2020 (2) TMI 1111 - HC - VAT and Sales Tax

Rate of tax on turnover - Sale of Music/Film Audio Compact Disc, video compact disc, digital video etc. - whether taxable at the rate of 14.5% or not - petitioner had claimed that the music/film audio compact disc/video disc/digital video disc et were liable to tax as Information Technology Product under Serial No.68 of Part B of the 1st schedule to the Tamil Nadu VAT Act, 2006 - HELD THAT - A notice dated 31.10.2016 was issued to the petitioner. Since the clarification of the Authority for Clarification and Advanced Ruling dated 25.7.2012 was against the petitioner, the respondent was justified in confirming the demand to that extent at the time of passing the impugned order - However, post facto, the above clarification of the Authority for Clarification and Advanced Ruling under section 48A of the T.N. VAT Act, 2006 given earlier on 25.7.2012 to the petitioner clarifying that music/film audio compact disc/video disc/digital video disc etc were liable to tax at 14.5% under Entry 13-A (e) of Part C of the 1st Schedule to the Tamil Nadu VAT Act, 2006 was reviewed and a review order has been passed on 19.11.2018 - the demand confirmed by the impugned order insofar as dispute relating to rate of tax on the sale of these items are concerned are answered in favour of the petitioner and accordingly to that extent the impugned order is quashed. Reversal of the Input tax credit under Section 19(5)(c) of the Act - HELD THAT - The period in dispute is 2013-14. The Amendment to Section 19(5) was in the year 2015. It deleted sub-clause (c) to Section 19(5). It was not intended to be retrospective in nature. If it was so, the state legislature would have expressly stated at the time of amendment in 2015 - the amendment cannot be said to be retrospective - That apart the amounts involved are too meagre - impugned order upheld. Petition disposed off.

Summary

Issues:
1. Impugned order dated 23.1.2017 passed by the respondent.
2. Liability of tax at 14.5% on turnover.
3. Reversal of Input tax credit under different sections of the Act.
4. Need for a speaking order.
5. Dispute regarding the tax liability of certain products.
6. Denial of input tax credit on inter-state sales.
7. Retroactive application of Section 19(5) amendment.
8. Relevance of cited legal precedents.
9. Meagre amounts involved in the dispute.

Analysis:

1. The petitioner challenged the impugned order dated 23.1.2017, which confirmed a tax liability of 14.5% on a specific turnover and ordered the reversal of Input tax credit under various sections of the Act.

2. The High Court noted that the impugned order was non-speaking, lacking detailed reasoning. Therefore, the Court considered remitting the case back to the respondent for a speaking order.

3. The dispute centered on the tax liability classification of certain products as Information Technology Products under the Tamil Nadu VAT Act, 2006. A clarification issued earlier was in favor of the respondent, but a subsequent review altered the tax rate, favoring the petitioner.

4. The denial of input tax credit on inter-state sales and failure to produce necessary forms was also contested. The Court found no merit in these denials, especially considering the non-retrospective nature of the amendment to Section 19(5) of the Act.

5. Legal precedents cited by the petitioner were deemed irrelevant due to the specific circumstances of the case and the non-retrospective nature of the legislative amendment.

6. Despite the non-speaking nature of the impugned order on certain issues, the Court decided not to interfere due to the insignificance of the amounts involved.

7. The Court allowed the petitioner to appeal the denial of input tax credit under Section 19(5) within 30 days, emphasizing that the appellate authority should decide the appeal on its merits without strict adherence to limitations.

8. The writ petition was disposed of with these observations, with no costs imposed, and the connected miscellaneous petition was closed.