9911796707
TMI Blog2018 (7) TMI 1355X X X X Extracts X X X X X X X X Extracts X X X X ..... nner as prescribed. After the expiry of three years, the unavailed credit shall lapse to the Government - Rule 10(4)(b) of the TNVAT Rules prescribes the manner in which the credit shall be allowable after commencement of commercial production and over a period of three years. The Rule states a dealer shall be entitled to avail up to 50% of the credit in the same financial year and the balance credit before the end of the third financial year. A registered dealer, who has purchased capital goods shall be allowed input tax credit in terms of Rule 10(4) provided, he gives an intimation within 30 days from the date of commencement of commercial production and the tax leviable shall be not more than 50% in the same financial year and the balance before the end of the third financial year. Thus Section 19(3) read with Rule 10(4) of the TNVAT Rules speaks only about the entitlement. Section 19(11) does not carve out any distinction between the type of goods purchased by the dealer on which there is a claim for input tax credit, but refers to any transaction of taxable purchase in any month. Thus, if a dealer fails to claim input tax credit in respect of any transaction of taxable purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss by paying applicable VAT on the same. The assessee relies upon Section 19(3) of the TNVAT Act for claiming input tax credit on the VAT paid in respect of the capital goods. 4.It is the assessees case that in terms of Section 19(3)(b) of the TNVAT Act, a dealer can utilise the input tax credit on capital goods over a period of three years from the date of commencement of commercial production as may be prescribed. In this regard, reference is made to Rule 10(4)(b) of the TNVAT Rules, 2007, which prescribes the manner in which credit may be utilised, which states that the dealer may utilise up to 50% of the credit in the financial year in which commercial production begins and the remaining within three years of commencing commercial production. 5.In the return filed under the TNVAT Act for the month of June 2013, the assessee availed input tax credit of ₹ 8,00,24,079/- on capital goods. The assessees Assessing Officer, viz., Deputy Commissioner (CT)-III, Large Taxpayers Unit, determined as ₹ 7,93,44,106/- of the total input tax credit availed on capital goods was related to the years 2011-12 and 2012-13 and therefore, vide order dated 10.09.2013, disallowed the inpu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the commencement of commercial production and over a period of three years in the manner as may be prescribed and after the expiry of three years, the unavailed input tax credit shall stand lapsed to Government. Further, Section 19(3) of the TNVAT Act gives the Government the power to make Rules in respect of input tax credit and the Rule being Rule 10(4)(a) of the TNVAT Rules, which clearly indicates that the intent of the legislature with regard to the claim of input tax credit qua capital goods is to be exclusively governed by Section 19(3) read with Rule 10(4) and not any other provision. In terms of the Rules, with respect to capital goods, input tax credit shall be allowed only upon commencement of commercial production and the time frame given to intimate such commencement of production is thirty days. It is stated that the petitioner has duly intimated the date of commencement of commercial production to the jurisdictional Assessing Officer within the stipulated thirty days vide their letter dated 01.02.2012. Therefore, it is submitted that denial of input tax credit vide the impugned order is invalid. It is further submitted that when there is an apparent contradict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause to be removed any books of accounts, other documents or stocks. Therefore, the accounts, which are required to be maintained by the assessee in terms of Rule 6(9) of the TNVAT Rules are required to be kept in the place of business of the assessee and cannot be removed by the Assessing Officer. 14.The learned counsel invited the attention of this Court to Form I, which is the Form in which the assessee is required to file the value added tax monthly returns. It is submitted that in Section A of the Form, the details of total purchases and input tax credit are to be furnished. In the tabulated statement, in Section A Clause H deals with local purchases and eligible input tax credit on capital goods. Therefore, if the assessee is to disclose in Column H, then it is necessary that such credit should be adjusted as in Column I, the net input tax credit available for adjustment is arrived at. 15.It is submitted that the Assessing Officer admitted that intimation letter has been given by the assessee, yet by referring to Section 19(1) of the TNVAT Act and it has been held that the petitioner is not eligible for availing input tax credit. The respondent, while confirming the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down in Section 19(3)(b) of the TNVAT Act and therefore, it is explicit that the provision of Section 19(11) alone is applicable, as the provision prescribes time limit for claim of input tax credit and not Rule 10(4) as claimed by the assessee. 19.It is further submitted that the validity of Section 19(11) of the TNVAT Act was put to challenge in a batch of cases as being inconsistent with Section 3 and the general scheme of TNVAT Act and as being arbitrary and irrational infringing the rights of the dealers under Articles 14 and 19(1)(g) of the Constitution of India. The challenge to the said provision was rejected in the case of USA Agencies vs. CTO in W.P.No.902 of 2009 and etc., batch dated 17.07.2013. Thus, the provision having been upheld, the claim made by the petitioner in the present writ petition does not merit consideration. 20.It is reiterated that the petitioner did not give their intimation as required to be done under Rules 10(4)(a) and 10(4)(b) of the TNVAT Rules and therefore, the respondent was right in rejecting the revision petition filed by the petitioner for the reasons assigned therein. 21.Heard the learned counsels for the parties and carefully perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of (i) re-sale by him within the State; or (ii) use as input in manufacturing or processing of goods in the State; or (iii) use as containers, labels and other materials for packing of goods in the State; or (iv) use as capital goods in the manufacture of taxable goods. (v) sale in the course of inter-State trade or commerce falling under sub-section (1) of section 8 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956). (vi) Agency transactions by the principal within the State in the manner as may be prescribed Sec.19(3)(a) : Every registered dealer, in respect of purchases of capital goods wholly *[for use in the course of business of taxable goods], shall be allowed input tax credit in the manner prescribed. Note : *The expression for use in the manufacture of taxable goods was substituted for the expression wholly for use in the course of business by Act 21/2007 Gazette Extraordinary dated 08.06.2007 Effective from 01.01.2007 (Retrospective.) Sec. 19(3)(b) : Deduction of such input tax credit shall be allowed only after the commencement of commercial production and over a period of three years in the manner as may be prescribed. After the expiry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7)(b) : purchase of all automobiles including commercial vehicles, two wheelers and three wheelers and spare parts for repair and maintenance thereof, unless the registered dealer is in the business of dealing in such automobiles or spare parts; or Sec. 19(7)(c) : purchase of air-conditioning units unless the registered dealer is in the business of dealing in such units. Sec. 19(8) : No input tax credit shall be allowed to any registered dealer in respect of any goods purchased by him for sale but given away by him by way of free sample or gift or goods consumed for personal use. Sec. 19(9) : No input tax credit shall be available to a registered dealer for tax paid or payable at the time of purchase of goods, if such- (i) goods are not sold because of any theft, loss or destruction, for any reason, including natural calamity. If a dealer has already availed input tax credit against purchase of such goods, there shall be reversal of tax credit; or (ii) inputs destroyed in fire accident or lost while in storage even before use in the manufacture of final products; or (iii) inputs damaged in transit or destroyed at some intermediary stage of manufacture. Sec. 19(10)(a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he selling dealer is cancelled by the appropriate registering authority, such registered dealer, who has availed by way of input tax credit, shall pay the amount availed on the date from which the order of cancellation of the registration certificate takes effect. Such dealer shall be liable to pay, in addition to the amount due, interest at the rate of *[two] per cent, per month, on the amount of tax so payable, for the period commencing from the date of claim of input tax credit by the dealer to the date of its payment. Note : *Substituted by Act 13 of 2013 w.e.f. 29.05.2018 Sec. 19(16) : The input tax credit availed by any registered dealer shall be only provisional and the assessing authority is empowered to revoke the same if it appears to the assessing authority to be incorrect, incomplete or otherwise not in order. Sec. 19(17) : If the input tax credit determined by the assessing authority for a year exceeds tax liability for that year, the excess may be adjusted against any outstanding tax due from the dealer. Sec. 19(18) : The excess input tax credit, if any, after adjustment under sub-section (17), shall be carried forward to the next year or refunded, in the mann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther shall send along with the goods moved a bill of sale or delivery note or such other documents, as may be prescribed. Sec. 64(4) : The Commissioner may order for audit of the business of any registered dealer by an officer not below the rank of *[Deputy] Commercial Tax Officer. For the purpose of this section, the selection of dealers for audit shall be made from amongst the dealers,- Sec. 64(4)(a) : who have not filed returns within the prescribed period; or Sec. 64(4)(b) : who have claimed exorbitant amount of refund of tax; or Sec. 64(4)(c) : who have filed returns, but in the opinion of the Commissioner he is not satisfied with the correctness of any return filed, any claim made, deduction claimed or turnover disclosed in any such; or Sec. 64(4)(d) : on the basis of any other criteria or on a random selection basis by the Commissioner ; or Sec. 64(4)(e) : where detailed scrutiny of the case is necessary in the opinion of the Commissioner. Sec. 64(5)(a) : During the course of the audit, the officer may require the dealer,- (i) to afford him the necessary facility to inspect such books of accounts or other documents as he may require and which may be available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchased as specified in the Second Schedule; (ix) Value of goods received on stock transfer from principal or head office situated outside the State for sale; (x) Value of goods received on stock transfer from the principal within the State for sale; (xi) Value of goods imported; (xii) Value of goods returned; (xiii) Total tax paid on local purchases; R.6(2)(c) : The sales or stock transfer account maintained by a registered dealer shall contain the following particulars, namely: - (i) Invoice No. and date with buyers Taxpayer Identification Number; (ii) Description of goods with quantity and value sold; (iii) Sale value of exempted goods ; (iv) Sale value realized out of stock received from the principal; (v) Value of goods under zero rated sale out of taxable purchases; (vi) Inter-State sales out of taxable purchases; (vii) Sale value of goods specified in the Second Schedule; (viii) Sale value of goods taxable at 1% with tax due; (ix) Sale value of goods taxable at 4% with tax due; (x) Sale value of goods taxable at 12.5% with tax due; (xi) Sale value of goods sold in the course of inter- State sale against C Form as prescribed under the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased or received for sale on each occasion, in respect of each principal separately; (ii) the original or copy of the written contracts, if any, entered into between the agent and the principal; (iii) copies of authorisations received by him to purchase or sell goods on behalf of each principal separately; (iv) details of purchases or sales effected on behalf of each principal, showing the names of commodities, quantities and value of purchases or sales, and the tax due thereon; (v) copies of pattials, i.e., accounts rendered by the agent to the principal from time to time, showing the gross amount of the purchases or sales, deductions on account of commission and incidental charges and the net amount payable to the principal. R.6(6)(b) Every such agent shall also furnish to the assessing authority concerned on or before the 20th of each month a statement in respect of each principal showing the turnover of purchases or sales effected on behalf of each principal in the previous month, containing the following particulars, namely:- (i) Name and full address of the principal; (ii) Name and value of goods bought or sold, liable at different rates of tax; (iii) Amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year B = Input tax credit accrued during the month or year C = Input tax credit reversed during the month or year D = Input tax credit refunded during the month or year R.10(2) : Every registered dealer who claims input tax credit under sub-section (1) of section 19 shall, produce the original tax invoice, in support of his claim of the input tax credit, containing the following details, namely:- (a) A consecutive serial number; (b) The date on which the invoice is issued; (c) The name, address and the Taxpayer Identification Number of the seller; (d) The name, address and the Taxpayer Identification Number of the buyer; (e) The description of the goods; (f) The quantity or volume of the goods; (g) The value of the goods; (h) The rate and amount of tax charged; and (i) The total value of the goods. *[(2-A) Every registered dealer who claims input tax credit to the extent of the tax paid on purchases of taxable goods specified in the First Schedule to the Act from the other registered dealers inside the State, shall establish, whenever it is deemed necessary by the assessing authority, that the tax due on such purchase of goods has actually been remitted into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ventory statement in From V by him. Such claim shall be availed within six months from the date of commencement of the Act. The unavailed input tax credit, if any, after six months shall lapse to Government. R.10(3)(b)(vi) : The assessing authority shall verify the claim made by the registered dealer with reference to documents filed along with the stock inventory in From V and pass an order *[not later than seven months, from the date of commencement of the Act], determining the amount for which the registered dealer is entitled to input tax credit and reverse the claim, wherever necessary. R.10(3)(b)(vii) : A registered dealer, who effects zero rated sale shall not be entitled for input tax credit relating to the stock held on the date of commencement of the Act. R.10(3)(b)(viii) : The registered dealer shall ordinarily keep all original purchase invoices and connected documents relating to the claim for input tax credit under this rule, for a period of five years from the date of commencement of the Act and shall produce such documents to the authority for scrutiny, if required. R.10(4)(a) : The registered dealer who claims input tax credit on capital goods under clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed unless the said dealer is given an opportunity of being heard. R.10(6)(a) : After availing input tax credit, if any, dealer who purchases goods returns the goods and gets credited the price and tax paid, the tax credit so availed shall be reversed, only when- (i) the purchase was included in the return; and (ii) the goods were returned within a period of six months from the date of purchase by him. R.10(6)(b) : Where a dealer who sells goods after paying tax, receives back his goods, he may deduct such tax amounts paid from the tax payable in the returns of following months only when, - (i) in respect of sales return, - (A) the sale was included in the return and the tax paid; (B) the goods were received back or returned within a period of six months from the date of sale; (C) the price of the goods and the tax, if any, charged thereon were refunded in full to the buyer; and (D) the credit note shall contain the date and serial number of the invoice on which the tax was originally charged and brought to account. (ii) in respect of un fructified sale,- (A) the sale was included in the return and tax paid; and (B) the goods were received back within a pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Sales Tax Act, 1956 shall be allowed only if Form F prescribed in the Central Sales Tax (Registration and Turnover) Rules, 1957 is filed. R.10(10)(a) : In cases where the input tax paid in the month exceeds the output tax payable, the excess input credit shall be carried over to the next month. R.10(10)(b) : In cases where the input tax credit as determined by the assessing authority for any registered dealer, for a year, exceeds the tax liability for that year, it may adjust the excess input tax credit against any arrears of tax or any other amount due from him If there are no arrears under the Act or after the adjustment there is still an excess of input tax credit, the assessing authority shall serve a notice in Form P upon such dealer. R.10(11) : The method of selection by the Commissioner referred to in sub-section (3) of section 22 shall be based on suitable stratified random sampling method and such selection shall not exceed twenty per cent of the cases assessed under sub-section (2) of section 22 and intimate the details of such selection to the assessing authority for detailed scrutiny of accounts. Such list shall be exhibited on the Notice Board of the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at every registered dealer in respect of purchases of capital goods wholly for the use in the manufacture of taxable goods shall be allowed input tax credit in the manner prescribed. 28.Clause (b) of Section 19(3) of the TNVAT Act deals with how the deduction of such input tax credit, which may be allowed, as in the manner prescribed. It states that credit shall be allowed only after commencement of commercial production and over a period of three years in the manner as may be prescribed. After the expiry of three years, the unavailed input tax credit shall stand lapsed to the Government. The first requirement a dealer has to fulfill is in terms as stipulated in Rule 10(4) of the TNVAT Rules, to intimate about the claim of input tax credit on capital goods under Section 19(3)(b) within thirty days from the date of commencement of commercial production to his Assessing Officer. The Revenue states that this intimation was not given by the assessee. 29.The petitioner refers to a letter dated 01.02.2012 addressed to the Assessing Officer stating that their new plant at Naranamangalam Village and Post, Kunnam Taluk, Perambalur as commenced its commercial production and the first excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, viz., Rule 10(4). Section 19(3)(b) of the TNVAT Act speaks about deduction of such input tax credit that may be allowed to be liable after the commencement of commercial production and over a period of three years in the manner as prescribed. After the expiry of three years, the unavailed credit shall lapse to the Government. 33.Rule 10(4)(b) of the TNVAT Rules prescribes the manner in which the credit shall be allowable after commencement of commercial production and over a period of three years. The Rule states a dealer shall be entitled to avail up to 50% of the credit in the same financial year and the balance credit before the end of the third financial year. Thus, a registered dealer, who has purchased capital goods shall be allowed input tax credit in terms of Rule 10(4) provided, he gives an intimation within 30 days from the date of commencement of commercial production and the tax leviable shall be not more than 50% in the same financial year and the balance before the end of the third financial year. Thus Section 19(3) read with Rule 10(4) of the TNVAT Rules speaks only about the entitlement. 34.Section 19(11) of the TNVAT Act deals with claims by registered dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation for claiming input tax credit. and there cannot be two different limitation periods for claiming input tax credit. This submission was rejected and held to effectuate the provision of the Act and beneficial to the registered dealer. 38.It was further pointed out that the benefit of credit under the Act is in the nature of a concession given, which could be availed only in the manner and in the circumstances mentioned in Section 19. One more argument was that Section 19(11) cannot be mandatory and it could only be directory, though the word shall has been used. Applying the principles of interpretation, it was held that the test to ascertain whether the word shall used in Section 19(11) has to be examined upon the TNVAT Act and we should not go by the phraseology of the provision, but should consider the nature, its design and consequence, which would flow from it. 39.Mr.M.V.Swaroop, pointed out that in the Form I return, there is no provision to disclose the availment of input tax credit under Section 19(3) of the TNVAT Act and once, the amount is disclosed in Clause H of Section A1 of the Form I return, the adjustment is automatic while computing the net of input tax credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not mean every and must be read contextually. Thus, it is submitted that input tax credit on purchase of regular inputs must form part of the monthly returns. Section 19(11) of the TNVAT Act states that if a dealer fails to claim input tax credit within that particular month, he may claim it within the end of the year, or within ninety days from the date of purchase. When read in that context, it becomes clear that the term any transaction must only include such transactions for which input tax credit must be claimed within the month of purchase. Since input tax credit on 'capital goods' may be claimed over a period of three years, in the manner prescribed in Rule 10(4)(a) and (b) read with Rule 6(10), the term any transactionin this provision should be restricted to transactions other than purchases of capital goods. 46.In the earlier part of the judgment, the Court has held that Section 19(11) of the TNVAT Act does not carve out any distinction between the type of goods purchased by the dealer of which there is a claim for input tax credit, but refers to any transactionof taxable purchase in any month. Further, it has been held that Section 19 of the TNVAT Act has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
