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TMI Blog2016 (12) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... o conduct an inspection of the place of business of the petitioner to acquaint himself with the manufacturing process. However, since the respondent has adopted a uniform percentage, the same calls for interference. With regard to the second issue wherein the respondent rejected the claim for input tax credit on certain purchases effected on the ground that the commodities were not exported is concerned, the petitioner's case is that those products are used in the manufacture of other goods, which are exported, as specified under Sub-Section (1) of Section 8 of the State Act and they are entitled to avail the input tax credit. However, the petitioner had no opportunity to put forth their objections on the above head. The last issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... By consent, the writ petitions are taken up for joint disposal. 2. The petitioner, which is a registered dealer on the file of the respondent under the provisions of the Tamil Nadu Value Added Tax Act, 2006 and the Central Sales Tax Act, 1956, is engaged in the manufacture of castings and valves out of the raw materials purchased from local registered dealers. The petitioner is stated to be selling the castings and valves within the State besides direct export under Section 5(1) of the Central Act. In these writ petitions, the petitioner has challenged the partial rejection of the petitioner's applications for refund of the input tax credit for the period from July 2015 to June 2016 and the prayer sought for in these writ petitions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed assessment orders are in violation of the principles of natural justice. However, this Court would like to examine as to whether the reasons assigned by the respondent on the above three heads are sustainable. 7. Firstly, with regard to reversal of input tax credit claim on wastage under Section 19(9) of the State Act, under which, there are two subsidiary issues namely invisible loss and visible loss, the respondent adopted a percentage of 5% and 1% respectively. The correctness of adopting uniform percentage came up before this Court in the case of Interfit Techno Products Ltd. Vs. The Principal Secretary and Commissioner of CT [reported in (2015) 81 VST 389] wherein this Court issued certain directions as to how the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r passed reversing the input tax credit to the extent of either four per cent or five per cent or on ad hoc percentage stands set aside. However, liberty is granted to the concerned assessing officer to issue appropriate show cause notices to the petitioners clearly setting out under what circumstances they propose to revise or call upon the petitioner to reverse refund sanctioned and after inviting objections proceed in accordance with law. 8. Thus, to ascertain as to whether there are quantum of loss of goods, which were purchased, on which, tax was paid, the Assessing Officer has to conduct an exercise, by which, he has to ascertain as to what would be the loss and uniform or ad hoc percentage cannot be adopted. To do so, it would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30 VST 581], held as follows : 3. In Sara Leathers Vs. Commercial Tax Officer, Tambaram I Assessment Circle, Chennai reported in (2010) 30 VST 581 (Mad.), this Court considered the scope of Section 18 of the TNVAT Act with particular reference of Section 18(2) of the TNVAT Act and pointed that Section 18(2) of the TNVAT Act is emphatic in its wording, the dealer referred to therein to claim a refund is one who had paid the tax on purchase of those goods that are exported and such consumed goods used in the manufacture of other goods, which are exported and are specified under Sub-Section (1) and in the said case, the petitioner was held to be entitled to the total refund. Thus, the respondent should consider the petitioner's case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings rendered by the respondent on all the above three heads call for interference. 13. Accordingly, the writ petitions are allowed by setting aside the findings of the respondent on the above three heads and the respondent is directed to issue a show cause notice to the petitioner on all the above three heads. On receipt of the notice, the petitioner shall file their objections and on receipt of the objections, the respondent shall cause an inspection of the petitioner's factory to acquaint himself regarding the manufacturing process so as to enable him to ascertain the invisible loss and the visible loss and thereafter, after affording an opportunity of personal hearing to the petitioner, redo the assessment on the above three ..... X X X X Extracts X X X X X X X X Extracts X X X X
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