2015 (12) TMI 178 - HC - VAT and Sales Tax

Refund claim - Tripura Incentive Scheme of 2002 read with section 28 of the Tripura Sales Tax Act read with rule 37 of the Tripura Sales Tax Rules 1976 - Held that -concession shall only be admissible to industrial units registered as small-scale industrial units by the Director of Industries Government of Tripura. The petitioner definitely is a small-scale unit. Sub-rule (1) of rule 37 provides that the Government may permit draw back set off or refund of an amount equal to the tax paid in respect of raw materials used in production. Subrule (3) clearly provides that the State Government may by notification in the Official Gazette specify the class or classes of goods which are to be treated as raw materials. Therefore the benefit under sub-rule (1) will only be in respect of those goods which are notified under sub-rule (3). The State Government has only issued notification under sub-rule (3) in respect of paraffin wax and not in respect of aluminium wire. No doubt the Additional Secretary of the Department of Industries and Commerce has recommended vide his communication dated 31st December 2004 that aluminium wire of less than 3 mm should also be included and notification in this regard should be issued but till such notification is issued by the State Government the benefit cannot be given - Decided against assessee.

Issues:
1. Refund of sales tax paid on purchase of raw materials under Tripura Incentive Scheme of 2002.
2. Interpretation of clause (15) of the Scheme.
3. Analysis of section 28 of the Tripura Sales Tax Act.
4. Examination of Rule 37 of the Tripura Sales Tax Rules, 1976.
5. Determination of eligibility criteria for tax refund under the rules.
6. Evaluation of the State Government's power to grant tax rebates.

Detailed Analysis:
1. The petitioner sought a refund of sales tax paid on the purchase of aluminium wire used as a raw material, citing the Tripura Incentive Scheme of 2002. The Scheme allowed for the refund of sales tax on raw materials used by small-scale industries in Tripura for manufacturing goods. However, the complete scheme was not presented in court, and the petitioner failed to demonstrate any financial hardship caused by not receiving the refund based on the scheme's promise.

2. The interpretation of clause (15) of the Scheme was crucial, defining "sales tax payable on raw materials" as the tax paid under the Sales Tax Act minus any admissible set off under the Tripura Sales Tax Act. The court emphasized that a petitioner relying on the Scheme must provide the complete scheme for proper assessment. The petitioner's failure to do so weakened their argument for the refund.

3. Section 28 of the Tripura Sales Tax Act empowered the State Government to grant draw back, set off, or refund of taxes paid on raw materials used in manufacturing goods in Tripura. This provision did not confer an automatic right to claim such benefits but vested discretion in the Government to decide on granting rebates based on specific circumstances.

4. Rule 37 of the Tripura Sales Tax Rules outlined the conditions for granting refunds, specifying that only small-scale industrial units registered by the Director of Industries, Government of Tripura were eligible. The rule allowed for refunds on taxes paid for raw materials used in production, subject to notification specifying the class of goods considered as raw materials.

5. The court noted that the State Government had only issued a notification for "paraffin wax" as a raw material eligible for refunds, not including aluminium wire. While a recommendation was made to include aluminium wire, until an official notification was issued, the benefit could not be extended. As the benefit was contingent on the Government's notification, the court found no merit in the petitioner's claim and dismissed the petition.

6. The judgment highlighted that the State Government had the authority to determine the scope and extent of tax rebates under the rules, emphasizing that the decision to grant such benefits and the manner of extension rested with the Government. The court's decision underscored the importance of adherence to legal provisions and official notifications in claiming tax refunds under the Tripura Sales Tax Act and Rules.

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