2024 (12) TMI 268 - HC - VAT / Sales Tax

Revenue petition dismissed as refund claims under Section 18(3) Tamil Nadu VAT Act must be filed within 180 days of Input Tax Credit accrual

The Madras HC dismissed the Revenue's petition challenging refund claims for Input Tax Credit under Section 18(3) of Tamil Nadu VAT Act, 2006. The court ... Rejection of refund claims filed by the Respondent for the refund of Input Tax Credit under Section 18(3) of Tamil Nadu Value Added Tax Act, 2006 - refund claims were filed beyond 180 days from the date of expiry of period prescribed - HELD THAT:- As per Section 18(3) of the Tamil Nadu Value Added Tax Act, 2006, a refund claim had to be made within a period of 180 days from the date of accrual of such Input Tax Credit and not from the date of zero rate sales during the period in dispute - Similarly, under Rule 11(2) of the Tamil Nadu Value Added Tax Rules, 2007, as it stood during the period in dispute, a dealer who has effected zero rated sales as is contemplated under Section 18(1) of the Tamil Nadu Value Added Tax Act, 2006 could file a refund claim in electronic form W from accrual of such claim. In this case admittedly there are no records to indicate that returns were assessed and therefore the accrual of refund of such Input Tax Credit cannot be said to have arisen either on the date of purchase of the inputs or on the date of export that is Zero Rated Sales as defined in Section 2(44) of the Tamil Nadu Value Added Tax Act, 2006 or within 180 days of the actual export during the period in dispute. The export incentives in the form of refund of Input Tax Credit should not be denied and ought not to be denied as export bring precious foreign exchange to the country. These export incentives were conceived of and are being given at the time when the country was facing shortage of foreign currency when foreign exchange reserves were depleted impelling the Parliament as also the State Legislatures to boost exports in a bid to usher the foreign exchange into the country. Question of restrictions if any statutorily can be said to have been put in a place only after 2010 pursuant to amendment to Section 18(3) of the Tamil Nadu Value Added Tax Act, 2006 vide Amendment Act 9 of 2010 with effect from 1st April 2010 as notified by G.O.Ms.No.24AA dated 02.03.2010 and amendment to Rule 11(2) of the Tamil Nadu Value Added Tax Rules, 2007 vide Notification No.SRO A-11/2010 dated 06.04.2010 with effect from the date of amendment to Section 18(3) of the Tamil Nadu Value Added Tax Act, 2006. There are no error in the order passed by the learned Single Judge - petition by the Revenue dismissed. Issues Involved:1. Timeliness of the refund claims under Section 18(3) of the Tamil Nadu Value Added Tax Act, 2006.2. Compliance with procedural requirements for claiming Input Tax Credit (ITC) refunds.3. The applicability of amendments to Section 18(3) and Rule 11(2) of the Tamil Nadu Value Added Tax Rules, 2007.4. The jurisdiction of the Writ Court in entertaining the petition without directing the respondent to file an appeal.Issue-wise Detailed Analysis:1. Timeliness of the Refund Claims:The core issue revolves around whether the refund claims filed by the respondent were within the prescribed time limit under Section 18(3) of the Tamil Nadu Value Added Tax Act, 2006. The original provision required claims to be made within 180 days from the date of accrual of input tax credit. The Writ Court found that the respondent had been making claims in its monthly returns within the stipulated period, thus satisfying the timeliness requirement. The court emphasized that the delay in filing Form W should not negate the respondent's entitlement to a refund, as the monthly returns were timely and in accordance with the Act.2. Compliance with Procedural Requirements for ITC Refunds:The procedural compliance for claiming ITC refunds was scrutinized, particularly the requirement to file Form W within 180 days. The court noted that the respondent had consistently filed monthly returns claiming ITC, and there was no denial from the Revenue regarding these returns. The court held that the procedural lapse of filing Form W beyond 180 days should not invalidate the refund claim, given the timely monthly filings. The court directed the Revenue to consider the monthly returns for assessment and process the refund claim accordingly.3. Applicability of Amendments to Section 18(3) and Rule 11(2):The amendments to Section 18(3) and Rule 11(2), effective from April 1, 2010, shifted the time frame for claiming refunds from the date of accrual to the date of making zero-rated sales. The court clarified that these amendments were not applicable to the period in dispute, which was before the amendments took effect. Therefore, the original provisions governed the refund claims in question. The court highlighted that export incentives, such as ITC refunds, should not be denied, as they play a crucial role in promoting exports and bringing foreign exchange into the country.4. Jurisdiction of the Writ Court:The appellants argued that the Writ Court should not have entertained the petition and should have directed the respondent to file an appeal under Section 51 of the Act. However, the court found the Writ Court's decision to entertain the petition justified, given the circumstances and the nature of the dispute. The court upheld the Writ Court's order, allowing the refund claims and dismissing the writ appeals filed by the Commercial Tax Department.In conclusion, the court dismissed the writ appeals, affirming the Writ Court's decision to allow the refund claims. The court emphasized the importance of adhering to the legislative intent behind export incentives and clarified that the amendments to the Act and Rules did not apply to the period in dispute. The decision underscored the need for the Revenue to process the respondent's refund claims based on the timely filed monthly returns, despite the procedural delay in filing Form W.