TaxTMI 
TaxTMI 
TaxTMI 
2020 (2) TMI 680
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....t the petitioner also partly utilises the imported plastic granules for manufacture of plastic products such as plastic bottles et cetera. 4. After the petitioner filed monthly returns for the respective assessment year and self-assessment were completed under Section 22 (2) of the Tamil Nadu VAT Act, 2006, the petitioner was issued with preassessment notices dated 15.6.2015. 5. In the notices issued to the petitioner it was observed that as per the clarification issued by the Commissioner of Commercial Taxes in Ref.No.VAT Cell/31956/2007 (VCC No. 940) dated 25.7.2007 no Input Tax Credit is eligible on purchase of DEPB under section 19 (2) (i) of the TN VAT Act, 2006 as if they are utilising the same for the purpose sale of DEPB and as per section 19 (2) of the said Act, no input tax credit is eligible on purchase of DEPB license, as if they are utilised for any other purpose. Hence it was proposed to reverse the credit availed on VAT paid on DEPB by the petitioner. It was also proposed to impose a penalty under Section 42(3) of the Act. 6. The petitioner replied to the respective notices by its reply dated 03.08.2015 for the Assessment Year 2012-2013 and reply dated 04.08.2015....
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.... decision the Hon'ble Supreme Court in A.R. Antulay versus RS Nayak (1998) 2 SCC 602 decisions which are per incurriam deserves to be ignored. She submits that per incurriam are those decisions given in ignorance or forgetfulness of some inconsistent statutory provisions or of some authority binding on the court concerned, so that in such cases some part of the decision or some step in the reasoning on which it is based, is formed on that account to be demonstrably wrong. 14. Learned counsel also refers to the decision of the Hon'ble Supreme Court rendered in and Bhargavan Pillai versus State of Kerala 2004 SC 2317 when it was held that views expressed without analysing the statutory provisions cannot be treated as a binding precedent and has to be treated as having been rendered per incurriam. Learned counsel also relies on the decision of the Division Bench of this Court rendered in Philips Jayasingh Versus the Joint Registrar of Cooperative Societies and Others 1992 to MLJ 309. 15. Per contra, learned counsel for the respondent submits that the impugned order is well reasoned and requires no interference. It is further submitted that the petitioner has an alternate remedy by w....
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....g out of these Rules. Under this rule the only instruction that the Board can issue is that relating to administrative matters; otherwise that rule will have to be considered as ultra vires Section 35 of the Act.'' 20. That apart the powers which were vested with the Commissioner of Commercial Taxes under the provisions of the TNGST Act, 1959 to issue such clarification were no longer available under the provisions of the Tamil Nadu VAT Act, 2006. Such powers could be exercised only under Section 48 A by an Advance Ruling Authority on an application. Therefore, the clarification dated 25.7.2007 of the Commissioner of Commercial Tax has no binding force of law under the changed scenario. 21. As an assessing officer, the respondent ought to independently come to a conclusion whether the provisions of the Tamil Nadu VAT Act, 2006 were to be invoked in the facts and circumstances of the case or not. Therefore, initiation of proceedings vide notices dated 15.6.2015 prima facie appears to be ill conceived and proceeds on a wrong assumption of jurisdiction by the respondent. 22. Since the impugned order has been passed, the issue appears to be covered by the decision of the Di....
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.... (iv) use as capital gods in the manufacture of taxable gods. (v) sale in the course of inter-State trade or commerce falling under sub-section (1) of section 8 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956); ] (vi) Agency transactions by the principal within the State in the manner as may be prescribed. 27. The expression re-sale in clause (i) to Sub Section 2 to Section 19 facilities a registered dealer to use input tax for re-sale of goods. There is no restriction that input tax credit availed has to be used for sale/re-sale of the same product on purchase of which credit was availed. It merely facilitates are registered dealer to utilize such input tax credit in case of re-sale of one or more of the goods. There is no restriction or one to one co-relationship between the credit availed and its utilization. 28. Further, as per the definition of "input" in Section 2(23) of the Tamil Nadu VAT Act, 2006, "input" means any goods including capital goods purchased by a dealer in the course of his business. The expression " input tax" has been defined in Section 2 (24). It means the tax paid under this Act (TNVAT, Act 2006) by a registered dealer to another registere....
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....saction in connection with, or incidental or ancillary to such trade, commerce, manufacture, adventure or concern. 33. It must be borne in mind that the provisions of the Tamil Nadu VAT Act, 2006 were designed to reduce the cascading effect on the output tax by allowing adjustment of input tax credit on the tax paid on the inputs and therefore input tax paid on inputs which go on to enrich final product whether to be sold as such or after value addition on account of manufacturing/processing or by way re-sale are to be set off in terms of Section 3 (3) of the Tamil Nadu VAT Act, 2006. This is the avowed objective behind enacting Section 19 of the Tamil Nadu VAT Act, 2006. 34. However, the decision of the Division Bench of this Court in Sha Kantilal Jayanthilal vs. State of Tamil Nadu 2016(339) ELT 520 seems to indicate that input tax credit cannot be availed on VAT paid on the purchase of DEPB Scrips from the open market cannot be utilized for discharging VAT liability on the final product. 35. There an identical issue arose. The notice was issued for reversal of ITC claim for the purpose of DEPB to the extent they were used for their own purposes.The Assessing Officer thus conf....
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....at DEPB licences are not included in any of the parts namely Part A, Part B and Part C. Therefore, the goods in relation to which, the petitioner claims input tax credit namely DEPB licences, despite coming within the purview of the expression 'goods' under Section 2(21), do not constitute goods specified in the First Schedule. Hence,Section 19(1)has no application. 33. DEPB licences do not even fall under any of the categories mentioned in Section 19(2). The case of the petitioner does not even fall under Sub-Section (3) or Sub-Section (4) of Section 19. Therefore, our answer to the first question of law would be that the Department was right in denying the benefit of input tax credit in respect of the duty paid by the petitioner on the purchase of DEPB licences, despite the fact that these licences constitute goods within the meaning of Section 2(21). 34. Despite the fact that DEPB licences are goods, they are certainly different and distinct from the goods that can be imported on the strength of those licences. These licences confer a right upon the licensees to import goods at some concession. It is only the goods that are imported on the strength of these DEPB li....
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....on 19, each of which serves a different purpose. While Sub-Section (2) gives a list of purposes for the purchase of goods within the State, which would make a registered dealer entitled to input tax credit, Sub-Section (3) speaks about a similar entitlement in so far as the purchases of capital goods are concerned. Sub- Sections (5) and (6) indicate the circumstances, under which, the input tax credit cannot be allowed. 39. But, the entitlement of a registered dealer to input tax credit, does not arise solely out of Sub-Section (2) of Section 19. It arises actually out of Sub-Section (1) of Section 19. But, since Sub-Section (1) covers all types of purchases of all types of goods specified in the First Schedule by all types of registered dealers, it is generic in nature. Out of such generic entitlement stipulated in Sub-Section (1), the statute carves out- (i) certain purchases made for the purposes specified in Sub- Section (2) within the State (ii) certain purchases of capital goods under Sub-Section (3) (iii) certain purchases, made for purposes indicated in Sub- Section (4), etc. 40. Therefore, entitlement, non-entitlement, etc., are covered with reference to specific....
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....e of the Tamil Nadu VAT Act, 2006, the view expressed in the above judgment that DEPB was not liable to tax under 1st Schedule of the Tamil Nadu VAT Act, 2006 may require a re-look by a Full Bench of this Court on reference. 44. Similarly, the observation in paragraph 36 of the Division Bench that the assessee was claiming the benefit under 19(2) after utilizing DEPB for the purpose of payment of import duty also appears to be a double benefit to the assessee requires a re-look. 45. It must be remembered that DEPB Scrips were given by the Joint Director of General of Foreign Trade as an export incentive to an exporter under the Export Import Policy. Instead of giving cash refund on exports, the Central Government through the Minsitry of Commerce & Trade gave it in the form of credit of duty in the DEPB Scrips/licence which could be used for discharging the Customs duty at the time of import of goods. Such DEPB Scrips/licence could be either used by the exporter himself in whose name such scrips/licence were issued as an export incentive or it can be sold in the open market to be purchased by person like the petitioner like REP Licence. 46. Nevertheless, at the time of import, th....