TaxTMI 
TaxTMI 
TaxTMI 
2012 (4) TMI 458
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....ases of the packing material was being claimed as a refund. However, it would appear that in the case of another dealer by the name Amar Products, the Commissioner, VAT gave a ruling that packing material can be purchased against Form-H also. Accordingly, under the Act which came into force from 1.4.2005, the appellant was also making purchase of packing materials on the basis of declaration filed in Form -H. 2. In respect of the tax paid by the appellant on the packing material after the introduction of the Act, it claimed input tax credit and asked for refund of the input tax on the ground that the packing material was used to pack rice which was exported out of India. The claim was made under Section 9(1)(b) of the Act which provided that a dealer, who is registered under the Act, shall be entitled to tax credit in respect of the turnover of purchase occurring during the tax period when the purchase arises in the course of his activities as a dealer and the goods are to be used by him directly or indirectly for the purpose of making sales which are not liable to tax under Section 7 of the Act. Section 7 provided that certain sales were not liable to VAT. Clause (c) of Section 7....
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....he submissions. The Joint Commissioner, however, rejected the appellant's submissions, observing as under: - "I have heard the arguments submitted by the counsel and also gone through the documents placed on the record. The dealer exports rice which an exempted commodity under First Schedule of Delhi V AT Act. Although the section 9(b) of Act allow the input tax credit on sales which are not liable to tax under section 7 of the Act but not such tax credit shall be allowed for purchase of goods which are used exclusively for packing of goods specified in First Schedule. It has been specifically provided u/s 9 clause 7(b) that for removal of doubt, no tax credit shall be allowed for the purchase of goods which are used exclusively for the manufacturing, processing or packing of goods specified in the First Schedule. The rice being a First Schedule item, no ITC can be allowed for its packing material. Accordingly, the default assessment order levying tax and interest are upheld. However, in view of the submissions regarding penalty, I am of the opinion that penalty u/s 89(1) is not leviable with reference to exports being made by the dealer. However, the penalty pertaining to the per....
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....e tax is calculated in accordance with the provisions of the Act. The rates at which the tax is to be paid are specified in Section 4 of the Act. Section 3(2) provides that every dealer shall be liable to pay tax at the rates specified in Section 4 of the Act on every sale of goods effected by him as a registered dealer or from the date on which he was required to be registered under the Act. The other sub-sections of Section 3 of the Act are not relevant for our purpose. Section 4 of the Act prescribes the rates of tax and Section 5 defines "taxable turnover". Section 6 of the Act provides for sale that is exempt from tax. It is necessary to reproduce Section 6 for the purpose of the present appeals. It is as follows: - "6. Sale exempt from tax (1) The sale of goods listed in the First Schedule shall be exempt from tax subject to the conditions and exceptions set out therein. (2) The dealers or class of dealers specified in the Fifth Schedule shall be exempt from payment of tax on all sales of goods effected by them subject to such conditions as may be prescribed. (3) Where a dealer sells capital goods which he has used since the time of pur....
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....se of making - (a) sales which are liable to tax under section 3 of this Act; or (b) sales which are not liable to tax under section 7 of this Act. Explanation: Sales which are not liable to tax under section 7 of this Act involve exports from Delhi whether to other States or Union territories or to foreign countries. ** ** ** (7) For the removal of doubt, no tax credit shall be allowed for - (a) the purchase of goods from an unregistered dealer; (b) the purchase of goods which are used exclusively for the manufacture, processing or packing of goods specified in the First Schedule. (c) any purchase of consumables or of capital goods where the dealer is exclusively engaged in doing job work or labour work and is not engaged in the business of manufacturing of goods for sale by him and incidental to the business of job work or labour work, obtains any waste or scrap goods which are sold by him." 12. A conjoint and harmonious reading of the above provisions discloses the following position. A dealer is liable to pay tax at the prescribed rates on every sale of goods effected by him. There are certain sales, which are liable ....
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....h takes place in the course of import of the goods into or export of the goods out of the territory of India will not be liable to tax under the Act. The opening words of Section 7 are important and they make the provisions of the Act and the rules inapplicable to sales in the course of import of the goods into or export of the goods out of the territory of India. The result is that such sales are outside the purview of the Act. Tax credit under Section 9(1)(b) is, however, available in the case of goods purchased and used by a dealer, directly or indirectly, for the purpose of making sale of goods in the course of export of the goods out of India. The First Schedule to the Act cannot, in the very nature of things, apply to sales in the course of export out of India, which are not liable to tax at all under the Act. If this is the correct legal position discernible from a conjoint and harmonious reading of the provisions of the Act referred to above, it follows that the appellant cannot be denied input tax credit in respect of purchase of packing material which are used by him for the purposes of exporting rice out of India which falls outside the purview of the Act because it repr....