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TMI Blog2020 (2) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... B qualifies as goods within the meaning of the Sales Tax laws and its sale is exigible to tax. DEPB scrips/licence is liable to tax at the rate prescribed under Entry 70 of Part B of the 1st Schedule of the Tamil Nadu VAT Act, 2006 - Since DEPB scrips/license is liable to tax at the rate prescribed under Entry 70 of Part B of the 1st Schedule of the Tamil Nadu VAT Act, 2006, the petitioner was entitled to input tax credit in terms of Section 19(1) of the Tamil Nadu VAT Act, 2006. It must be remembered that DEPB Scrips were given by the Joint Director of General of Foreign Trade as an export incentive to an exporter under the Export Import Policy. Instead of giving cash refund on exports, the Central Government through the Minsitry of Commerce Trade gave it in the form of credit of duty in the DEPB Scrips/licence which could be used for discharging the Customs duty at the time of import of goods. Such DEPB Scrips/licence could be either used by the exporter himself in whose name such scrips/licence were issued as an export incentive or it can be sold in the open market to be purchased by person like the petitioner like REP Licence. Petition dismissed. - W.P.Nos.38508 & 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the respondent has considered the decision of a Division Bench of this Court in Prakash Impex versus State of Tamil Nadu in TCR Nos. 158-162 of 2011. 7. In the impugned order, it has been concluded that under Section 19 (2) of the Tamil Nadu VAT Act, 2006 the petitioner should have re-sold DEPB to be eligible to avail and utilise the input tax credit availed by the petitioner. 8. The learned counsel for the petitioner submits that the issues covered by the decision of the Delhi High Court in Jagriti Plastics Ltd versus Commissioner of Trade and Taxes 2016 IAD Delhi 625 and 2016 54 GST 632 (Delhi) and submits that the decision of this Court in Prakash Impex versus State of Tamil Nadu is to be confined to the facts peculiar of the said case. 9. The learned counsel also referred to few other decisions rendered in the context of CENVAT Credit Rules, 2002 to state that there is no one-toone co-relationship between the Input Tax Credit availed on input and the tax payable on output service/goods. A specific reference was made to the decision of the Division Bench of the Bombay High Court in Coca-Cola India Private Limited versus Commissioner of Central Excise 2009 (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 16. It was further submitted that in the teeth of the decision of the Division Bench of this Court in Sha Kantilal Jayanthilal versus State of Tamil Nadu 2016 (339) ELT 520 also these writ petitions are liable to be dismissed. 17. I have considered the arguments advanced by the learned counsel for the petitioner and the learned Additional Government Pleader (Tax). 18. At the outset, it may be mentioned that an Assessing Officer cannot rely on clarifications and instructions of his superior as has been done in the present case. 19. If assessing officers were follow such clarifications of their superior, their orders would be arbitrary. As such, such assessment cannot be completed based on clarifications as such exercise would amount to assessment by circular contrary to the view taken by the Honourable Supreme Court in Orient Paper Mills Case vs, UOI AIR 1969 SC 48 . The Court there held as follows:- '' 8. If the power exercised by the Collector was a quasi judicial power - as we hold it to be - that power cannot be controlled by the directions issued by the Board. No authority however high placed can control the decision of a judicial or a quasi jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 339) ELT 520 I am constrained to examine the issue on merits and give a finding as to it applicability to the facts of the present case. 23. As far as DEPB scrips are concerned, it is beyond any shadow of doubt it is goods with the meaning of Section 2(21) of the Tamil Nadu VAT Act, 2006 and was therefore liable to tax under the provisions of the Tamil Nadu VAT Act, 2006. In this connection, it would suffice to refer to the decision of the Hon ble Supreme Court in Yasha Overseas, Commissioner of Sale Tax ( 2008) 7 VST 182 (SC) wherein the Hon ble Supreme Court held that DEPB has an intrinsic value that makes it a marketable commodity. 24. Therefore, DEPB qualifies as goods within the meaning of the Sales Tax laws and its sale is exigible to tax. DEPB scrips/licence is liable to tax at the rate prescribed under Entry 70 of Part B of the 1st Schedule of the Tamil Nadu VAT Act, 2006. 25. Since DEPB scrips/license is liable to tax at the rate prescribed under Entry 70 of Part B of the 1st Schedule of the Tamil Nadu VAT Act, 2006, the petitioner was entitled to input tax credit in terms of Section 19(1) of the Tamil Nadu VAT Act, 2006. Reference may be made to the aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of his business. Again the definition is inclusive definition. 29. Conjoint reading of the expression any transaction in connection with, or incidental or ancillary to such trade, commerce, manufacture, adventure or concern in the definition of business in sub clause (ii) to Section 2(10) with definition of goods , input and input tax and Section 19 makes it clear that the intention is not to restrict or stifle the use of input tax credit. Once credit has been validly availed, it can be utilized unless there is specific restriction. The Hon ble Supreme Court in Dai Ichi Karkaria Vs CCE 1999 (112) ELT 353, has held that once credit has been validly availed, it is indefeasible in the hands of an assessee and can be utilized without any limit unless the statutory Rules itself provides for such restrictions. 30. As per Section 3(3) of the Tamil Nadu VAT Act, 2006 tax payable under sub-section(2) by registered dealer, shall be reduced to the extent of tax paid on his purchase of goods specified in Part-B or Part-C of the 1st schedule, inside the State, to the registered dealer, who sold the goods to him. The petitioner was thus entitled to avail Input Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee there filed a statutory appeal under Section 51 of the Tamil Nadu VAT Act, 2006. The Appellate Deputy Commissioner rejected the appeal of the assessee holding that under Section 19(2), input tax credit can be allowed only for resale within the State, manufacturing or processing in the State or in the course of interstate trade or commerce and since the petitioner had purchased the DEPB licence from local registered dealers and use it for their imported goods to reduce the customs duty, appellate Deputy Commissioner held that the credit availed was liable to be reversed, The appellate Tribunal also dismissed the appeal of the assesse. 37. The Hon ble Division Bench of this Court in M/S.Sha Kantilal Jayantilal vs The State Of Tamilnadu Rep.by Joint Commissioner (CT), Chennai (North), Division, Chennai, framed the following question of law: (i) Can the Department deny the benefit of input tax credit for the duty paid by the petitioner on the purchase of DEPB licences, when such licences are considered to be goods within the meaning of Section 2 (21) and the tax paid on the purchase of such licences are considered as input tax under Section 2(24) and also when the chargi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin the ambit of Section 19(1) provided a tax is payable or paid under the Tamil Nadu Value Added Tax Act, 2006 on those goods and those goods are also listed in the First Schedule to the Act. 35. Apart from the fact that DEPB licences purchased by the petitioner are not goods enumerated in the First Schedule, it is to be pointed out that the petitioner does not pay any tax under this Act namely the Value Added Tax Act on these purchases. What the petitioner is now seeking is a credit for the duty paid. 36. In addition, the petitioner has used these DEPB licences, for the purpose of payment of import duty. Therefore, the benefit that they are claiming now under the Tamil Nadu Value Added Tax Act appears to be a double benefit. As we have pointed out earlier, the petitioner cannot claim credit, unless he satisfies all the three conditions specified in Section 19(1)namely (i) that he is a registered dealer (ii) that he actually paid or became liable to pay tax on the purchase of taxable goods and (iii) that the tax paid or payable was in respect of goods specified in the First Schedule. The petitioner does not satisfy all the three conditions. Hence, the denial of input tax cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sub-Sections of Section 19. It does not mean that the very entitlement to credit could be traced only to Sub-Sections (2) to (4) and the nonentitlement could be traced to Sub-Sections (5) to (10). If a dealer satisfies the essential conditions stipulated in Sub- Section (1), he is entitled to credit. Therefore, we are of the considered view that Sub-Section (2) of Section 19 is enumerative and not exhaustive. The second question of law is answered accordingly. 39. The Hon ble Division Bench has proceeded on the assumption that DEPB Scrips/Licence are not goods liable to tax under the 1st schedule. There is however no discussion as to how such a conclusion has been arrived. Entry 70 of Part B, 1st Schedule of the Act pertains to Intangible Goods like copyright, patents, REP licence. 40. REP licences were issued under the provisions of the Export Import Policy as it stood during the late 1980s, 90s and early part of this millennium. They were discontinued by the Ministry of Commerce, UOI Department of Foreign Trade Development and different kinds of scrips/licence came to be issued under the successive Export Import Policy and Foreign Trade Policies issued under The For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , there is a payment of duty though such payment is not in cash but by debiting the credit of duty in the DEPB scrips/license. Therefore, the observations in paragraph No.32 to 36 may not be correct. 47. I would refrain from holding the decision as per incuriam though it was submitted by the learned counsel for the appellant . The said decision gives an interpretation of the provision of the law and is binding on this court even if it fails to note the avowed object of the Tamil Nadu VAT Act, 2006 was to allow cross utilization of input tax credit to dealers to reduce the cascading effect of the tax on the final product as long as credit is available. 48. As far as applicability of the decision of the Division Bench of the Delhi High Court in Jagriti Plastics Ltd versus Commissioner of Trade and Taxes 2016 IAD Delhi 625 and 2016 54 GST 632 (Delhi) , is concerned, I am of the view that though the Court there has held input tax credit was available on the VATpaid on purchase of DEPB, the Court there has not decided the entry under which it was taxable. 49. In the present case, the Honourable Division Bench has given finding regarding the rate of tax and inapplicability ..... X X X X Extracts X X X X X X X X Extracts X X X X
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