TaxTMI 
TaxTMI 
2023 (9) TMI 1627
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...., within the State of Rajasthan? ii) Whether interest can be levied and charged, even though full amount of tax due from the dealer under the Act according to returns has been deposited and as such, interest on differential tax determined on reopened assessment could be validly and legally charged?" 2. As common issue is involved in all these STRs, with the consent of the parties, they were heard together and are now being decided by way of this common order. STR No. 13/2019 is taken as lead file to peruse the facts. 3. Brief facts leading to these STRs are that the petitioner-assessee is a manufacturer of various types of bearings used for automotive, industrial and railway purposes. The Anti-Evasion Authorities surveyed the business premises of the appellant on 23.08.2016 and found that the appellant has purchased DEPB / Duty Free Licenses / Duty Credit Scrip within the State and has claimed and availed the ITC of the tax paid on purchase of these intangible goods. The enquiry officer found that no ITC is available on these items if the same are not disposed off in accordance with Section 18 of the RVAT Act. Accordingly, a case of tax-evasion was made out and it wa....
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....Bench of Delhi High Court in the case of Jagriti Plastics Ltd. and Ors. vs. Commissioner of Trade and Taxes reported in (2015) 223 DLT 571. 5. Per contra, supporting the concurrent findings of the authorities below, learned counsels for the revenue submits that no question of law worth consideration arises in the present STRs. Learned counsel for the revenue further submits that as per scheme of Section 18 of the RVAT Act, the ITC is allowed only in cases as enumerated under clause (a) to (g) of sub-section (1). Since the goods in question, i.e. DEPB / Duty Free Licenses / Duty Credit Scrip, have been utilized against payment of the custom duty on imports of machinery/raw material, which does not fall under any of the clauses of Section 18 (1) of the RVAT Act and therefore the ITC was rightly disallowed. In support of his submissions, learned counsel for the revenue has placed reliance on Division Bench judgment of Madras High Court in the case of Sha Kantilal Jayantilal vs. The State of Tamilnadu reported in (2017) 97 VST 295 (Mad). Learned counsel for the revenue has also relied on Apex Court judgment of Jayam and Co. vs. Assistant Commissioner and Ors. reported in (2016) 15 S....
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.... India; or (g) being used in the State as capital goods in manufacture of goods other than exempted goods; However, if the goods purchased are used partly for the purposes specified in this sub-section and partly as otherwise, input tax credit shall be allowed proportionate to the extent they are used for the purposes specified in this sub-section. (2) The input tax credit under sub-section (1) shall be allowed only after verification of the deposit of tax payable by the selling dealer in the manner as may be notified by the Commissioner. ... (emphasis supplied)" 9. It is settled and undisputed that DEPB / Duty Free License / Duty Credit Scrip are 'goods' for the purpose of RVAT Act. The said legal position has been settled by the Hon'ble Supreme Court in Vikas Sales Corporation (supra) and Yasha Overseas and Ors (supra). 10. It is an admitted position that the petitioner-assessee, a registered dealer, had purchased the goods in question from another registered dealer after payment of VAT. Therefore, the petitioner-assessee has satisfied the first condition mentioned in Section 18 (1) of the RVAT Act. The goods in question were the....
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.... (v) a supply of goods by an unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; and (vi) a supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply shall be deemed to be a sale and the word "purchase" or "buy" shall be construed accordingly; Explanation.-Notwithstanding anything contained in this Act, where any goods are sold in packing, the packing material in such case shall be deemed to have been sold with the goods; (36) "sale price" means the amount paid or payable to a dealer as consideration for the sale of any goods less any sum allowed by way of any kind of discount or rebate according to the practice normally prevailing in the trade, but inclusive of any statutory levy or any sum charged for anything done by the dealer in respect of the goods or services rendered at the time of or before the delivery thereof, e....
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.... a dealer is entitled in respect of the purchase of goods shall be the amount of input tax arising in the tax period reduced in the manner described in sub-sections (4), (6) and (10) of this section. (4) Where a dealer has purchased goods and the goods are to be used partly for the purpose of making the sales referred to in sub-section (1) of this section and partly for other purposes, the amount of the tax credit shall be reduced proportionately." 19. There can be no doubt that the price of the goods imported has an element of customs duty paid on such goods. The component of customs duty is reduced to the extent of the usage by the Assessee of the DEPB scrips. The reduced customs duty is embedded in the resale price of the imported goods. Thus, the use of the DEPB scrips is for the purpose of the Assessee selling the imported goods. 'Usage' in this context has to be seen as a use that affects the price of the goods although it may not be used tangibly in the goods themselves. There is no warrant to limit the understanding of the word 'use' to an actual direct tangible or physical use in the imported goods. 20. It is possible in this cont....
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....n to provisions of MODVAT credit and CENVAT credit. Section 14 (1) (a) of the MPVAT Act stated where "goods purchased by a registered dealer from another registered dealer after payment of duty is used by the purchasing registered dealer or is consumed in the manufacturing or processing of something or used as a plant, machinery, equipment and parts in respect of goods then the final product would be entitled for input rebate." The High Court rejected the contention of the Department that the material on which input tax was paid should itself be sold and should not be further used in respect of anything for the making of a final product which is ultimately sold. 22. In Coca Cola India Pvt. Ltd. v. Commissioner of Central Excise Pune-III: 2009 (15) STR 657 (Bom.) it was held in the context of CENVAT credit that service tax paid on advertisement sales promotion and market research was admissible as credit for payment of excise duty on the soft drink concentrate particularly when such expenses formed part of the price of the final product on which excise duty was paid. In para 13 of the said judgement it was held "in order to avoid the cascading effect the benefit of CENVAT c....
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.... The Court finds no reason why in respect of the input tax credit provided under Section 9 (1) read with Section 9 (4) of the DVAT Act a similar approach should not be adopted. The usage by the Assessees, who are registered dealers, of the DEPB scrips purchased by them from another registered dealer after paying the input tax for reducing the incidence of customs duty should be held to constitute use of such DEPB scrip for the purposes of sale of the imported commodity. The DEPB scrip has contributed, if not directly then indirectly, to the price of the imported commodity sold by the Assessees in the market. There could be any number of intangibles that have an impact on the value of the final product like advertisement costs in respect of which input service tax credit may have been availed of, as was in the case of Coca Cola India Pvt. Ltd. (supra). All that is to be shown is that such input tax paid goods have contributed to the sale of the final product in some way directly or indirectly. 25. The Court also rejects the other contention of the DTT that input tax credit cannot be availed of unless the Assessees are themselves dealing in DEPB scrips. In other words, in or....
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....lysed the terms 'be used by him directly or indirectly' and allowed the input tax credit on the purchase of DEPB Scrip. But provisions of the RVAT Act, precisely as contained in section 18, are not identical to the section 9 of Delhi VAT Act, therefore, the said judgment cannot be applied in the cases under the RVAT Act. 14. On perusal of the provisions of various States about allowability of ITC it appears beyond any doubt that wherever any particular State intended to allow the ITC on DEPB for any use, the specific provision was made in their statutes. So, had the State Legislature any intent to allow input credit on purchase of DEPB/Duty Entitlement Scrips, which is subsequently used against payment of customs duty, the express provisions could have been incorporated. But the language of the section 18 does not provide any such availability of ITC. Therefore, it is held that ITC shall not be allowed on purchase of DEPB/Duty Entitlement Scrips when the same is used for payment of Customs duty. In the backdrop of the legal position discussed above, the AO has rightly disallowed the ITC and has rightly levied interest on non-deposit of the due tax. Therefore, the appellate....