2024 (2) TMI 297 - HC - VAT and Sales Tax

Rejection of Refund of unutilised Input Tax Credit (ITC) - HELD THAT - The petitioner has made the refund claims in time and cannot be faulted for the delayed processing of such claims by the respondent. If such claims were not processed on account of Circular No.22, which was superseded by Circular No.12, at a minimum, the limitation period should be reckoned from the date of such Circular. For such reason, the impugned order is unsustainable. Notwithstanding the above conclusion, the refund claim has to be examined and determined based on documents pertaining to the availing of ITC as well as the export of products on zero rated basis. This factual determination cannot be undertaken by this Court. For such purpose, it becomes necessary to remand this matter. Petition disposed off by way of remand.

Summary

Issues involved: The rejection of refund claim of unutilised Input Tax Credit (ITC) under the Tamil Nadu Value Added Tax Act, 2006 (the TNVAT Act) and the applicability of Circular No.22/2011 and Circular No.12/2018 issued by the Commissioner of Commercial Taxes.

Summary:

Issue 1: Rejection of refund claim of unutilised ITC
The petitioner, a manufacturer and exporter, claimed refund of unutilised ITC on capital goods under the TNVAT Act due to zero-rated exports. The rejection of the refund claim was based on Circular No.22/2011, which was later clarified by Circular No.12/2018 allowing such refunds. The petitioner argued that the rejection was unwarranted as Circular No.12 superseded Circular No.22, and the assessing officer was now able to process refund claims.

Issue 2: Applicability of limitation period
The Additional Government Pleader contended that the petitioner did not make the refund claim within the specified 180-day period from the date of zero-rated sale, as required by Section 18(3) of the TNVAT Act. He also referred to Section 27 of the TNVAT Act, stating that the six-year period prescribed therein is the outer limit for revising assessments. Therefore, he argued that the rejection of the refund claim was justified based on these provisions.

Court's Decision:
The High Court observed that the petitioner had made refund claims within the specified time limit and could not be faulted for the delayed processing of such claims by the respondent. The Court noted that Circular No.12 superseded Circular No.22, and the refund claims on capital goods were not processed due to the earlier circular. Consequently, the Court held that the rejection of the refund claim was unsustainable.

Conclusion:
The impugned order rejecting the refund claim was quashed, and the matter was remanded for reconsideration on merits. The assessing officer was directed not to consider the issue of limitation, and the refund claim was to be decided within a maximum period of two months after providing a reasonable opportunity to the petitioner. The writ petition was disposed of with no order as to costs.