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TMI Blog2022 (3) TMI 1054X X X X Extracts X X X X X X X X Extracts X X X X ..... o pay presumptive tax or had ever paid it. Applicability of section 16(2) - HELD THAT:- From the conjoint reading of Section 7 and Section 16(2) of the Act and Rule 45 of the rules, it is clear that a registered dealer under the Act has option to pay presumptive lump-sum tax under Section 7 or by way of composition under Section 16(2) in the manner as prescribed in Chapter VI of the Rules. Importantly, by virtue of Rule 45(6), the dealer opting to pay the lump-sum is not liable to issue tax invoices under Section 30 - It is not understandable as to under what assumption, learned Tribunal has upheld the order of the Commissioner by placing reliance upon Section 16(2) of the Act. Again, there is nothing on record to suggest even remotely that the selling dealer M/s Samana Industries Ltd. had opted to pay lump-sum tax for the year 2010-11. The findings recorded by learned Tribunal in this behalf can easily be termed to be non- speaking being bereft of any reasoning. The lump-sum payment of composite tax under Section 16(2) of the Act in no way can be equated with the powers of State under Section 62(5) of the Act as both have separate and distinct fields of operation. There ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t'). The Assessing Authority, Baddi, District Solan, H.P. assessed the petitioner for the year 2010-11 under the VAT Act and also the Central Sales Tax Act, 1956. The assessment order was issued on 29.09.2011. A total sum of ₹ 1,31,43,515/- was assessed as excess Input Tax Credit (for short ITC ), out of which a sum of ₹ 49,27,694/- was applied towards the payment of due Central Sales Tax and balance of ₹ 82,15,821/- was assessed as excess Input Tax Credit, which was ordered to be carried forward to the next year under Section 12(4) of the VAT Act. Petitioner made a request for refund of ITC, however, he was directed to file separate application for refund by the Assessing Officer. 3. Petitioner submitted requisite application for refund of excess ITC of ₹ 82,15,821/-. Refund, as applied by the petitioner, was recommended by Assistant Excise and Taxation Commissioner, Baddi, Barotiwala and Nalagarh (AETC-BBN) on 02.11.2011. While considering the refund application of the petitioner, Commissioner called for additional reports from AETC-BBN and Excise and Taxation Officer (ETO) Nalagarh to verify the facts relating to actual tax deposition in Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 005 for which the Assessing Authority Nalagarh has issued a necessary certificate (Deferment Certificate No. 005) for the period 14.08.2009 to 13.08.2014 covering the period of commencement of commercial production w.e.f. 14.08.2009. As per report of ETO Nalagarh dated 21.05.2012, M/s Samana Industries Limited has claimed deferment to the tune of ₹ 17,06,715/- on VAT payable for ₹ 70,85,283/- i.e the amount of ₹ 17,06,715 has not been deposited into government treasury due to option exercised for upfront payment of tax as per aforesaid notification. The amount of tax which has not gone into Government treasury does not become refundable to the dealer as the amount cannot be refunded out of air. For granting refund, the first and foremost requirement is to allow refund only against specific payment or deposit of tax/ demand and where no amount has been deposited, there exists no provision under law to refund such amount. The application for refund cannot be entertained to the extent of the amount of claim not deposited in Government Treasury and as such the same remains unverifiable. Hence the amount of tax to the tune of ₹ 17,06,715/- is disallowed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - had not been deposited into the Government Treasury as M/s Samana Industries Ltd. had opted for upfront payment of tax in accordance with notification No. EXN-F(1)- 2/04, dated 26.07.2005. Since the amount of ₹ 17,06,715/- had not gone into the Government Treasury, hence, according to the learned Commissioner, the same was not refundable to the dealer. 9. In appeal, learned Tribunal upheld the dis-allowance of ₹ 17,06,715/-, ordered by the learned Commissioner, on the grounds that the petitioner was not entitled to avail the refund against the amount which was not deposited by the selling dealer i.e. M/s Samana Industries Ltd. by availing the benefit of deferment scheme, and also that refund to the extent of ₹ 17,06,715/- was unverifiable under Section 11(7) (c )(iii) of the Act. 10. Since the learned Tribunal has upheld learned Commissioner s order by placing reliance on Section 11(7)( c)( iii) of the Act, we deem it proper to answer question of law at serial No. (ii) above, in the first instance. 11. Section 11(7)(c)(iii) of the Act reads as under: (7) No input tax credit shall be claimed by a purchasing dealer and shall not be allowed to him for, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered dealer under the Act to pay fixed presumptive tax on the entire taxable turnover of the sales and purchase at the rates to be prescribed by the Government. A dealer having opted to pay presumptive tax under aforesaid provisions of Act is precluded to avail ITC. To bar a dealer from claiming ITC under Section 7 of the Act, it is necessary to be proved that such dealer firstly was entitled to opt and secondly had opted to pay presumptive tax. In the facts of the case in hand, there is nothing to suggest that the selling dealer i.e. M/S Samana Industries had opted to pay presumptive tax or had ever paid it. 14. As regards the applicability of section 16(2) of the Act to attract disqualification under section 11(7)(c)(iii), we find the conclusion drawn by learned Tribunal in that behalf to be clearly misplaced. The aforesaid provision of the Act clearly provides that the State Government has power to accept from any class of dealers, a composite or lump sum amount in lieu of tax payable under this Act for any period and at such intervals as may be prescribed . The calculation of payable lump-sum amount has also been left to be prescribed . The term prescribed is defined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch quarter and shall, in proof of the payment so made, furnish to the appropriate Assessing Authority, a treasury receipt. (6) The dealer opting to pay the lump-sum shall not issue a tax invoice under section 30 and the input tax credit in respect of goods purchased from such dealer shall be nil, and such dealer shall also not be entitled to claim any input tax credit on the purchase of goods made by him. (7) The dealer opting to pay lump-sum shall be entitled to charge tax as may be prescribed. (8) Notwithstanding anything contained in this Chapter, the State Government may at any time withdraw the facility of making payment of the lump-sum from any or all class(s) of dealers. Rules 46 to 49 deal with specific classes of dealers i.e. brick kiln owners, laboratory dealers, work contractors and village industries etc. Rule 50 deals with dealers other than those covered under Rules 46 to 49. As per above provisions, one is at liberty to opt to pay either under Section 7 or Section 16(2), the fixed lump-sum payable amount in accordance with its annual turnover subject, however, to the provisions of Rule 45(supra). 16. From the conjoint reading of Section 7 and S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve list, which have come into commercial production before 07.01.2003 and which, after the approval of the Director of Industries or other officers so authorized by him, undertake substantial expansion only after 07.01.2003 may either continue to avail such facility or by making an application in Form S.T. (DP)-VII opt to pay 65% of the tax liability, for any tax period of a financial year, according to the return and upon making such payment, he shall be deemed to have paid the tax due from him according to such return. The option once exercised shall be final. (2) The registered dealer (industrial unit) making payments of tax under sub-para(I) of this para shall be entitled to input tax credit under Section 11 of the Himachal Pradesh Value Added Tax Act, 2005 in respect of intra-State sales, inter-State sales or transfer of goods on consignment basis or branch transfer basis. The genesis of notification dated 26.07.2005 can be traced from Himachal Pradesh General Sales Tax (deferred payment of tax) Scheme 2005 (for short, deferment scheme ) issued under the Himachal Pradesh General Sales Tax Act, 1968, notified by the State Government on 30.03.2005. The H.P. General Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o avail of any incentive on tax, if such incentive has been declared by the State before the commencement of the VAT Act. In exercise of such powers, the State Government issued notification dated 19.01.2006 and allowed the incentive of deferment to new and existing Industrial Units by applying all terms and conditions specified in deferment scheme. 20. The lump-sum payment of composite tax under Section 16(2) of the Act in no way can be equated with the powers of State under Section 62(5) of the Act as both have separate and distinct fields of operation. There cannot be any overlapping between the two provisions, therefore, disallowance of ₹ 17,06,715/- payable from ITC to the petitioner by invoking the provisions either of Section 7 or Section 16(2) of the Act is wholly illegal and against the mandate of law. 21. The question of law under consideration is thus answered accordingly. It is held that the payment of presumptive tax under Section 7 or lump-sum tax by way of composition under Section 16(2) of the Act read with Rules 45 to 50 of the rules have their application in the specific field expressly contemplated in the Act and cannot be expanded to include deferm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of law are not juxtaposed, rather have their application in different situations. 23. There is no dispute on facts that the selling dealer i.e. M/s Samana Industries Limited had initially availed the benefit of deferred payment subsequently converted to upfront payment of 65% of the payable amount by virtue of provisions of notification dated 26.07.2005. It was provided in said notification that the upfront payment of 65% of the tax liability for any tax period of financial year shall be deemed to be payment of the tax due according to the return of the assessee. Therefore, deficit, if any, of 35% in receipt of tax suffered by the State was its voluntary Act under a scheme formulated by it. Such deficit to the State coffers cannot be made basis for penalizing the petitioner who was not at fault. 24. The questions of law at serial No. (i) and (iii) are accordingly answered. The petitioner was entitled to refund of entire amount of ITC to the tune of ₹ 82,15,821/-. Dis-allowance of ₹ 17,06,715/- from payable amount of ITC to the petitioner as ordered by learned Commissioner vide order dated 28.05.2012 and upheld by learned Tribunal vide order dated 29.08. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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