Madras HC Imposes Rs. 10,000 Token Penalty for Wrongful Input Tax Credit Availment, Finds No Fraud or Wilful Suppression of Facts

The Madras High Court has quashed a VAT assessment order, requiring a 10% pre-deposit, due to its hasty issuance. Justice C. Saravanan noted that the order, passed on September 28, 2022, for the assessment years 2014-2015 and 2015-2016, involving substantial tax amounts, was premature. \r

The petitioner, P.C.S. Trades, had requested more time to submit objections and documents, but the orders were issued without proper consideration. The court found that the petitioner's application under Section 84 of the Tamil Nadu Value Added Tax Act, 2006, was dismissed without due consideration. To ensure a fair reassessment, the court set aside the November 9, 2022, orders rejecting the revision petition, conditional on a 10% pre-deposit. The petitioner is now required to attend a personal hearing and provide necessary documents. \r

The respondent is instructed to consider previous favorable assessments from October 31, 2022, if relevant. Mr. B. Rooban and Mr. J.K. Jayaselan represented the petitioner and respondents, respectively.