TaxTMI 
TaxTMI 
2015 (4) TMI 935
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....this common order. 2. To decide the controversy in this batch of writ petitions, it would suffice to take note of the facts in one of the writ petitions as except the products manufactured all transactions are said to be export sales. The facts as set out in W.P.No.24828 of 2012 are that the petitioner is engaged in the business of manufacture and sales of Hosiery Garments and registered as dealer under the provisions of Tamil Nadu Value Added Tax Act, 2006 (VAT Act) and the Central Sales Tax Act, 1956(CST). The petitioner purchase yarn among other inputs inside the State of Tamil Nadu from various registered dealers on payment of VAT of 4% / 5% which is converted into fabric in the manufacturing unit of the petitioner and the fabric was thereafter processed and Hosiery garments were manufactured. The resultant Hosiery Garments were exported by the petitioner periodically. 3. It is submitted that during the knitting process, there was a process loss due to the flying of loose fibres and such loss was termed as invisible waste of yarn by the Trade and the same is less than 0.5% and such loss was unavoidable. It is further submitted that the yarn locally purchased from register....
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....ct of the members of the Association. In the affidavit in support of the writ petition, it was stated that there was in fact no invisible loss of yarn and there was no requirement to effect any reversal for any process loss in terms of the scheme of the VAT Act. The Writ Petition was dismissed by order dated 14.12.2011 on the ground that the Association has no locus standi to file the writ petition claiming relief in respect of tax treatment in individual cases. Aggrieved by the same, the Association filed a Writ Appeal in W.A.No.966 of 2012. The Writ Appeal was dismissed by the Honourable Division Bench, by order dated 25.07.2012. An observation was made by the Honourable Division Bench that it is open to the Association whenever there is a need to conduct demonstration, they are entitled to approach the appropriate Authorities with appropriate representation for consideration and passing appropriate orders. Pursuant thereto notices were served on the petitioners proposing to bring to tax the invisible loss of yarn occurring during manufacture of knitted garments and it was fixed at 5% of the total value of the yarn purchased during a particular year. 5. The petitioners submitt....
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....egistered dealer and the Section do not deal about consumption of raw material in the manufacturing process and inevitable resultant process loss. Further it is submitted that the respondent has uniformly adopted 5% which is without any basis. That apart there is no power under the VAT Act for issuing the impugned circular and therefore, the impugned circular has no effect of law and has to be set aside. Further by commenting upon observation made in the order of assessment, wherein, the Assessing Officer has stated that the assessee has not reversed ITC on the invisible loss of raw material utilised in the manufacture, therefore, ITC is reversed in purchase value of raw material, it is submitted that the said observation is wholly untenable and unsustainable in law. Therefore, the learned counsel submitted that the impugned circular deserves to be set aside. 7. Mr.Raveekumar, learned counsel appearing for the petitioner submitted that there is no power under the VAT to issue circular; the Circular prescribes procedure which is not contemplated under the Act or Rules and the refund claims to be audited before the refund is processed is not as per the procedure stipulated under t....
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....SSMENT CIRCLE, KOTAGIRI AND OTHERS], [2013]59 VST 256 (Mad) [JINSASAN DISTRIBUTORS VS. COMMERCIAL TAX OFFICER (CT), CHINTADRIPET ASSESSMENT CIRCLE, CHENNAI], 2014-15 (20) TNCTJ 61 [M/S.VEESONS ENERGY SYSTEMS(P) lIMITED, REP. BY DIRECTOR SHANKAR, THUVAKKUDI, TRICHY VS. THE COMMISSIONER OF COMMERCIAL TAXES, CHENNAI AND ANOTHER]. 8. Mr.Bakthasironmani, learned counsel appearing for the petitioner, who is engaged in Iron and Steel products submitted that Section 19(9)(iii) cannot be referred to missing material and referred to the White Paper submitted by the Government with regard to VAT regime and submitted that the circular cannot be made available in respect of assessment for the year 2006-07. Learned counsel also referred to the decision of the Honourable Supreme Court in the case of 2006(8) SCC 314 [THE COMMISSIONER OF CENTRAL EXCISE VS. INDIAN ALUMINIUM CO. LTD.,]. 9. Mr.N.Murali, learned counsel appearing for the petitioner submitted that Section 19(9) applies to goods which did not go into process of manufacture and all three contingencies under Sub Section (9) of Section 19 only refers to such goods; therefore, it is submitted that paragraph 13 of the impugned circular ....
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.... as an island under the scheme of the Act. In this regard, the learned counsel referred to the statutory provisions viz., Section 3(44), 5(1), Section 18(1), 18(2) of the Act. By referring to Sub Section (2) of Section 18, it is submitted that the dealer who makes zero-rated sale shall be entitled to refund of the Input Tax Credit paid by him on the purchase of goods used in the manufacture, therefore, the entire matter comes to a close and there could be no further enquiry into that. Reliance was placed on the decision of the Honourable Supreme Court in 1992 (57) ELT 209 (SC) [MULTIMETALS LTD VS. ASSISTANT COLLECTOR, CENTRAL EXCISE] which was followed in 1995 (77) ELT 268 (SC) [UNION OF INDIA VS. INDIAN ALUMINIUM CO.LTD]. Further it is submitted that even if there is loss of yarn in the manufacture process of Hosiery Garment, the petitioner is entitled to refund under Section 18(1) of the Act. Further it is submitted that Section 19 of the Act has absolutely no application to the entitlement of refund under Section 18(2) and Section 18 of the Act operates independently. Even assuming, it is applicable, the circular refers to Sub Section (9) of Section 19 of the Act. Admittedly, th....
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....t has to be adjusted in the subsequent refund. Further Section 84 also cannot be pressed into service as process loss cannot be an apparent error. The learned counsel further submitted that though the assessee had given undertaking in Form W and such undertaking is with regard to details furnished in the Form and not for any other purpose. In this regard, reference was made to the decision of this Court in the case of 1997 (89) ELT 28 (Madras) [ETERNIT EVEREST LTD VS. UNION OF INDIA]. 12. Mrs.Hemalatha, while reiterating the submissions made by the other counsels, submitted that the petitioner had consumed and used raw material and manufacture valves and exported the same and by virtue of the impugned order, 5% has been deducted, the balance has to be refunded. Further it is submitted that question of filing revision or alternative remedy does not arise in the light of the circular issued by the first respondent. 13. Mr.Senniappan, learned counsel for the petitioner submitted that the export value contains the raw material purchased, though some are washed away in the dyeing process, it does not affect the right of the petitioner to take credit. Reliance was placed in the unr....
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....is no such loss/wastage as invisible loss in the process of conversion of yarn into cloth or Hosiery garments and the yarn used in the conversion of cloth is totally consumed/used and the weight of the cloth is equivalent the weight of the yarn used. It is submitted that the said writ petition was dismissed by order dated 14.12.2011 as against whcih the association preferred an appeal in W.A.966 of 2012 and the Honourable Division Bench of this Court did not find any reason to take a different view than what was taken by the learned Single Judge. However, an observation was made that it is open to the association that whenever there is a need to conduct demonstration, it is for them to approach the concerned officers with appropriate representation for consideration. It is submitted that all issues were raised in the earlier writ petition and got crystalised and now, the members of the association have filed these writ petitions taking an inconsistent stand than what was taken in the affidavit filed in the writ petition filed by the association and these writ petitions are after the dismissal of the writ appeal by the Honourable Division Bench. However, the liberty granted by the D....
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....dit eligible for the dealer for which Input Tax Credit analysis have to be made as regards the input output ratio. Further, by referring to Form W, the refund claim, it is emphasised in terms of Paragraph 2(viii)(a), the quantity has to be discussed by the dealer to ascertain as to whether the entire quantity purchased has gone into export and there is undertaking given by the dealer in Form W and this procedure has been elucidated and answered in Question No.40 of the FAQ. Further it is submitted that the contention that Section 18 of the VAT Act is an island under the Act is incorrect since the right to claim ITC flows only from Section 19 and Section 18(1) and 18(2) used the words subject to such restrictions and conditions as may be prescribed and the prescription is under Section 19. Further it is submitted that Section 18 is general rule for zero-rated sale and however this is subject to Section 19 and the scheme under Section 19 applies to all registered dealers. However, it is submitted that the dealers have not placed any material to show Section 18 is an "island" within the provisions of the Act and the Act being a Taxation Statute, words cannot be inserted into the provi....
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....mited (supra), does not refer to the definition of input under the Central Excise Rules and by reading Section 2(23) of the VAT Act which defines "input" to mean goods including capital goods purchased by the dealer in the course of business, read along with Section 18(2) of the VAT Act entitles the dealer to refund of input tax paid on purchase of the goods which are exported as such or consumed or used in the manufacture of other goods that are exported as specified in Sub Section 1 of Section 18 of the Act. Therefore, the question which arose in Multimetals Limited (supra) is whether it is used in the manufacture and the Honourable Supreme Court was not dealing with definition of "input" under Cenvat or Central Excise Act. Further it is submitted that under Section 19(9)(iii) of the VAT Act, the word destroyed to mean the deliberate act on the part of the assessee and in this regard, reference is made to Form I and the Form does not speak of loss in the course of manufacture. Further it is submitted that the procedure under Section 19(16) of the VAT Act is not applicable to a case falling under Section 18 of the VAT Act and the order passed on a refund claim made under Form W is....
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....ircular is absoluteely without jurisdiction and without any authority of law and Section 19(9) of the VAT Act does not speak of manufacturing loss . 23. Heard the learned counsels appearing on behalf of the petitioners and the learned Special Government Pleader appearing on behalf of the State. The following questions fall for consideration in these batch of writ petitions. (1) Whether the impugned Circular No.22/2011 dated 20.10.2011 is bad in law for want of jurisdiction to issue the same under the provisions of the TNVAT Act and the effect of such Circular on the assessments made by the Assessing Officer? (2) Whether Section 18 of the TNVAT Act is a Scheme by itself or whether the benefit to a dealer under Section 18 is subject to the conditions prescribed under Section 19, more particularly Section 19(9) of the TNVAT Act ? (3) Whether in the given facts and circumstances would it be sufficient for a dealer who claims refund under Section 18(2) of the TNVAT Act of the input tax paid on the purchase of the goods, to show that those goods are used in the manufacture and nothing more ? Whether the Assessing Authority should embark upon a fact finding exercise to ascerta....
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....circulars and clarification, which would bind the Assessing Authorities and that the power to issue clarification and Advance Ruling was conferred on a State Level Authority comprising of the Commissioner of Commercial Taxes and two Additional Commissioners by insertion of Section 48A of the VAT Act from 27.09.2011. Therefore, it was contended that on the date on which the said clarification was issued, based on which, enhanced tax was demanded there was no enabling power to issue such clarification. In this regard, reliance was placed on the decision of the Division Bench of this Court in the case of Texx One Private Ltd., Vs Principal Commissioner and Commissioner of Commercial Taxes, Chepauk, Chennai and another (2012) 52 VST 377 (Mad), wherein, the Honourable Division Bench held that on the date when the circular was issued, the Commissioner did not have statutory powers to issue such circular and the net result is that the circular has no statutory force. After taking note of the decision of the Honourable Division Bench, it was observed that the circular issued by the Commissioner though stated to be without jurisdiction, having been issued by the highest officer of the depar....
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....under Section 18(3) of the VAT Act; (ii) Maintenance of the Consolidated refund register; (iii) Maintenance of Refund Register; (iv) the details which have to be verified while processing a refund claim in Form W; (v) manner in which export documents have to be examined; (vi) cases relating to rejection or revision of export value; (vii) prior sufferance of taxes; (viii) necessity to make Input and Output ratio analysis; (ix) Pointing out cases where two incorrect tax collection; excess tax collection or collection of tax in contravention of tax in contravention of the provisions of the Act by suppliers to exporters; (x) procedure to be followed to detect double claims of ITC; (xi) reversal of ITC on wastage by applying Section 19(9) of VAT Act; (xii) Refund on purchase of capital goods; (xiii) Declaration to be submitted in respect of deemed sale in the course of export under Section 5(3) of the Central Sales Tax Act, 1956; (xiv) Audit by the Enforcement Wing; (xv) Prior approval to be obtained from Deputy Commissioner (CT) or by Joint Commissioner; (xvi) the manner in which written communication has to be sent; (xvii) procedure for internal audit; (xviii) Reconciliation of refund....
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....nted or refused cannot be issued in the form of guideline or instruction to the Assessing Officer. 32. The Assessing Officer, the first fact finding authority, who examines the return or refund claim is bound to ensure that the parameters prescribed under the statute are complied with. He is duty bound to apply his mind independently and scrutinise the assessment order or process the refund. Upon failure to do so, it would be clear abdication of the power and duties enshrined on the Officer. On a reading of the circular, it shows that the past experiences were not too pleasant for the Department, as random checks reveal several bogus refund claims. This has prompted the Commissioner to issue guideline to his subordinate officers. While doing so the Commissioner has cautioned the Officers to act in accordance with the provisions of the statute and not quote the circular. Therefore, on the grounds raised by the petitioner, there is no necessity to quash the impugned circular as the same being non-statutory. Such a non-statutory guideline cannot transgress into the adjudicating power of the Assessing Officer or the Appellate Authority or refund authority under the provisions of the....
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.... to exercise his quasi-judicial powers. In any event there is no cause of action to challenge the impugned circular and such prayer made in one of the writ petitions in W.P.9276/2014 is rejected. 36. The Honourable Division Bench in the case of Pizzeria Fast Foods Restaurant (Madras) Pvt Ltd., Vs Commissioner of Commercial Taxes, Chennai and others [supra] noted that the circular issued by the Commissioner under Section 28-A of the TNGST Act is not binding on the assessing authority or the appellate authority, yet, the fact that since the Commissioner is a superior authority to the assessing officer or appellate authority cannot be overlooked, it would be impracticable to expect the subordinate authority to take a view contrary to the view expressed by the Commissioner. Therefore, the Division Bench held that the writ petition was maintainable even without exhausting alternative remedy. 37. The decision in the case of Ashok Lanka and another Vs. Rishi Dixit and others reported in (2005) 5 SCC 598 was cited by the learned counsel for the petitioner to contend that the circular was bad in law. On a careful reading of the said decision, it is seen that the matter arose under the....
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....te sale means a sale of any goods on which no tax is payable but credit for the input tax related to that sale is admissible. " "Section 18:- Zero-rating.- (1) The following shall be zero-rate sale for the purpose of this Act, and shall be eligible for input tax credit or refund of the amount of the tax paid on the purchase of goods specified in the First Schedule including capital goods, by a registered dealer in the State, subject to such restrictions and conditions as may be prescribed:- (i) A sale as specified under sub-section (1) or (3) of Section 5 of the central Sales Tax Act, 1956 (Central Act 74 of 1956); (ii) Sale of goods to any registered dealer located in Special Economic Zone in the State, if such registered dealer has been authorised to establish such units by the authority specified by the Central Government in this behalf ; and (iii) Sale of goods to International Organisations listed out in the Fifth Schedule. (2) The dealer, who makes zero-rate sale, shall be entitled to refund of input tax paid or payable by him on purchase of those goods, which are exported as such or consumed or used in the manufacture of other goods that are exported as specif....
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....the State, otherwise than by way of sale: Provided that if a dealer has already availed input tax credit there shall be reversal of credit against such transfer. (5) (a) No input tax credit shall be allowed in respect of sale of goods exempted under section 15 (b) No input tax credit shall be allowed on tax paid or payable in other States or Union Territories on goods brought into this State from outside the State. (c) No input tax credit shall be allowed on the purchase of goods sold as such or used in the manufacture of other goods and sold in the course of inter-State trade or commerce falling under sub-section (2) of section 8 of the Central Sales Tax Act, 1956. Central Act 74 of 1956. (6) No input tax credit shall be allowed on purchase of capital goods, which are used exclusively in the manufacture of goods exempted under section 15. (7) No registered dealer shall be entitled to input tax credit in respect of- (a) goods purchased and accounted for in business but utilised for the purpose of providing facility to the proprietor or partner or director including employees and in any residential accommodation; or (b) purchase of all automobiles including c....
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....enefit of input tax credit to such registered dealer who has claimed input tax credit based on such invoice, bill or cash memorandum from such date. (14) Where the business of a registered dealer is transferred on account of change in ownership or on account of sale, merger, amalgamation, lease or transfer of the business to a joint venture with the specific provision for transfer of liabilities of such business, then, the registered dealer shall be entitled to transfer the input tax credit lying unutilized in his accounts to such sold, merged, amalgamated, leased or transferred concern. The transfer of input tax credit shall be allowed only if the stock of inputs, as such, or in process, or the capital goods is also transferred to the new ownership on which credit has been availed of are duly accounted for, subject to the satisfaction of the assessing authority. (15) Where a registered dealer has purchased any taxable goods from another dealer and has availed input tax credit in respect of the said goods and if the registration certificate of the selling dealer is cancelled by the appropriate registering authority, such registered dealer, who has availed by way of input tax ....
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....it or refund of the amount of tax paid on the purchase of goods specified in the First Schedule including capital goods, by a registered dealer in the State, subject to restrictions and conditions prescribed. In Clause (i) to (iii) under Section 18(1) lists out the zero rated sales which are eligible for the benefit of input tax credit. Sub Section (2) of Section 18 speaks of entitlement of a dealer who makes zero-rate sale, be entitled to refund of input tax paid or payable by him on purchase of those goods, which are exported as such or consumed or used in the manufacture of other goods that are exported as specified in Sub-Section (1) of Section 18, subject to restrictions and conditions as may be prescribed. Sub Section (3) of Section 18 stipulates the period within which, the refund claim has to be made which is 180 days from the date of making zero-rate sale failing which such credit shall lapse to Government. 42. From the above, it is clear that to enable a dealer to avail a benefit under Section 18 of the VAT Act, the sale effected by him shall be a sale of any goods on which no tax is payable. The statute gives him an incentive to take credit of the input tax by way of ....
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.... While considering the design of the VAT Act, its concept, coverage, compulsory requirement to be complied with and other relevant details, it was pointed out that the essence of VAT is in providing set-off for the tax paid earlier and this is given effect through the concept of input-tax credit/rebate. While considering the expression in the manner prescribed , it was pointed out that the said expression has been used in several places in Section 19 and in several other places in TNVAT Act including Section 18(2) of VAT Act. Considering the said expression being liberally used under the TNVAT Act, it is held that the expression in the manner prescribed occurring in Section 3(3) shall be referable only to the manner prescribed in Section 19 and such expression makes it clear that input tax credit could be availed of in the manner prescribed and one such modality and the time frame is prescribed under Section 19(11) of the Act and it is not merely procedural. Therefore, it was pointed out that it is a settled provision of law that a person claiming benefit of exemption must show that he satisfies the eligiblity criteria and for the said purpose, the provision must be strictly constr....
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....by him on the purchase of goods under normal circumstances would be enjoyed by him as a credit, which is being granted to the registered dealer as a refund since there is no tax liability cast on him. Sub-Clause (i) to (iii) of Sub-Section (1) of Section 18 of the VAT Act speaks about types of zero rate sale which shall be eligible for input tax credit or refund of the amount of the tax paid on the purchase of goods specified in the First Schedule including capital goods, by a registered dealer in the State subject to such restrictions and conditions as may be prescribed. Therefore, for all practical purposes, the benefit which accrues to the registered dealer is in effect input tax credit and that will ripen into refund claim by the dealer under Sub-section (2) of Section 18. If such a reasoning is applied, then the resultant consequence is such input tax credit shall be available to the dealer subject to restrictions and conditions stipulated under Section 19 of the Act. Therefore, the contention raised by the learned counsel for the petitioners that Section 18 of the VAT Act is an independent provision and an island by itself for the VAT Tax regime and not dependant upon any con....
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....pper alloys. By referring to the Notification, which was subject matter of the said case, the learned counsel emphasised on the word are used employed in the said Notification and submitted that all that the petitioner has to establish for being entitled for refund under Section 18(2) of the TNVAT Act is to show that they used raw materials in the manufacture. However, this Court is not inclined to accept the submission for two reasons. Firstly, the Notification which was subject matter of consideration in the case of Multimetals (supra) was under the Central Excise Tariff Act, the scheme of which was entirely different and the purport and intent of the notification is different. In the cases on hand, we are not concerned with exemption provision, but statutory provision, as to whether it is contingent upon compliance of certain requirements since the benefit availed under the TNVAT is a set-off, it is a concession. However, the decision was rendered by interpreting Notification and the Honourable Supreme Court, while interpreting the Notification took note of the fact that if in the process of manufacture of pipes and tubes of copper and copper alloys out of copper and copper allo....
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....ourt in the case of A.L.Murugan Chettiar and another Vs. State of Tamil Nadu [(1983) 53 STC 227] and in the said case, the assessee contended that in the matter of estimated purchase value, the value of the quantity in terms of weight which had disappeared owing to driage or other reasons should not be taken note of. The Honourable Division Bench pointed out that if an assessee maintains correct accounts of purchases, then, even though after purchase, the raw cotton gets reduced in weight and therefore, what is termed as invisible loss occurs to the assessee, that subsequent development would have nothing to do with the determination of the purchase turnover at the time of purchase. It was further pointed out that even as there is no provision in the Act making allowance for driage or wastage in the manufacturing process of a commodity which is taxable at purchase point, even so, there cannot be an estimated allowance for driage or wastage in cases where purchase value has perforce to be estimated in the absence of correct data or figures in the assessees' accounts. 50. Therefore, the issues raised by the petitioner being questions of fact cannot be adjudicated in the writ p....
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....the VAT Act. 53. Section 18(1) of the Act stipulates that the eligibility for input tax credit or refund shall be subject to restrictions and conditions as may be prescribed. Similar expression is found in sub section (2) of Section 18. In my view, the restrictions and conditions found in Section 19 of the VAT Act, is the only provision, which deals with the manner in which input tax credit is admissible. Therefore, the dealer is bound to satisfy that his sale is a zero rated sale and that he is entitled for input tax credit as he has paid tax on purchases effected by him and those goods purchased have been exported as such or consumed or used in the manufacture of other goods and on establishing the same would be entitled to the credit subject to such restrictions and conditions as may be prescribed. 54. If we look at Section 19 of the VAT Act, there are various restrictions and conditions imposed. Sub Section (2) of Section 19 deals with input tax credit for purchase of goods made within the State from a registered dealer, which are for the purpose of the circumstances set out in Clauses (i) to (vi) under Section 19(2). Sub Section (3) of Section 19 deals with purchases of ....
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....ore, it is not sufficient for the registered dealer to merely state or show that the goods were used in the manufacture and there is nothing more to be done by him and he would be entitled to the entire credit of the tax paid by him on the input by way of refund. The said contention cannot be accepted in the light of the discussion made above. In such circumstances, the dealer is bound to prove that the circumstances set out in Section 19 of the VAT Act are not attracted, which places embargo on the right of the registered dealer to avail input tax credit and satisfy the Assessing Officer that none of the circumstances set out under Section 19 of the VAT Act prohibit the claim made by the dealer for which it is essential for the Assessing Authority to embark upon on fact finding exercise on each individual claim which may be unique and distinct. Therefore, the Assessing Officer has to conduct an exercise by which it is to be ascertained as to whether the representation made by the dealer is justified and is not hit by any any of the restrictions and conditions contained in Section 19 of the Act. 56. In all these cases, despite different products manufactured by the petitioners, ....
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....cture are to be established before the assessing officer by the dealer and to satisfy the assessing officer that loss of the goods purchased is not covered under any one or more of the contingencies under Section 19(9) of the Act. The Assessing Officers appear to be have been impulsive after issuance of the impugned guideline partly precipitated by the dealers since they did not avail opportunity granted by the Honourable Division Bench before whom they agreed to demonstrate their manufacturing process before their concerned Assessing Authority that there is no loss of material. Be that as it may, the earlier round of litigation did not decide the merits of the issue. Therefore, the same cannot be an embargo for the petitioners, who may be the members of the earlier writ petitioner association and in any event, there was no finding on the legal issues while deciding the earlier writ petitions or that matter in the Writ Appeal. Question Nos.3 and 4 are answered accordingly. 57. Question No.5:- Whether the respondent / assessing authorities were justified in adopting a uniform percentage as invisible loss and calling upon the dealer to reverse the Refund / Input Tax Credit availed....
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....for input tax as well as tax paid on previous purchases and the benefits which flow to a dealer on the introduction of VAT was that he is entitled to (i) a set-off will be given for input tax as well as tax paid on previous purchases. (ii) other taxes, such as turnover tax, surcharge, additional surcharge etc were abolished, (iii) rationalisation of the overall tax burden. (iv) general fall in the prices of products. (v) self-assessment procedure by the dealers themselves (vi) increase in transparency (vii) higher revenue growth. 59. Therefore, going by the object of the enactment, the Assessing Officer is bound to examine the refund claim under Section 18 in accordance with the procedure stipulated for availing input tax credit by applying Section 19 of the VAT Act and it is only then, the Authority can pass an order on a refund claim. Therefore, the processing of refund application under Form W is in effect akin to an assessment proceedings since the benefit which flows under claim in Form W, is in effect, the amount which the dealer avail as refund would be a credit if the transaction was not a zero rated sale. The learned counsel for the petitioners plac....
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.... refund has been sanctioned, it is final for all purposes and there is no procedure prescribed under the Act for reversing the refund sanction. This submission does not merit acceptance in the light of the reasoning given above that whatever refund sanctioned under Section 18(2) of the Act, which in effect a credit in the hands of the dealer is subject to the restrictions and conditions in Section 19 of VAT Act. If there is wrong availment of refund, furnishing of wrong information or any other matter, which ultimately leads to a conclusion that the refund ordered was incorrect or erroneous then, the Assessing Officer is entitled to direct the petitioner to reverse the same. Further more, the assessee has given an undertaking in Form W agreeing to refund the amount which was paid erroneously. It is submitted by the learned counsel for the petitioner that this undertaking is relatable only to information furnished in Form W and therefore, it does not empower the Assessing Officer to review the order passed under Sub Section 2 of Section 18. This contention also does not merit acceptance for two reasons. Firstly, Form W is a statutory form under Rule 11(2) of the VAT Rules and the sa....
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....gly Question No.6 is answered against the petitioners. 63. In the result, (1) the challenge to the impugned circular is held to be unnecessary since the circular is a non statutory circular and is in the nature of guideline and the prayer for quashing the circular is rejected. (2) Section 18 of the TNVAT Act is not an independent or a separate stand alone provision under the provisions of TNVAT Act but subject to other provisions of the Act including Section 19 of the VAT Act. (3) For the reasons assigned, it is not sufficient for a dealer claiming refund under Section 18(2) of the Act to show that he has paid input tax on the goods purchased; that those goods are used in the manufacture and nothing more but there is duty upon the dealer to satisfy the Assessing Authority that the claim is not hit by any of the restrictions or conditions contained under Section 19 of the VAT Act. In this regard, it is essential for the Assessing Authority to embark upon the fact finding exercise to ascertain the quantum of loss of the goods which were purchased on which tax was paid vis-a-vis the goods manufactured from and out of the goods purchased and to examine as to whether they fa....