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2021 (3) TMI 235 - HC - VAT and Sales TaxRefund of Input Tax paid - Sales to 100% EOU - zero rated sale under Section 18 of the TNVAT Act, 2006 - HELD THAT - Section 18 of the TNVAT, Act 2006 is very clear. There are two options available under the scheme of Section 18. In respect of sale effected to 100% EOU, a dealer is entitled to adjust the Input Tax Credit or claim refund under sub clause (2) to Section 18. The petitioner has opted to adjust the Input Tax Credit. The petitioner has not opted to claim the refund of Input Tax Credit subject on the sale effected to 100% EOU under sub clause (2) to Section 18. The impugned orders passed by the respondent holding that the petitioner was not entitled to refund and consequently not entitled to adjust the Input Tax Credit, is not sustainable - the impugned orders to that extent is set aside leaving the other issue open for the petitioner to take it on appeal before the Appellate Court, if desired - petition allowed in part.
Issues:
Challenge to impugned orders for assessment years 2007-08 and 2008-09 regarding zero-rated sales to 100% EOU under Section 18 of TNVAT Act, 2006. Analysis: The petitioner challenged the impugned orders dated 13.01.2015 passed by the respondent for the assessment years 2007-08 and 2008-09. The petitioner contended that sales to 100% EOU are zero-rated sales under Section 18 of the TNVAT Act, 2006. Section 18(2) provides for a dealer making zero-rated sales to be entitled to a refund of input tax paid on goods exported or used in the manufacture of goods for export, subject to prescribed conditions. The respondent argued that the petitioner should have filed a refund claim under Section 18(2), while the petitioner asserted eligibility for input tax credit or refund under Section 18(1) for goods purchased, including capital goods. The court examined Section 18 of the TNVAT Act, 2006 and noted two options available to dealers. For sales to 100% EOU, a dealer can either adjust the input tax credit or claim a refund under Section 18(2). In this case, the petitioner chose to adjust the input tax credit and did not opt for a refund under Section 18(2). Consequently, the court found the respondent's decision denying the refund and input tax credit adjustment to be unsustainable. The impugned orders were set aside, allowing the petitioner to appeal the remaining issue before the Appellate Court. As a result, the writ petitions were partly allowed, granting a grace period of 30 days for the petitioner to file an appeal before the Appellate Deputy Commissioner. The grace period was provided due to the expiration of the initial appeal deadline. No costs were imposed, and the connected Miscellaneous Petitions were closed.
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