2017 (9) TMI 1110 - HC - VAT and Sales Tax

Interpretation of statute - refund - reversal of input tax credit - Section 19 (2) (v) of the Tamil Nadu Value Added Tax Act, 2006 - Held that - it appears that the State is in the process of preferring Appeals by re-presenting the Appeal papers and the Appeals are yet to be numbered. The settled legal position being that, mere pendency of an Appeal without interim order will not amount to the grant of stay of the order passed by the Lower Court or Lower Forum - In the instant case, it appears that the Appeals filed by the State are yet to be numbered. Therefore, this Court is inclined to issue appropriate direction in this Writ Petition, however, leaving it open to the respondents to pursue their Appeal in the meantime. Similar issue decided in the case of M/s. Everest Industries Limited Versus The State of Tamil Nadu, The Deputy Commissioner (CT) (FAC) 2017 (3) TMI 279 - MADRAS HIGH COURT , where it was held that A plain reading of the provisions of sub-section (1) and sub-section (2) of Section 19 of the 2006 Act would show that, as long as specified goods, which suffer tax are used for any of the purposes set out in clauses (i) to (vi) of sub-section (2) of Section 19, the assessee should be able to claim the ITC, with a caveat in so far as clause (v) is concerned - the respondent directed to take note of the decision of the Court in M/s. Everest Industries Ltd. s case and pass decision on merits - petition allowed by way of remand.

Summary

Issues:
1. Claim for refund of input tax credit reversed for a specific period.
2. Interpretation of proviso to Section 19(2)(ii) of TNVAT Act.
3. Appeal filed by the State against a previous decision.

Analysis:
1. The petitioner, a registered dealer under TNVAT Act seeking a Writ of Mandamus for a refund of input tax credit reversed for the period November 2013 to March 2015 based on a previous court decision. The court considered the law laid down in a specific case involving the interpretation of proviso to Section 19(2)(ii) of the TNVAT Act.

2. The court analyzed Section 19 of the TNVAT Act and held that a dealer is entitled to claim input tax credit for tax suffered inputs purchased within the state from a registered dealer and used for specific purposes outlined in the Act. The proviso to Section 19(2) limits the availment of input tax credit in certain scenarios, particularly in the case of inter-state trade or commerce. The court clarified that the limitation provided in the proviso applies only to specific purposes and not to all purposes outlined in the Act.

3. The State had filed appeals against a previous decision, but the appeals were yet to be numbered, indicating that they were in the process of being pursued. The court noted that the mere pendency of an appeal does not automatically stay the order passed by the lower court. In this case, the court directed the respondents to consider the petitioner's representation for refund in light of the previous court decision and pass appropriate orders within a specified timeframe, allowing the State to pursue its appeal simultaneously.

This judgment clarifies the entitlement to input tax credit under the TNVAT Act, the limitations imposed by the proviso to Section 19(2), and the implications of pending appeals on refund claims.