2016 (8) TMI 1336 - HC - VAT and Sales Tax

Court grants input rebate based on actual transactions within financial year, not invoice dates

The High Court allowed the writ petition, quashed the assessment orders, and directed the Assessing Officer to grant input rebate for transactions within ... Benefit of Input Rebate - whether based on the ground that invoices were issued after the Financial Year, can the benefit be denied to the petitioner when the transaction did take place during the Financial Year i.e… period between 1.4.2012 to 31.3.2013? Held that: - The actual payment of the installment and the tax component is in the Financial Year and if the actual payment of duty or tax is in the Financial Year, merely because the invoice is issued on a subsequent date, may be after the Financial Year, the question would be as to whether the benefit can be denied to the petitioner. Even if the invoice is of a particular date, may be after the Financial Year, but the invoice did evidence payment of duty and conclusion of the transaction as per the contract during the Financial Year. That being the factual position, there is no reason as to why „input rebate‟ cannot be granted, when the transaction has infact occurred during the Financial Year and the duty or tax paid during the Financial Year, which is admissible to a set off or input rebate. Petition allowed - Impugned orders of assessment stand quashed, and the Assessing Officer is directed to grant „input rebate‟ for the transaction, which infact had taken place during the Assessment Year in question. Issues Involved:1. Denial of input rebate for the period 1.4.2012 to 31.3.2013.2. Validity of sale invoices issued after the financial year.3. Availability of statutory remedy of appeal.4. Exercise of jurisdiction under Article 226/227 of the Constitution.Issue-wise Detailed Analysis:1. Denial of Input Rebate for the Period 1.4.2012 to 31.3.2013:The petitioner, a proprietary concern dealing in iron, steel, and scrap material, challenged the denial of input rebate for the financial year 1.4.2012 to 31.3.2013 by the Assistant Commissioner of Commercial Tax. Despite complying with the requirements of the MP Value Added Tax Act, 2002, and submitting quarterly returns, the input rebate was disallowed because the sale invoices were issued after the financial year ended. The petitioner argued that the transactions, including payment of installments and taxes, occurred within the financial year, evidenced by gate passes and delivery memos.2. Validity of Sale Invoices Issued After the Financial Year:The petitioner contended that Rule 9 of the MP VAT Rules does not specify a particular document format for claiming input rebate. The actual payment of tax and the transaction's occurrence during the financial year should be the basis for granting the rebate, not the date of the invoice. The court noted that the documents, including delivery memos and gate passes, showed that the transactions occurred within the financial year, and the tax was paid during that period. Therefore, the issuance of invoices after the financial year should not be a ground for denying the benefit.3. Availability of Statutory Remedy of Appeal:The respondent argued that the petitioner should have pursued the statutory remedy of appeal under section 46(1) of the VAT Act instead of filing a writ petition. However, the court held that discretionary jurisdiction under Article 226 could be exercised in cases where the action of a statutory authority is arbitrary, unreasonable, or contrary to law, and serious disputes on facts are not involved. The court found the Assessing Officer's action unsustainable and exercised its jurisdiction to address the issue.4. Exercise of Jurisdiction under Article 226/227 of the Constitution:The court referred to precedents where jurisdiction under Article 226 was exercised despite the availability of an alternative remedy. It was emphasized that when the statutory authority's action is arbitrary or contrary to law, the court can intervene. In this case, the facts were not in dispute, and the Assessing Officer's action was found to be in contravention of statutory requirements. Therefore, the court exercised its extraordinary jurisdiction to grant relief to the petitioner.Conclusion:The court allowed the writ petition, quashed the impugned orders of assessment, and directed the Assessing Officer to grant the input rebate for the transactions that occurred during the financial year in question. The court emphasized that the actual transaction and payment of tax during the financial year should be the basis for granting input rebate, not the date of the invoice.