2024 (10) TMI 1604 - HC - GST

Denial of refund of input tax credit debited by the petitioner as a pre-deposit - non-inclusion of the freight and pumping charges collected by the petitioner from its customers into taxable value of the Ready Mix Concrete (RMC) manufactured and supplied by the petitioner to its customers - HELD THAT - The amount of pre-deposit debited by the petitioner in the returns filed by the petitioner for the respective months for the Assessment Years 2015- 2016 from its input tax credit claimed under the Tamil Nadu Value Added Tax regime is now sought to be denied vide Impugned Intimations all dated 25.11.2021 invoking the Circular No.05/2015/MM3/15440/2013 dated 06.02.2015. The Court is of the view that refund of the aforesaid amounts cannot be denied, since the substantial questions of law now has been answered in favour of the petitioner in terms of the order passed in Tax Case (Revision) Nos.10 and 11 of 2013 dated 13.12.2018. Further, having accepted the pre-deposit of input tax credit through a debit in the VAT Returns and having considered the Revision Orders passed on 14.09.2021, it is not open for the Commercial Tax Department now to turn around and deny the refund stating that the petitioner had not complied with the Order dated 25.03.2015 passed by this Court. As per Section 142(6)(a) and (b) of the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017, the amounts paid as pre-deposit has to be refunded back - the Impugned Intimations all dated 25.11.2021 invoking the Circular No.05/2015/MM3/15440/2013, dated 06.02.2015 at this belated point of time seeking to deny refund are liable to be quashed and are accordingly quashed with consequential reliefs. The respondents are therefore directed to refund the amount to the petitioner within a period of thirty (30) days from the date of receipt of a copy of this order - Petition allowed.

Issues Involved:

1. Denial of refund of input tax credit debited as a pre-deposit.
2. Inclusion of freight and pumping charges in the taxable value of Ready Mix Concrete (RMC).
3. Compliance with the court's order regarding pre-deposit and refund.
4. Applicability of transitional provisions under the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017.

Issue-wise Detailed Analysis:

1. Denial of Refund of Input Tax Credit:
The petitioner challenged the denial of a refund of input tax credit debited as a pre-deposit for Assessment Years 2004-2005, 2005-2006, and 2006-2007. The petitioner had complied with the court's order dated 25.03.2015 by depositing the amount through input tax credit. However, the respondents, invoking a circular, denied the refund. The court found that the denial of refund was unjustified, especially since the substantial questions of law were decided in favor of the petitioner in a previous judgment dated 13.12.2018.

2. Inclusion of Freight and Pumping Charges:
The core dispute revolved around whether freight and pumping charges should be included in the taxable value of RMC. Initially, the petitioner's stance that these charges were post-sale activities was accepted, but later revised orders sought to include them. The Division Bench of the court, in its order dated 13.12.2018, ruled that such charges, when separately charged, cannot be included in the sale price. This decision was based on established precedents, including rulings by the Supreme Court.

3. Compliance with Court's Order:
The court had earlier directed the petitioner to deposit 10% of the tax amount, which the petitioner did by debiting from the input tax credit. The respondents argued that this did not constitute proper compliance. However, the court held that having accepted the pre-deposit through input tax credit, the respondents could not now deny the refund. The court emphasized that the petitioner had complied with the order, and the respondents' stance was inconsistent with the earlier acceptance of the deposit method.

4. Transitional Provisions Under TNGST Act, 2017:
The court addressed the applicability of transitional provisions under the TNGST Act, 2017. It highlighted that as per Section 142(6)(a) and (b), amounts paid as pre-deposit should be refunded in cash. The court noted that the TNGST Act, 2017, replaced the TNVAT Act, 2006, and the amounts debited under the VAT regime should be either refunded or adjusted under the new GST regime. The court concluded that the respondents' reliance on the circular to deny refund was inappropriate, given the statutory provisions favoring refund.

Conclusion:
The court quashed the impugned intimations dated 25.11.2021, which sought to deny the refund, and directed the respondents to refund the amount within thirty days. The writ petitions were allowed with consequential reliefs, affirming the petitioner's entitlement to the refund of the pre-deposited amounts.

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