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2011 (11) TMI 600

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....he facts illustratively are taken from SBCWP No. 6903/2009--RSWM Limited v. State of Rajasthan. 2. Clause 7 of the Rajasthan Investment Promotion Policy, 2003 ("RIPS 2003", for short) provides that in case of new investment made, the sum total of interest subsidy and wage/employment subsidy would be subject to a maximum limit of fifty per cent of the tax payable and deposited under the Rajasthan Sales Tax Act, 1994, the Central Sales Tax Act, 1956 and Value Added Tax Act as and when introduced in the State. The Rajasthan VAT Act, 2003 was enforced with effect from April 1, 2006 during the operative period of RIPS, 2003, which was extended up to March 31, 2011. Clause 7(i)(a) of the Scheme reads as under: "7. Subsidies (i)(a) In case of new investment made, the sum total of interest subsidy and wage/employment subsidy would be subject to a maximum limit of fifty percent of the tax payable and deposited under the Rajasthan Sales Tax Act, 1994, the Central Sales Tax Act, 1956 and Value Added Tax Act as and when introduced in the State." 2. The impugned clarification issued by the tax division of the Finance Department of Government of Rajasthan on October 10, 2....

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....tax under sub-section (3) of section 20 of the RVAT Act, 2003. 6. Where the unit is engaged in trading of goods, other than the goods manufactured by it, subsidy is allowable only on the amount of tax payable on the sale of goods manufactured by such unit. By order Sd/(ADITYA PAREEK) Deputy Secretary to Government" 3. The grievance raised in the present writ petition is that the said clarification issued by the State Government on October 10, 2008 is contrary to the provisions of RIPS, 2003 as well as the Rajasthan VAT Act, 2003 which does not define as such the term "tax payable" as such. 4. The learned counsel for the petitioners, Mr. Dinesh Mehta, therefore, contended that the term "tax payable" should be interpreted to mean the gross output tax payable under the VAT Act, 2003 and not 'net tax payable' after deducting input-tax in the case of the petitioner-industry and the petitioner-industry as per clause 7 reproduced above could not be with reference to "net tax payable" under the VAT Act, but should be with reference to "gross tax payable" under the said Act. He urged that in purported exercise of powers for issuing su....

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.... to the "net tax payable" as has been done under clause 2 of the impugned clarification dated October 10, 2008. 7. On the other hand, Mr. V.K. Mathur, learned counsel for the Revenue submitted that the tax payable by a dealer under the Rajasthan VAT Act, 2003 has been defined in section 17 of the VAT Act, 2003 which stipulates that "tax payable" under the said Act is "net tax payable" by a registered dealer for a tax period computed by formula; T = (O+R+P) I where T is net tax payable; O is amount of output tax, R is amount of reverse tax and P is the amount of tax payable under sub-section (2) of section 4; and I is the amount of input tax. He also submitted that power to issue such clarification by the Finance Department and Tax Division is clearly there in clause 11 of the RIPS, 2003 and powers to review, appeal and revision by the State Government are contained in clauses 11, 12, 13 and 14 of the RIPS, 2003, respectively. Said clauses are reproduced herebelow for ready reference: "11. Authority for implementation/interpretation: All the related Departments shall implement the scheme. The Industries Department shall act as the nodal coordina....

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....er industry, who purchased the various raw materials and goods. The input-tax credit is deducted from their output tax liability on the sale of finished goods manufactured by them after value addition therein and it is only net tax liability which is tax payable (VAT) as per heading of section 17 of the Act itself and even though the said term "tax payable" is not separately defined under section 2 of the Act or in RIPS, 2003, the only logical conclusion is that "tax payable" is "net tax payable" under the VAT Act. He also drew the attention of the court towards clause 7 of the RIPS, 2003 which clearly put limit of 50 per cent of the "tax payable and deposited" under the RST Act, CST Act or VAT Act, therefore, the word "deposited" would clearly amount to "net tax liability" as computed in accordance with section 17 of the Act. He also submitted that various clarifications 6 in number in the order dated October 10, 2008 have emphasized that benefit of subsidy under RIPS, 2003 would be payable after amount of tax in question is deposited by the assessee, so there is no question of relating the amount of subsidy to the gross ....

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....gh attractive is devoid of any merit and substance because it is hypothetical figure to construe "tax payable" as the "gross tax liability" or "output tax" as defined in section 2(24) of the VAT Act, 2003 which means the tax charged or chargeable under this Act by a registered dealer in respect of the sale of goods in the course of his business. Section 17 of the Act with heading "tax payable by a dealer" on the other hand clearly provides that tax payable by dealer is only after deducing input tax and letter "T" which defines net tax payable is O (output tax) + R (reverse tax) + P (tax payable under section 4(2)) I (input tax). Therefore, the "tax payable" under the Rajasthan VAT Act, 2003 is nothing but "net tax payable" by the assessee or manufacturer as per section 17 of the Act. 10. In the considered opinion of this court, the clarification issued by the Finance Department (Tax Division) on October 10, 2008 is perfectly in consonance with the Rajasthan VAT Act, 2003 read with clause 7 of the Scheme-RIPS 2003 and the same cannot be said to be either without jurisdiction or bearing incorrect or erroneous inte....