w w w . L a w y e r S e r v i c e s . i n



Visteon Automotive Systems Pvt. Ltd., Represented by its Deputy General Manager (Indirect Taxation), T.A. Bhaskaran, Guindy, Chennai v/s The Deputy Commissioner (CT) – IV (FAC), Large Taxpayers Unit, Egmore, Chennai


Company & Directors' Information:- VISTEON AUTOMOTIVE (INDIA) PRIVATE LIMITED [Active] CIN = U31902PN2005PTC020905

Company & Directors' Information:- C P SYSTEMS PVT LTD [Active] CIN = U29199DL1999PTC101718

Company & Directors' Information:- J J AUTOMOTIVE LTD [Active] CIN = L34103WB1981PLC033996

Company & Directors' Information:- T SYSTEMS INDIA PRIVATE LIMITED [Strike Off] CIN = U72200DL2004PTC127138

Company & Directors' Information:- A K M SYSTEMS PRIVATE LIMITED [Active] CIN = U74899DL1984PTC018546

Company & Directors' Information:- S C L AUTOMOTIVE PRIVATE LIMITED [Active] CIN = U35900TN2009PTC072343

Company & Directors' Information:- W B M SYSTEMS PRIVATE LIMITED [Active] CIN = U74899DL1984PTC017764

Company & Directors' Information:- P P AUTOMOTIVE PRIVATE LIMITED [Active] CIN = U35999HR2009PTC039808

Company & Directors' Information:- AUTOMOTIVE CORPN OF INDIA LTD [Strike Off] CIN = U15422MH1974PLC017377

Company & Directors' Information:- G N AUTOMOTIVE PRIVATE LIMITED [Strike Off] CIN = U50102MH2010PTC201448

Company & Directors' Information:- G. H. AUTOMOTIVE PRIVATE LIMITED [Active] CIN = U34300DL2007PTC161956

Company & Directors' Information:- A R G SYSTEMS LIMITED [Active] CIN = U74899DL1994PLC062621

Company & Directors' Information:- C V AUTOMOTIVE PRIVATE LIMITED [Active] CIN = U63011DL2009PTC189646

Company & Directors' Information:- S SYSTEMS PVT LTD [Active] CIN = U72200DL2001PTC111270

Company & Directors' Information:- SYSTEMS INDIA PRIVATE LIMITED [Active] CIN = U74899DL1994PTC059377

Company & Directors' Information:- K J AUTOMOTIVE PRIVATE LIMITED [Active] CIN = U50401PN2013PTC146058

Company & Directors' Information:- V S S SYSTEMS INDIA PRIVATE LIMITED [Strike Off] CIN = U03000TZ1997PTC007933

Company & Directors' Information:- D M AUTOMOTIVE PRIVATE LIMITED [Active] CIN = U29253HR2012PTC045797

Company & Directors' Information:- I L SYSTEMS INDIA PRIVATE LIMITED [Strike Off] CIN = U18100GJ1999PTC037104

Company & Directors' Information:- A V SYSTEMS PRIVATE LIMITED [Active] CIN = U31909PN2001PTC015788

Company & Directors' Information:- N D T SYSTEMS PRIVATE LIMITED [Active] CIN = U74210MH1996PTC104744

Company & Directors' Information:- S P P S SYSTEMS PRIVATE LIMITED [Active] CIN = U72200TG2000PTC033732

Company & Directors' Information:- L S I SYSTEMS (INDIA) PRIVATE LIMITED [Active] CIN = U32109DL2000PTC105666

Company & Directors' Information:- T K W AUTOMOTIVE PRIVATE LIMITED [Active] CIN = U34300DL2005PTC137031

Company & Directors' Information:- H B S SYSTEMS PRIVATE LIMITED [Active] CIN = U74899DL1992PTC048198

Company & Directors' Information:- L G K AUTOMOTIVE PRIVATE LIMITED [Active] CIN = U34300AS2001PTC006713

Company & Directors' Information:- L K AUTOMOTIVE PRIVATE LIMITED [Active] CIN = U34300GJ2011PTC066118

Company & Directors' Information:- U C SYSTEMS INDIA PVT LTD [Active] CIN = U72200DL1997PTC084267

Company & Directors' Information:- L C SYSTEMS PRIVATE LIMITED [Active] CIN = U55200PB2012PTC036880

Company & Directors' Information:- C I SYSTEMS PVT LTD [Active] CIN = U45200TG1983PTC003915

Company & Directors' Information:- M J SYSTEMS (INDIA) PRIVATE LIMITED [Active] CIN = U72900MH2005PTC150591

Company & Directors' Information:- R R SYSTEMS PRIVATE LIMITED [Active] CIN = U30007DL1999PTC098142

Company & Directors' Information:- C N C SYSTEMS PVT LTD [Active] CIN = U72900DL1999PTC100476

Company & Directors' Information:- M B M SYSTEMS PRIVATE LIMITED [Active] CIN = U30006DL1988PTC030404

Company & Directors' Information:- C SYSTEMS PRIVATE LIMITED [Active] CIN = U31103TN2009PTC071155

Company & Directors' Information:- R M I SYSTEMS PRIVATE LIMITED [Active] CIN = U72200KA2011PTC060246

Company & Directors' Information:- W & S SYSTEMS (INDIA) PRIVATE LIMITED [Active] CIN = U74910TN2005PTC055568

Company & Directors' Information:- M. Y. T. SYSTEMS PRIVATE LIMITED [Under Process of Striking Off] CIN = U74990TG2016PTC110104

Company & Directors' Information:- L V SYSTEMS PRIVATE LIMITED [Active] CIN = U31900KA2021PTC150256

Company & Directors' Information:- CHENNAI AUTOMOTIVE PRIVATE LIMITED [Active] CIN = U34300TN2021PTC146444

Company & Directors' Information:- S E I SYSTEMS LIMITED [Strike Off] CIN = L74899DL1994PLC061731

Company & Directors' Information:- D C S SYSTEMS LIMITED [Strike Off] CIN = U72100MP2000PLC014224

Company & Directors' Information:- I T G SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U72200DL1999PTC098431

Company & Directors' Information:- I O SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U72200TG1998PTC029166

Company & Directors' Information:- S E C O M SYSTEMS PRIVATE LIMITED [Active] CIN = U31909HR2009PTC039084

Company & Directors' Information:- TAXATION INDIA PRIVATE LIMITED [Strike Off] CIN = U74140DL2000PTC106716

Company & Directors' Information:- D M SYSTEMS PRIVATE LIMITED [Active] CIN = U72100DL1999PTC101817

Company & Directors' Information:- J N AUTOMOTIVE PRIVATE LIMITED [Active] CIN = U50102AS2014PTC011838

Company & Directors' Information:- K K K SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U72100UP1995PTC017784

Company & Directors' Information:- A S A AUTOMOTIVE PVT LTD [Strike Off] CIN = U51109WB1991PTC052174

Company & Directors' Information:- E-SYSTEMS (INDIA) PRIVATE LIMITED [Active] CIN = U72200WB2003PTC096700

Company & Directors' Information:- J B SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U72200KL1997PTC011510

Company & Directors' Information:- M AND S SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U72200MH1996PTC103819

Company & Directors' Information:- K AND M SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U32101UP1993PTC015352

Company & Directors' Information:- S S V SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U72300TN1996PTC037072

Company & Directors' Information:- R G B SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U72300TN1998PTC040485

Company & Directors' Information:- C C SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U31100TG1996PTC023469

Company & Directors' Information:- D R P AUTOMOTIVE PRIVATE LIMITED [Active] CIN = U51101DL2014PTC267341

Company & Directors' Information:- K R T SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U52392TN2002PTC048704

Company & Directors' Information:- B & D SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U72100OR1996PTC004611

Company & Directors' Information:- A M P S SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U72900WB2001PTC093281

Company & Directors' Information:- G M E SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U71290DL1987PTC029758

Company & Directors' Information:- R B SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U31300RJ1990PTC005689

Company & Directors' Information:- E D H SYSTEMS PVT. LTD. [Strike Off] CIN = U99999DL1991PTC045384

Company & Directors' Information:- H N G SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U72900RJ2012PTC040713

Company & Directors' Information:- F A SYSTEMS PRIVATE LIMITED [Active] CIN = U72100MH2004PTC148941

Company & Directors' Information:- D S AUTOMOTIVE PRIVATE LIMITED [Strike Off] CIN = U50102MH2011PTC215763

Company & Directors' Information:- H AND P SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U74900PN2013PTC146918

Company & Directors' Information:- G. K. SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U72900PN2006PTC129225

Company & Directors' Information:- T G SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U31403TN2006PTC061859

Company & Directors' Information:- V. E AUTOMOTIVE INDIA PRIVATE LIMITED [Active] CIN = U34200UP2012PTC054101

Company & Directors' Information:- I T SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U72400AS1999PTC005824

Company & Directors' Information:- Y Y SYSTEMS PRIVATE LIMITED [Active] CIN = U72200CH2015PTC035767

Company & Directors' Information:- N P M E SYSTEMS PRIVATE LIMITED [Active] CIN = U29299DL1998PTC094645

Company & Directors' Information:- K. S. AUTOMOTIVE PRIVATE LIMITED [Active] CIN = U51502DL2007PTC163634

Company & Directors' Information:- R D SYSTEMS PRIVATE LIMITED [Active] CIN = U72100DL2000PTC103462

Company & Directors' Information:- V C SYSTEMS PVT LTD [Active] CIN = U72200DL2001PTC111812

Company & Directors' Information:- K B N SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U64204DL1997PTC088904

Company & Directors' Information:- A B SYSTEMS PRIVATE LIMITED [Active] CIN = U93000DL2012PTC234774

Company & Directors' Information:- J K AUTOMOTIVE PRIVATE LIMITED [Converted to LLP] CIN = U34300DL2011PTC218392

Company & Directors' Information:- J S N D SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U72900GJ2011PTC065160

Company & Directors' Information:- J C D SYSTEMS PVT LTD [Strike Off] CIN = U32109PB1988PTC008438

Company & Directors' Information:- Y R SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U72900DL2000PTC105093

Company & Directors' Information:- S R SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U72900DL2000PTC104743

Company & Directors' Information:- F C S SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U73100DL1997PTC090517

Company & Directors' Information:- E R SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U72200TG2008PTC061904

Company & Directors' Information:- R & T SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U72200DL2008PTC179617

Company & Directors' Information:- Q S Q SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U51109KA2000PTC026269

    W.P. No. 32655 of 2015 & M.P. No. 1 of 2015

    Decided On, 13 January 2020

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE C. SARAVANAN

    For the Petitioner: K.A. Parthasarathy for N. Inbarajan, Advocate. For the Respondent: A.N.R. Jayaprathap, Government Pleader (T).



Judgment Text


(Prayer: Writ Petition filed under Article 226 of Constitution of India, to issue Writ of Certiorari, calling for the records on the files of the respondent herein in TIN:33910904989/2006-07, dated 18.09.2015, quashing the same in so far as it relates to dis allowance of Input Tax Credit beyond 4% on the purchase capital goods on a value of Rs.67,43,848/-, or pass such further other orders as it may deem fit and proper in the facts and circumstances of the case.)

1. Heard learned counsel for the petitioner and the respondent Deputy Commissioner of Commercial Taxes, Large Tax Payers Unit.

2. Short point that arises for consideration in the present writ petition is whether the respondent was justified in directing the petitioner to reverse the input tax credit availed on capital goods in excess of 4% vide the impugned order?

3. The petitioner had purchased “capital goods” as defined in Section 2(11) of the TNVAT Act, 2006 for manufacturing purpose and availed input tax credit in terms of Section 19(3) of the said Act. As per Entry 25, Part B to the I schedule of the said Act, the “capital goods” are liable to VAT at 4%. However, the dealer who sold the “capital goods” to the petitioner charged VAT at 12.5% and passed on the incidence of such tax to the petitioner. The petitioner therefore availed the tax paid and reflected in the invoice at 12.5%.

4. It is the contention of the respondent that since the “capital goods” were liable to VAT only at 4%, the petitioner was liable to reverse input tax credit in excess of 4% and accordingly the petitioner was required to reverse credit availed equivalent to 8.5% VAT paid in excess by the registered dealer who sold the capital goods to the petitioner. A show cause notice dated 26.12.2011 was issued to the petitioner. The petitioner replied to the said notice by its reply dated 30.01.2012. By the impugned order dated 18.09.2015, the respondent has directed the petitioner to reverse the excess credit of Rs.5,73,309/-

5. The learned counsel for the petitioner submits that the issue is no longer res integra and is covered by several decisions of this Court. In this connection, learned counsel for the petitioner relies on the decision of a Division Bench of this Court in Sara Leathers Vs. Commercial Tax Officer, (2010) 30 VST 581 (Mad).

6. It is submitted that the above decision was also followed by this Court in the petitioner’s own case and an order dated 29.08.2016 rendered in W.P.No.12459 of 2014. The learned counsel also refers to the decision of this Court rendered in Summer India Textiles Private Limited. Vs. Commercial Tax Officers, (2013) 61 VST 218 (Mad).

7. Per contra, learned counsel for the respondent submits that the decision rendered in the context of Section 18 of the above Act cannot be applied to the facts of the present case. He further submits that the petitioner has an alternate remedy by way of an appeal before the Appellate Deputy Commissioner under Section 51 of the said Act. The learned counsel for the respondent therefore prays for dismissal of the present writ petition by directing the petitioner to approach the Appellate Deputy Commissioner.

8. I have considered the submission of the learned counsel for the petitioner and the respondent. The purpose of allowing input tax credit on capital goods and inputs are to reduce the cascading effect of the tax on the products / goods sold by a dealer under the provisions of the said Act. Under Section 19 (3) of the Act every registered dealer, is allowed into tax credit in the manner prescribed on the purchase of capital goods for use in the manufacture of taxable goods. The only restriction that is contained under the provision of Sub Section (6) of the Act. Section 19 Input Tax Credit:-

(3) (a) Every registered dealer, in respect of purchases of capital goods *for use in the manufacture of taxable goods, shall be allowed input tax credit in the manner prescribed.

(b) Deduction of such input tax credit shall be allowed only after the commencement of commercial production and over a period of three years in the manner as may be prescribed. After the expiry of three years, the unavailed input tax credit shall lapse to Government.

(c) Input tax credit shall be allowed for the tax paid under section 12 of the Act, subject to clauses (a) and (b) of this sub-section.

9. The prescribed procedure is in the Rule 10(4)(a) of the TNVAT Rules, 2007 for availing credit. Rule 10(4)(a) and (b) of the Rules reads as under:-

Rule 10(4)(a) The registered dealer who claims input tax credit on capital goods under clause (b) of sub-section (3) of section 19, shall within thirty days from date of commencement of commercial production intimate the said date to the assessing authority under whose jurisdiction his principal place of business is situated.

Rule 10(4)(b) In respect of capital goods purchased within the State, the registered dealer shall be entitled to avail upto fifty per cent of the input tax credit in the same financial year and the balance of the input tax credit before the end of the third financial year, provided the said capital goods are in possession of the dealer. After the expiry of the third financial year, the unavailed input tax credit, if any, shall lapse to Government.

Provided that a registered dealer who makes purchase of parts and accessories for capital goods already purchased and use in manufacture of taxable goods is entitled to input tax credit relating to such goods in the month of purchase or thereafter.

10. It is noticed that under the scheme of the Act, input tax credit can be availed on the strength of the invoice on the tax paid by the registered dealer who sells such capital goods or input. As a person availing input tax credit, the petitioner had to merely satisfy that the tax reflected in the invoice was paid by the registered dealer who sold the capital goods to it.

11. Even if the registered dealer had deliberately paid tax in excess and passed on the incidence of such tax to the petitioner with a view to liquidate the excess credit of input tax accumulated in their hand, the petitioner cannot be denied of the input tax credit of tax paid and reflected in the invoice.

12. Under those circumstances, the option available to the commercial tax department would be to recover the amount of tax passed on in excess from the registered dealer who sold such capital goods to the petitioner if it facilitated the petitioner to avail credit of such tax if such tax was otherwise not payable.

13. In this case, it is not the case of the respondent that there was deliberate ploy on the part of the dealer who sold the capital goods to the petitioner by charging tax at 12.5% to liquidate accumulated credit. In my view, whether the tax was paid at 4% or 12.5% as the case may irrelevant as far as the respondent is concerned as the issue is revenue neutral. I therefore see no reason why credit availed by the petitioner should be disallowed particularly in the light of the fact that intention of the legislature is to reduce the cascading effect of the tax the final product.

14. Though the decision in Sara Leathers Vs. Commercial Tax Officer, (2010) 30 VST 581 (Mad) was rendered in the context of Section 18 of the Act, nevertheless it was in the context of refund of the tax paid by the said dealer on the capital goods in excess to the said Sara Leathers. The court allowed refund of the tax under Section 18 of the Act. The operative portion of the said order reads as under:-

5. Given the, fact that the choice of an adjustment of the input tax credit is given to the assessee, the question of a suo motu, adjustment by the Revenue, hence, does not arise, more so, when an assessee seeks a refund of the ITC as provided for under sub-section (2). It is admitted that the petitioner had in fact paid the tax at 12.5 per cent which could not be refuted by the seller. If there had been a charging of tax by the seller when effected the sale to the purchaser at the rate over and above what is payable under the Act, all that the Revenue could do is to proceed against the seller of the goods for charging the purchaser at a rate not legally sustainable. Equally so, unlike in the earlier provisions of the Repealed Act, once the purchaser proves as regards the actual payment of tax at a rate which is not as per the provisions of the Act, the question of proving the passing on of the liability does not arise. The provisions contained under section 19 of the Act relating to input tax credit, hence, herein assumes significance in considering the claim of refund under section 18(2) of the Act. In the circumstances, going by the very provisions of section 18(1) of the Act, given the fact that the sale by the petitioner is zero rated and that the petitioner is entitled to the benefit of section 18(2) of the Act for the refund of the input tax paid on the purchase of goods

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under the stated circumstances, the petitioner's claim for refund of amount paid as per the assessment order has to be given in toto without any adjustment whatsoever. 15. Following the decision rendered in Sara Leathers’ case cited supra, the decision of this court in petitioner’s own case in W.P.No.12459 of 2014 in order dated 29.08.2016, which allowed relief to the petitioner after referring to the decision rendered in TVL Tata Refractories Ltd Vs. The Commercial Tax Officer in W.P.Nos.5614 and 5615 of 2008 in order dated 17.11.2014 and in the view of the decision contained herein the petitioner is entitled succeed. 16. In the light of the above discussion, I find no reasons to sustain the impugned order. The impugned order dated 18.09.2015 passed by the respondent in TIN:339109TIN:33910904989/2006- 07 is quashed with consequential relief to the petitioner. 17. The present Writ Petition is allowed. No cost. Consequently, connected Miscellaneous Petition is closed.
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