Input tax credit and limitation objections on DEPB licence reassessment required fresh consideration after non-treatment of key materials.
Input tax credit on DEPB licence purchases was challenged on the ground that the licences were not covered by the First Schedule to the Tamil Nadu Value Added Tax Act, 2006, while the assessee relied on an advance ruling, a departmental clarification and a specific entry in the Schedule. The assessing authority did not deal with that material, and the matter required fresh examination. A separate limitation objection was also raised against reassessment for later years, but it was not addressed in the impugned orders. The assessments were therefore set aside and the matters remanded for reconsideration after hearing the assessee and dealing with all relevant objections.
Issues: (i) Whether input tax credit on purchase of DEPB licences could be denied on the footing that such licences did not fall under the First Schedule to the Tamil Nadu Value Added Tax Act, 2006, and whether the advance ruling and clarification relied upon by the assessee required consideration. (ii) Whether the reassessment for the assessment years 2007-08 to 2010-11 was barred by limitation.
Issue (i): Whether input tax credit on purchase of DEPB licences could be denied on the footing that such licences did not fall under the First Schedule to the Tamil Nadu Value Added Tax Act, 2006, and whether the advance ruling and clarification relied upon by the assessee required consideration.
Analysis: The assessee had specifically asserted that DEPB licences were covered by Entry 70 of Part B of the First Schedule and had also relied on an advance ruling under Section 48-A and a departmental clarification. The assessing authority proceeded on the basis that the licences were goods but not goods covered by the First Schedule, and did not deal with the effect of the advance ruling or the factual distinction urged by the assessee. The assessment therefore suffered from non-consideration of relevant material and the matter required fresh examination.
Conclusion: The denial of input tax credit was not finally sustained and the issue was directed to be reconsidered afresh.
Issue (ii): Whether the reassessment for the assessment years 2007-08 to 2010-11 was barred by limitation.
Analysis: The assessee had raised a specific objection that reopening beyond the prescribed period of five years was time-barred. That objection was not considered in the impugned orders, even though it went to the validity of the reassessment itself. A reassessment made without addressing a raised limitation plea could not be allowed to stand without fresh scrutiny.
Conclusion: The limitation objection was kept open for fresh consideration on remand.
Final Conclusion: The writ petitions succeeded, the impugned assessment orders were set aside, and the matters were remanded for reconsideration after affording an opportunity of hearing and after dealing with all relevant objections.
Ratio Decidendi: An assessment order cannot be sustained where the assessing authority fails to consider a binding advance ruling, a specifically raised limitation plea, and other relevant materials bearing on the taxability and credit entitlement of the transaction; such omission justifies remand for fresh adjudication.
TaxTMI 
AI Drafter ✕
TaxTMI 
