2009 (10) TMI 848 - HC - VAT and Sales Tax

Disallowance of refund claim of tax paid by him at 12.5 per cent as against four per cent chargeable thereon - Held that - We do not accept the submission of the learned Additional Government Pleader that the petitioner, who is a purchaser of the capital goods, is not entitled to have the benefit of total refund of the amount. The provisions of section 18(2) of the Act has to be given its full thrust and consequently, reject the plea of the learned Additional Government Pleader. In the circumstances, the claim of the petitioner as regards the refund of tax without any reduction has to be accepted. Consequently, all the writ petitions stand allowed as far as this aspect is concerned.

Issues:
1. Disallowance of claim of refund of tax paid at 12.5% instead of 4%.
2. Input tax credit on "paper board" used for exported shoes.
3. Restriction of refund claim without proper adjudication.
4. Interpretation of sections 18(1) and 18(2) of the Tamil Nadu Value Added Tax Act, 2006.
5. Dispute over entitlement to refund under section 18(2) of the Act.
6. Assessment periods from January 2007 to September 2007.
7. Legal standing of the petitioner as a registered dealer in leather goods.

Analysis:

1. The primary issue in the writ petitions concerns the disallowance of the petitioner's claim for a refund of tax paid at a rate of 12.5% instead of the chargeable 4%. The petitioner, engaged in the business of leather goods export, argued that the tax paid on raw materials was wrongly appropriated towards a penalty under section 42 of the Act. The petitioner contended that the respondent should refund the excess tax paid, citing section 18(2) of the Act. The respondent, however, maintained that the petitioner could not claim a full refund as the tax paid in excess was a matter between the purchaser and the seller. The court analyzed section 18(1) and (2) of the Act, emphasizing the dealer's right to a refund for goods exported or used in manufacturing exported goods, and ruled in favor of the petitioner, directing the full refund without any adjustment.

2. Another issue raised in specific writ petitions related to the assessment of input tax credit on "paper board" used in exported shoes. The court decided that this matter should be addressed by the authorities under the Act and permitted the petitioner to file revisions within a specified timeframe. Consequently, the impugned orders regarding tax refunds were set aside, with certain writ petitions partly allowed and others fully allowed, without imposing any costs.

3. The judgment delved into the interpretation of sections 18(1) and 18(2) of the Act, highlighting the entitlement of a dealer making zero-rated sales to claim a refund of input tax paid on exported goods. The court rejected the contention that only the remitter of tax could claim a refund, emphasizing that the petitioner, as a purchaser who paid tax at a higher rate, was eligible for a full refund. The court underscored the importance of section 18(2) in granting refunds without reductions, dismissing arguments that sought to limit the scope of the provision.

4. Regarding the assessment periods from January 2007 to September 2007, the court addressed the petitioner's status as a registered dealer in leather goods, emphasizing the petitioner's right to claim refunds under the Act. The judgment concluded by allowing certain writ petitions, permitting revisions on specific issues, and closing all related miscellaneous petitions.

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