2019 (7) TMI 1830 - HC - VAT and Sales Tax

Refund of Input Tax Credit - Zero rated sales - refund rejected on the ground that Form-W was filed beyond the statutory period of 180 days - whether the prescription of 180 days is to be mandatorily applied or is only directory? - HELD THAT - The comprehensive monthly returns filed by the petitioner admittedly contains inter alia all particulars in relation to the zero rated transactions. The format of monthly returns in Form-I contains Annexure-4 wherein the petitioner has to set out details of the transaction of zero rated sales. This will be available on monthly basis before the Assessing Authority and as such the requirement to file Form-W is only to be for the convenience of the authority to receive the particulars of the claim by way of a consolidated statement. The decision in the case of SARA LEATHERS VERSUS COMMERCIAL TAX OFFICER TAMBARAM I ASSESSMENT CIRCLE CHENNAI 2009 (10) TMI 848 - MADRAS HIGH COURT where the Court considered the disallowance of the claim of the petitioner for refund of tax paid by it at 12.5 % as against 4.5% chargeable notwithstanding there was a dispute raised in the assessment thereof. The Court held that such dispute would not stand in the way of the refund sought. The petitioner is permitted to seek refund/adjustment of the amount of credit which shall be considered by the Assessing Authority after hearing it within a period of two weeks from date of receipt of such request - petition allowed - decided in favor of petitioner.

Summary

Issues:
Refund of Input Tax Credit on zero-rated sales under Section 18 of the Tamil Nadu Value Added Tax Act, 2006.

Analysis:
The petitioner, a dealer in granite, purchased commodities from Tamilnadu Minerals Limited (TAMIN) and sold them domestically and for export. The petitioner filed monthly returns with details of zero-rated sales under Section 18 of the Act, seeking a refund of Input Tax Credit. However, the petitioner filed Form-W for the refund beyond the statutory 180-day period, leading to the rejection of the refund claim by the respondent based on Section 18(3) of the Act. The respondent argued that the 180-day period is mandatory, and non-compliance results in the lapse of credit to the Government.

The petitioner relied on a previous court order in a similar case to support their position. The Additional Government Pleader, representing the respondent, defended the rejection of the refund claim, emphasizing the strict adherence to the 180-day limit as per Section 18(3) of the Act. Both parties presented their arguments before the court, leading to a crucial question regarding the mandatory nature of the 180-day period for seeking refunds on zero-rated sales.

The court examined the provisions of Section 18 of the Act, which outline zero-rated sales eligible for Input Tax Credit or refund, along with the conditions for claiming such refunds. The court noted that the respondent did not dispute the classification of the transactions as zero-rated sales. The judge opined that the requirement to file Form-W within 180 days is not mandatory but rather for the convenience of the authority to receive consolidated claim particulars. Citing a previous case, the judge highlighted that disputes over tax rates should not hinder legitimate refund claims, especially when the classification of transactions is undisputed.

In light of the above analysis, the court quashed the impugned orders and allowed the petitioner to seek refund/adjustment of the credit amount, subject to assessment by the Authority within two weeks of the request. The court ruled in favor of the petitioner, emphasizing the importance of considering the substance of the claim over technicalities. The writ petitions were allowed with no costs, and connected miscellaneous petitions were closed as a result of the judgment.