2017 (11) TMI 1876 - HC - VAT and Sales Tax

Reversal of input tax credit - levy of penalty - business of buying and selling export/import licences such as REP licence and DEPB licence etc. - petitioner's case is that these licences fall under Entry 70 of Part B of First Schedule to the TNVAT Act and taxable at the rate of 5% - it was stated that the petitioner cannot claim input tax credit unless he satisfies that the tax paid or payable was in respect of goods specified in the First Schedule - HELD THAT - This Court is of the considered view that the assessing officer should re-consider the matter afresh taking note of the factual issues, as to whether the assessment for the years 2007-08 to 2010-11 is barred by limitation, the advance ruling dated 25.07.2012 in ACAAR 14/2012-13, the clarification issued by the Commissioner of Commercial Taxes dated 28.06.2007 - Petition allowed by way of remand.

Summary

Issues involved:
Interpretation of tax law regarding input tax credit on DEPB licenses under the TNVAT Act, applicability of legal precedents, consideration of advance ruling, assessment period limitation.

Analysis:

Issue 1: Interpretation of tax law regarding input tax credit on DEPB licenses under the TNVAT Act
The petitioner, a registered dealer in export/import licenses, claimed input tax credit under Section 19(1) of the TNVAT Act on purchases of DEPB licenses. The respondent disputed this claim, arguing that DEPB licenses do not fall under the First Schedule of the TNVAT Act, making them ineligible for input tax credit. The respondent relied on a previous court decision to support their stance. The petitioner, however, contended that the DEPB licenses should be considered as goods under Entry 70 of Part B of the First Schedule. The petitioner also referenced a Delhi High Court decision and a clarification issued by the Commissioner of Commercial Taxes to support their argument.

Issue 2: Applicability of legal precedents
The respondent cited a court decision to assert that DEPB licenses are not eligible for input tax credit. The petitioner argued that this decision did not consider the specific provision in the TNVAT Act and should be deemed as per incuriam, making it non-binding. The petitioner also highlighted their participation in a personal hearing, where they presented their objections and arguments. The Court noted that the respondent failed to consider crucial aspects, such as the advance ruling under Section 48-A of the TNVAT Act, which should have been binding on the assessing officer.

Issue 3: Consideration of advance ruling and assessment period limitation
The petitioner raised the issue of assessment period limitation for the years 2007-08 to 2010-11, stating that the re-opening of assessment after five years was barred. However, the respondent did not address this point in the impugned orders. The Court emphasized the importance of re-considering the matter afresh, taking into account all factual issues, including the advance ruling, clarification by the Commissioner of Commercial Taxes, and the assessment period limitation. Consequently, the Court allowed the writ petitions, quashed the impugned orders, and remanded the matters to the respondent for fresh consideration after providing an opportunity for a personal hearing to the petitioner's representative.

This detailed analysis of the judgment highlights the key legal issues, arguments presented by the parties, and the Court's decision, providing a comprehensive overview of the case.