2022 (7) TMI 650 - HC - VAT and Sales Tax

Refund of Input Tax Credit - export sales - zero rated sales - delay in filing of Form W - Section 18(3) of the Act read with Rule 11(2) of the VAT Rules, 2007 - HELD THAT - Section 19(11) grants a benefit to the assessee stating that if an assessee has failed to set-off ITC in respect of output tax liability in any month, then, he shall have the benefit of an extended time limit for such claim, that is, before the end of financial year or before 90 days from the date of purchase, whichever was later, to make such claim - the claim, once made, would have an impact on the quantification of turnover itself and cannot be equated to a claim for refund. Assessees are granted the benefit of ITC as a set-off against liability and such claim would have a substantial impact upon the computation of tax liability. It was thus necessary for an assessee to exercise this right within the time granted by statute. In the event the timeline had been missed, a further extension of time was granted under Section 19(11). An assessee who misses even the extended timeline had indeed missed the benefit of ITC availment and the returns of the assessee as filed, would be taken to be final. The strict application of the timelines under the Act will not be applicable, particularly, in a situation where the assessee concerned, is otherwise entitled in law, to the same. The filing of the form claiming refund cannot be equated to claim of ITC itself which would have an impact on the quantification of turnover itself. Thus, and for the reasons set out in the preceding paragraphs, the reliance placed by revenue upon the case of ALD Automotive Pvt. Ltd. does not further its case in the present matter. The writ petition is allowed.

Summary

Issues:
Claim for refund of Input Tax Credit (ITC) filed belatedly under TNVAT Act, 2006.

Analysis:
The petitioner, a private limited company engaged in export sales, filed Form-W for refund of ITC beyond the prescribed 180 days. The delay in filing Form-W was less than a month but was not considered fatal to the claim, citing a previous judgment allowing refund despite a similar delay. The court emphasized that procedural requirements should not hinder a substantive claim for refund, especially when the entitlement to ITC is not disputed.

The court noted that the petitioner met all conditions for refund eligibility, being an exporter with zero-rated turnover and timely filing of returns. The assessments were deemed completed based on the filed returns, including the refund component. The government advocate tried to distinguish the case by citing a Supreme Court judgment on the mandatory timeline for claiming ITC, but the court found it inapplicable to the present scenario.

The court clarified that the case did not involve a claim for utilizing ITC against output tax liability but a refund of accumulated ITC. It emphasized that the entitlement to ITC was undisputed, and the strict timelines under the Act should not apply when the assessee is legally entitled to the refund. The court rejected the revenue's reliance on previous judgments challenging ITC claims, stating that the filing of a refund claim should not be equated with the claim of ITC itself.

Despite the pending appeal of a related case, the court allowed the petitioner's claim for refund, emphasizing the absence of a stay order. The court directed the expeditious payment of the refund within four weeks from the order's issuance, with no costs imposed. The writ petition was allowed, and the connected Miscellaneous Petition was closed, concluding the judgment.