2022 (12) TMI 964 - HC - VAT and Sales Tax

Refund of input tax credit (ITC) - claim of ITC had been rejected on the ground that such refund would have to be tested on the anvil of Section 19 of the Act that sets out certain conditions there for - HELD THAT - The matter was adjourned on 29.11.2022 after directing the learned Additional Government Pleader, who appears for the State, to produce the records relating to and culminating into MoU dated 07.07.2008, entered into between the State of Tamil Nadu and the petitioner. The direction was given specifically to understand the role played by the Commercial Taxes Department in such matters. Today, letter bearing No.7916/C1/2021-2 dated 01.12.2022 is placed before me wherein the Secretary to Government conveys to the Principal Secretary/Commissioner of Commercial Taxes Department the position that refund is liable to be granted by the Commercial Taxes Department under MoU dated 07.07.2022, without reference to the provisions of the law relating to ITC. Mr.Prasanth Kiran, learned Government Advocate, would convey that the Commercial Taxes Department accedes to this position. Nothing further survives in these matter and these writ petitions are allowed.

Summary

Issues:
Refund of input tax credit (ITC) under the Tamil Nadu Value Added Tax Act, 2006 related to a memorandum of understanding (MoU) for an ultra mega power project.

Analysis:
The writ petitions revolved around the petitioner's claim for the refund of input tax credit (ITC) under the Tamil Nadu Value Added Tax Act, 2006, arising from a memorandum of understanding (MoU) with the Government of Tamil Nadu for establishing an ultra mega power project in SIPCOT. The MoU specified incentives, including the refund of ITC for purchases made in Tamil Nadu for the project. The refund was contingent upon specific conditions, such as the nature of purchased commodities and the absence of output VAT-based incentives for suppliers or manufacturers in the VAT chain. The petitioner's refund claims were subjected to scrutiny based on Section 19 of the Act, leading to restrictions on the granted refunds, with the petitioner accepting some limitations.

The detailed analysis of the refund claims presented a breakdown of amounts claimed, allowed, and rejected for multiple years, highlighting specific reasons for rejection. The rejection reasons included vendor claims, excess claims beyond specified limits, ineligible capital goods claims, and claims falling outside the 90-day limit under Section 19(11) of the TNVAT Act. The tabulated data provided a comprehensive overview of the contested refund amounts, categorizing them based on different criteria and referencing specific sections of affidavits and impugned orders for clarity.

During the proceedings, the Court directed the Additional Government Pleader to produce records related to the MoU to understand the Commercial Taxes Department's role. Subsequently, a letter clarified that the refund obligation under the MoU was independent of ITC law provisions, leading to the Government Advocate confirming the department's agreement to grant refunds as per the MoU terms. Consequently, the Court allowed the writ petitions, as no further issues remained, directing prompt payment of refunds without imposing costs.