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TMI Blog2021 (4) TMI 1170X X X X Extracts X X X X X X X X Extracts X X X X ..... t 2006. Thus, the net tax to be paid by the petitioner was determined as Rs. 28,26,034/-. 5. Meanwhile, the assessment for the Assessment Year 2010-2011 under the provisions of the Central Sales Tax Act, 1956 was also completed on 29.11.2013, wherein, it was determined that the petitioner was in arrears of a sum of Rs. 15,01,080/- for the said Assessment Year. 6. Under these circumstances, a Notice was issued to the petitioner and called upon the petitioner to pay arrears amount of Rs. 34,24,084/- [15,01,080 + 28,26,034 - 2,00,000 - 7,03,030] for these two Assessment Years. The aforesaid arrears was arrived after setting off the subsequent payments of Rs. 2,00,000/- and Rs. 7,03,030/- by the petitioner. 7. The petitioner therefore agreed to adjust another amount of Rs. 9,90,815/- from its unutilised Input Tax Credit as per tax return of March, 2012. The petitioner further stated that it had made further payments for a sum of Rs. 1,65,342/- and therefore stated that the net tax payable by the petitioner for the Assessment Year 2011-12 was only Rs. 9,74,520/- and therefore requested the respondent to issue a revised Notice in Form 3 for the aforesaid sum of Rs. 9,74,520/-. 8. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,548/- [ Rs. 36,16,923- Rs. 1,68,375]. 16. Against the said order, the petitioner filed an application under Section 84 of the Tamil Nadu Value Added Tax Act, 2006 on 01.09.2014 to revise the said order of re-assessment dated 31.07.2014. The said application has resulted in the second mentioned impugned order dated 25.09.2014. The respondent has rejected the application filed under Section 84 of the Tamil Nadu Value Added Tax Act, 2006 as made applicable to assessment under Central Sales Tax Act, 1956. 17. It is the contention of the petitioner that adjustment of input tax credit against tax liability under the provisions of the Central Sales Tax Act, 1956 is permissible under Rule 10(10(b) of the Tamil Nadu Value Added Tax Rules, 2007. 18. The learned counsel for the petitioner placed reliance on the following decisions of this Court in i. Tvl.Mahaajay Spinners India Pvt. Ltd., Vs. The Commercial Tax Officer, Salem, in W.P.No.28275 of 2016. ii. M/s.Sri Laxmi Exports Vs. The Assistant Commissioner (CT), Madurai, in W.P. (MD) Nos.9674 to 9679 of 2014. iii. Tvl.Shakthi Tech Vs. State Tax Officer, Coimbatore in W.P.Nos.2912 and 2913 of 2020. 19. Defending the impugned order, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 2006. In the circumstances the input tax claim of Rs. 23,31,952/- has lapsed to Government. Therefore the lapsed amount cannot be adjusted towards arrears of sales tax that too for the arrears under the Central Sales Tax Act 56 for the interstate sales effected without C declaration forms for the year 2010-11 and 2011-12 under the CST Act 56. Since there is limitation prescribed as within the same financial year as laid down under Sec.18(3) of the Tamil Nadu Value Added Tax Act, 2006, the claim of adjustment is not valid in law. In the case of USA Agencies Vs. The Commercial Tax Officer Attur (Rural) Assessment Circle reported in 2013-14(19) TNCTJ page 149 the High Court observed as follows W.P.Nos.902, 1202, 2016, 2233, 3732, 4329 to 4331, 5766, 20302, 25124 and 26281 of 2009; dated 17.07.2013 the High Court observed as follows:- "32.Like wise as per Section 19(5)(c), no Input Tax Credit shall be allowed on the purchase of goods sold as such or used in the manufacture of other goods and sold in the course of Inter- State trade or commerce falling under Section8(2) of Central Sales Tax Act. The reason being in respect of such sales effected outside the State of Tamilnadu, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 106979-00 5846048-00 12.5% 7,30,756-00 22. Challenging the impugned orders, the learned counsel for the petitioner submits that the credit availed by the petitioner under the provisions of the TNVAT Act, 2006 has not been reversed. It is submitted that therefore the adjustment of tax liability under Central Sale Tax Act, 1956 by the petitioner cannot be disturbed. 23. It is further submitted that the petitioner is not claiming refund of the Input Tax Credit on the zero rated sales effected by it. On the other hand, the petitioner has merely adjusted the tax liability against the amount determined on the taxable turn over determined in the Assessment Orders under Central Sales Tax Act, 1956. 24. It is submitted that Section 18 of the TNVAT Act, 2006 contemplates 2 situations, i.e. adjustment of Input Tax Credit towards discharge of tax liability and refund of tax borne on zero rated sale. In this case, the petitioner has adjusted such Input Tax Credit as per Rule 10(9)(a) of the Central Sales Tax (Tamil Nadu) Rules, 1957. 25. The learned counsel further submits that question of filing of Form-W for refund of Input Tax Credit does not arise as the petitioner is in a position ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o establish such units by the authority specified by the Central Government in this behalf; and (iii) Sale of goods to International Organizations listed out in the Fifth Schedule. (2) The dealer, who makes zero rate sale, shall be entitled to refund of input tax paid or Payable by him on purchase of those goods, which are exported as such or consumed or used in the manufacture of other goods that are exported as specified in sub-section (1), subject to such restrictions and conditions as may be prescribed. (3) Where the dealer has not adjusted the input tax credit or has not made a claim for refund within a period of one hundred and eighty days from the date of making zero rate sales accrual of such input tax credit, such credit shall lapse to Government. 30. The petitioner has claimed that it has effected zero rated sale within the meaning of Section 18 of the Tamil Nadu Value Added Tax Act, 2006 and therefore adjusted a sum of Rs. 23,31,952/- from its Input Tax Credit in annual return for Assessment Year 2013-2014 as against the gross tax due for a sum of Rs. 40,60,869/- for Assessment Year 2011- 2012 as determined by the respondent vide order dated 31.07.2014. 31. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g under sub-sections (1) and (2) 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. 36. There is an apparent contradiction between Section 19(5)(c) and Section 19(2)(v) of the Tamil Nadu Value Added Tax Act, 2006. While, Sub-Section (2)(ii) and Sub-Section (2)(v) to Section 19 of the Tamil Nadu Value Added Tax Act, 2006 seems to allow credit without any limitation, Section 19(5)(c) of the said Act puts a restriction from availing of Input Tax Credit on goods sold as such or used in the manufacture of other goods and sold in the course of inter-State trade and commerce falling under Section 8(2) of the Central Sales Tax Act, 1956. 37. In fact, earlier on 17.01.2005, a White Paper was released by the Committee of Finance Ministers before various VAT laws were enacted by the respective States. There, it was made clear that input tax credit (hereinafter "ITC") would be available to be set-off against tax liability on all intra-State and inter-State sales. Para 2.3 of the same reads as under: "Coverage of Set-Off/Input tax credit 2.3.This input tax credit will be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Central Sales Tax (Registration and Turnover) Rules, 1957 is filed by the dealer. 42. Only if such credit is available, it can be utilized for discharging the tax liability under Rule 5(3-A) of the Central Sales Tax (Tamil Nadu) Rules, 1957. 43. The language adopted in Rule 5(3-A) of the Central Sales Tax (Tamil Nadu) Rules, 1957makes it clear that there is a one to one corelation i.e. availing of input tax credit in accordance with Rule 10(9)(a) of the Tamil Nadu Added Tax Rules, 2007 and its ultimate utilization for discharging tax liability under Central Sales Tax Act, 1956 in terms of Rule 5(3-A) of the Central Sales Tax (Tamil Nadu) Rules, 1957. 44. Thus, only if credit is available as per Rule 10(9)(a) of the Tamil Nadu Value Added Tax Rules, 2007 read with Section 9(5) of the Tamil Nadu Value Added Tax Act, 2006 as in force w.e.f. 01.01.2001, it can be adjusted / utilized for discharging tax liability under Central Sale Tax Act, 1956 under Rule 5(3-A) of the Central Sales Tax (Tamil Nadu) Rules, 1957. 45. In TVS Motor Co. Ltd. Vs. State of Tamil Nadu, (2019) 13 SCC 403, the Court had an occasion to consider the following issues answered by this Court:- "(1) Whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat "Having regard to the above, we are of the opinion that the provisions of Section 19(5)(c) are to be read down by construing that those dealers who are making sales exclusively to the other State Governments (i.e. outside the State of Tamil Nadu), the said States would be deemed as registered dealers for the purposes of availing benefits of ITC. Otherwise, in such a situation, it would be difficult to hold that test of reasonable classification is met in this limited context. It becomes unnecessary to deal with other contentions of MrBagaria". 51. However, to come to the above conclusion, the Court in para 43 held observed, "Sub-section (5) stipulates certain contingencies where such ITC would not be admissible. There is no quarrel about clauses (a) and (b). We are only concerned with clause (c) of this sub-section which provides that ITC would not be allowed on the purchase of goods sold as such or used in the manufacture of other goods and sold in the course of inter-State trade or commerce falling under subsection (2) of Section 8 of the Central Sales Tax Act. To put it tersely, sale by a dealer who is registered in the State of Tamil Nadu which is effected outside the Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the input tax credit and its utilization. 56. If there was any zero rated sale during the subsequent years, it can only be refunded in accordance with the law to the petitioner. There is no scope for adjustment for past liabilities. 57. Therefore, if the petitioner was otherwise entitled to such refund under Section 18 of the Tamil Nadu Value Added Tax, 2006, instead of refunding the amounts to the petitioner, such amount may be allowed to be set-off against the tax liability in view of the peculiar situation arising out of subsequent development and transition to a different tax regime under the GST Laws with effect from 01.07.2017. 58. Therefore, while dismissing this Writ Petition, I allow the petitioner to file an appeal against the impugned orders within a period of thirty days from date of receipt of a copy of this order before the appellate authority. 59. If such appeal is filed within such time before the appellate authority, the said appellate authority shall decide the case on merits in accordance with law within a period of three months from date of receipt of a copy of this order. 60. It is made clear there will be no waiver from mandatory pre- deposit of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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