2021 (4) TMI 599 - HC - VAT and Sales Tax

Rectification of Mistake - error apparent on the face of record or not - Refund of Input Tax Credit - failure to reverse the input tax credit in respect of the invisible loss ratio - HELD THAT - This Court called upon the assessing officer to make available the copy of the letters given by the petitioner herein. In response to the aforesaid direction, the assessing officer immediately made available a copy of the petitioner's letters in which the petitioner himself has accepted the invisible loss ratio in his case at 5%. Of course, the petitioner's counsel would still insist that when a specific mandate has been issued by this Court that the assessing authority should examine the manufacturing process before arriving at invisible loss ratio and that the said mandate cannot be given go by by receiving a waiver letter from the petitioner. The respondent cannot be faulted for having acted on the petitioner's letters. In any event, there is no waiver of any right as such. The issue is regarding the working out of the exact ratio of invisible loss. The petitioner himself has come forward and given in writing that the invisible loss is at 5% - the order passed by the respondent accepting the same cannot be said to suffer from any error apparent on the face of the record. Petition dismissed.

Summary

Issues:
1. Refund of input tax credit for exports under the Tamil Nadu Value Added Tax Act.
2. Application of invisible loss ratio by the respondent.
3. Rejection of rectification petition under Section 84 of the Tamil Nadu Value Added Tax Act.
4. Assessment of invisible loss ratio at 5% without inspecting manufacturing process.
5. Contentions between the petitioner and respondent regarding the invisible loss ratio calculation.
6. Jurisdiction under Section 84 of the Tamil Nadu Value Added Tax Act.

Analysis:
The petitioner, an exporter registered under the Tamil Nadu Value Added Tax Act, sought a refund of input tax credit for exports. The petitioner challenged the respondent's application of an arbitrary 5% invisible loss ratio under Section 19(9)(iii) of the Act. The petitioner cited a previous Madras High Court decision mandating inspection of the manufacturing process to determine the actual invisible loss, not allowing adhoc assessments. The petitioner contended that the respondent failed to inspect their manufacturing process and arbitrarily calculated the loss at 5%, leading to the refund dispute.

The petitioner filed a rectification petition under Section 84 after the initial rejection, prompting the writ petition. The respondent claimed to have promptly processed refunds but later initiated a reassessment due to an oversight in reversing input tax credit for invisible loss. The respondent issued a show cause notice, and the petitioner submitted letters confirming the 5% invisible loss. The assessing authority accepted this figure without alteration, leading to the current dispute.

The court reviewed the contentions and evidence, noting the petitioner's failure to rebut the respondent's assertions adequately. Despite the petitioner's argument against accepting the 5% loss without inspecting the process, the court held that the petitioner's written acceptance of the ratio was binding. The court emphasized the petitioner's right to waive benefits under the law, stating that no fundamental rights were at stake in this case. As the respondent acted based on the petitioner's letters and no error was apparent on record, the court found no grounds for intervention under Section 84 of the Act. Consequently, the writ petition was dismissed, with no costs imposed.

In conclusion, the judgment upheld the respondent's decision based on the petitioner's written acceptance of the 5% invisible loss ratio, emphasizing the petitioner's ability to waive benefits under the law. The court found no error justifying intervention under Section 84 and dismissed the writ petition accordingly.