2015 (9) TMI 829 - HC - VAT and Sales Tax

Benefit of Set-off/input tax paid Whether dis-allowance of appellant s claim for Input Tax Rebate under Section 14 of MP VAT Act, 2002 in respect of Input Tax paid on cotton seeds purchased and sale of by-product oil cake is proper Held that - on going through order passed by in M/s. Shreeram Agro Industries v. Commissioner of Commercial Tax 2015 (8) TMI 959 - MADHYA PRADESH HIGH COURT , court of view that question, involved has already been answered in favour of appellant-assesse In circumstances, appeal allowed in terms of order holding that assesse is entitled to get benefit of set off / Input Tax paid on entire amount of tax paid on purchase of raw material and principle of proportionate liability cannot be invoked Appellant shall be entitled for refund of tax, in accordance with law Decided in favour of Appellant.

Summary

Issues involved: Interpretation of Section 14 of the MP VAT Act, 2002 regarding Input Tax Rebate on cotton seeds purchased for manufacturing cotton seed oil and the by-product oil cake.

Detailed Analysis:

1. Interpretation of Section 14 of the MP VAT Act, 2002:
The judgment revolves around the interpretation of Section 14 of the MP VAT Act, 2002, specifically concerning the Input Tax Rebate on cotton seeds purchased for the manufacturing of cotton seed oil and the by-product oil cake. The appellant challenged the disallowance of their claim for Input Tax Rebate under Section 14. The Division Bench at Principal Seat, Jabalpur, relied on a judgment from Gwalior and ruled in favor of the appellant, stating that the appellant is entitled to the benefit of set off/Input Tax paid on the entire amount of tax paid on the purchase of raw material. The principle of proportionate liability was deemed inapplicable in this scenario.

2. Application of Precedent Judgments:
The judgment highlights the reliance placed on previous judgments by the Division Bench at Jabalpur and Gwalior. The judgment passed by the Division Bench at Gwalior in the case of Ruchi Soya Industries Limited v. State of MP & others was crucial in determining the outcome of the present case. The judgment in VATA No.08/2013, where a similar issue was addressed, was also instrumental in the decision-making process. The consistent interpretation of the law in previous cases played a significant role in resolving the matter in favor of the appellant.

3. Entitlement to Refund:
The judgment concludes by granting relief to the appellant, stating that the appellant is entitled to a refund of the tax paid. The appellant is directed to receive the refund in accordance with the law within a specified timeframe of six months. Additionally, compliance with the directive to refund the tax within three days is emphasized, ensuring timely and efficient resolution of the matter in favor of the appellant.

In essence, the judgment clarifies the interpretation of Section 14 of the MP VAT Act, 2002 regarding Input Tax Rebate on specific raw materials, ultimately ruling in favor of the appellant and granting them the entitlement to a tax refund as per the law. The application of precedent judgments and the rejection of proportionate liability principles were pivotal in the decision-making process, ensuring consistency and fairness in the application of tax laws.