2017 (9) TMI 1242 - HC - VAT and Sales Tax

Interpretation of statute - refund - reversal of input tax credit - Section 19 (2) (v) of the Tamil Nadu Value Added Tax Act, 2006 - Held that - it appears that the State is in the process of preferring Appeals by re-presenting the Appeal papers and the Appeals are yet to be numbered. The settled legal position being that, mere pendency of an Appeal without interim order will not amount to the grant of stay of the order passed by the Lower Court or Lower Forum - In the instant case, it appears that the Appeals filed by the State are yet to be numbered. Therefore, this Court is inclined to issue appropriate direction in this Writ Petition, however, leaving it open to the respondents to pursue their Appeal in the meantime. Similar issue decided in the case of M/s. Everest Industries Limited Versus The State of Tamil Nadu, The Deputy Commissioner (CT) (FAC) 2017 (3) TMI 279 - MADRAS HIGH COURT , where it was held that A plain reading of the provisions of sub-section (1) and sub-section (2) of Section 19 of the 2006 Act would show that, as long as specified goods, which suffer tax are used for any of the purposes set out in clauses (i) to (vi) of sub-section (2) of Section 19, the assessee should be able to claim the ITC, with a caveat in so far as clause (v) is concerned - the respondent directed to take note of the decision of the Court in M/s. Everest Industries Ltd. s case and pass decision on merits - petition allowed by way of remand.

Summary

Issues:
- Refund of input tax credit reversed under TNVAT Act from November 2013 to March 2015.

Analysis:
1. Refund of Input Tax Credit Reversed:
- The petitioner, a registered dealer under TNVAT Act, sought a Writ of Mandamus for the refund of input tax credit reversed for the period November 2013 to March 2015. The petitioner relied on a previous judgment (M/s. Everest Industries Ltd. Vs. State of Tamil Nadu) which interpreted the proviso to Section 19(2)(ii) of the TNVAT Act.
- The Court in the previous judgment clarified that a dealer is entitled to claim input tax credit for tax-suffered inputs purchased within the state from a registered dealer for specified purposes. The proviso limits the credit to 3% of the tax for certain purposes, not all purposes mentioned in the Act.
- The Court highlighted that the proviso's misinterpretation by the Revenue caused difficulties for manufacturers, affecting their competitiveness compared to neighboring states. The Court directed the respondent to consider the petitioner's representations for refund based on the previous judgment and pass appropriate orders within eight weeks.

2. Pending Appeals by the State:
- The State had preferred Appeals against the previous judgment, but they were yet to be numbered due to certain compliances. The mere pendency of an Appeal without an interim order does not stay the lower court's decision.
- The Court acknowledged the State's right to pursue the Appeals while directing the respondent to consider the petitioner's refund representations within the stipulated timeframe. This decision aligned with a similar relief granted in a previous case involving the same issue.

3. Compliance and Directions:
- The Court emphasized the need for the respondent to consider the petitioner's representations diligently and in accordance with the law based on the precedent set by the previous judgment. The Court's order aimed to ensure timely and appropriate action on the refund claim, without imposing any costs on the parties involved.

In conclusion, the High Court of Madras directed the respondent to review the petitioner's refund requests in light of the previous judgment, emphasizing the importance of complying with legal provisions and ensuring a fair and timely resolution of the matter.