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TMI Blog2023 (10) TMI 724X X X X Extracts X X X X X X X X Extracts X X X X ..... amended provisions of Section 18(8)(ix) of the Jharkhand Value Added Tax Act, 2005 (for short 'JVAT Act')"? 3. For the sake of ready reference, facts of individual cases are enumerated hereunder in short:- (i) W.P.(T) No. 786 of 2013 pertains to the period 2010-11 in respect of Unit-II of the Petitioner-company. The Petitioner is primarily engaged in manufacturing and selling of Auto Parts and Leaf Spring assembly. Petitioner has two Units/Plants being Unit No. I and Unit No. II bearing TIN No. 20310900926 and TIN No. 2044 0905643 respectively and both the Units are situated at Adityapur Industrial Area, Jamshedpur. It is the case of the Petitioner that during normal course of its business, Petitioner makes Intrastate stock transfer of goods from its Unit-II to Unit-I and vice versa. An inspection was conducted in the premises of the Petitioner by a team of officials of Commercial Taxes Department and for the Period 2010-11 it was alleged that the Petitioner claimed Input Tax Credit (for short 'ITC') for Rs. 52,28,783.68 on Intrastate stock transfer of its goods and it was contended in the Inspection Report that ITC on the goods manufactured and thereafter stock transferred with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessment Order, preferred an appeal before Joint Commissioner of Commercial Taxes (Appeals), Jamshedpur Division, Jamshedpur, which was registered as AP- VAT-A-93/2004-05. However, the Appellate Court, vide order dated 30.01.2016, by relying upon un-amended provisions of Section 18(8)(ix) of the JVAT Act, upheld the Assessment Order. Petitioner, thereafter, preferred statutory revision before Commercial Taxes Tribunal, Jharkhand, Ranchi against the Appellate Order, which was registered as Revision Case No. JR-74 of 2016. However, the revisional court, vide its order dated 10.08.2021, was pleased to dismiss the revision petition of the Petitioner and held that Petitioner is not entitled to claim ITC on the goods which were stock transferred by it within the State. (v) W.P.(T) No. 4509 of 2021 also pertains to Unit-I of the Petitioner- company for the period 2010-11, wherein Petitioner claimed total ITC of Rs. 57,07,648.79. The Assessing Officer, while relying upon the decision of this Court in the case of Tata Steel Ltd. (supra) held that since Petitioner made Intrastate stock transfer of approximately 14.88 per cent of its total turnover; to the extent of its turnover which p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Cummins, Tinplate India Ltd., etc. which were engaged in manufacture of goods, filed representations before the State Government pleading hardships due to denial of the benefit of ITC in respect of the goods consumed for manufacture of goods for Intrastate stock transfer of goods for sale. It is the case of the Petitioner that there are several manufacturing Units situated within the State of Jharkhand and it is not possible for the said Units to sell its product in the market from its Industrial Unit itself and they are required to establish Branches, Stock-yards and Dealers across the State from where the goods are sold. In order to sell the goods, through their Branches/Stockyards, the companies, like Petitioner, have to transfer the goods by way of Intrastate stock transfer which are intended for sale. However, in view of un-amended provision of Section 18(8)(ix), proportionate ITC on the goods used for manufacture of goods, which were Intrastate stock transferred for sale, was being denied. It was pursuant to the said representations being made by various Units situated within the State of Jharkhand, the state of Jharkhand carried out amendment in Section 18(8)(ix), wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Saheli Leasing and Industries Ltd., (20010) 6 CC 384, it has been submitted that the doctrine of "aspect legislation" must be kept in mind while interpreting the provisions of Section 18(8)(ix) of the JVAT Act. 9. Further reliance has been made to the decision of Hon'ble Apex Court in the case of 'Ald Automotives Ltd. vs. The Commercial Tax Officer, reported in (2019) 13 SCC 255' and in the case of 'TVS Motor Company Ltd. vs. The state of Tamil Nadu, reported in (2019) 13 SCC 403', to contend that benefit of ITC is in the nature of 'benefit/concession' and is not a vested right and/or indefeasible right. It was vehemently argued that benefit of ITC conferred under the Act is subject to certain contingencies and condition prescribed in the statutory Scheme and unless an assessee fulfills said contingencies and/or satisfies the conditions, benefit of ITC cannot be extended to the said assessee. 10. On the strength of the above, it was contended that benefit of ITC has been rightly denied to the respective Petitioners. 11. Having heard learned counsel for the parties and after going through the materials available on record; it is evident that the Petitioner is a manufacturing dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in relation to a registered dealer means the tax charged under this Act by the selling dealer to such dealer on the sale to him of any goods for resale or for use in manufacturing or processing of goods for sale or for directly use in mining or use as containers or packing materials or for the execution of works contract. It shall also include the tax paid on entry of goods as mentioned in schedule III by a registered dealer. (V) Section-17 Tax Payable - (1) The tax payable by a registered dealer for any tax period shall be the difference between the output tax payable plus purchase tax, if any, and the input tax paid, which can be determined, from the following formula: Tax payable = (O+P)-I Where 'O' denotes the output tax payable for any tax period as determined under Section 15, 'P' denotes the purchase tax paid by a registered dealer for any tax period as determined under Section 10 and 'I' denotes the input tax paid or payable and includes tax paid on Entry of Goods, for the said tax period as determined under Section 15. (VI) Section-18-Input Tax Credit- (1) Subject to the provisions of this Act, for the purpose of calculating the tax payable by a registered deale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the First Point of Sale within the State of Jharkhand (2) Any VAT dealer, who claims Input Tax Credit under sub-section (4) of Section 18 of the Act and his Output Tax payable requires the Input Tax Credit, for the sales made at the stage(s) under sub-section (1) of Section 9 of the Act, shall substantiate for such claim before the authority prescribed, by producing a true Declaration in writing, issued by the preceding VAT selling dealer, in Form JVAT 404 evidencing that the goods in question have already been subjected to Tax at the preceding stage of their sale in the State of Jharkhand." 13. By bare perusal of the aforesaid provisions of the JVAT Act, 2005 it would transpire that said provisions are in consonance with the scheme of Value Added Tax Regime introduced in the Country. From the scheme of JVAT, 2005 it would be evident that output tax liability of a dealer was required to be determined after subtracting therein the input tax paid by the dealer. 14. For the purposes of manufacturing dealer, Section 18(4)(3) of JVAT Act is relevant and a bare reading of the provisions of Section 18(4)(3) would reveal that following conditions are required to be complied with by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded that in respect of transactions falling under this clause, input tax credit may be allowed on the tax paid in excess of 4% on such materials used in the manufacture of the finished Products." 18. A bare perusal of the un-amended provision would reveal that if the goods manufactured for stock transfer, whether Intrastate or Interstate, ITC could not be availed subject to exceptions carved out in the proviso. The proviso enables availment of ITC in respect of tax paid in excess of 4% on such materials used in the manufacture of goods which were stock transferred, either within or outside the State. Thus, even prior to amendment carried out under Section 18(8)(ix), proportionate ITC in excess of 4% of the tax paid on input goods was available. Therefore, when the input tax paid was over and above 4% paid on raw materials consumed for manufacturing of goods which were ultimately stock transferred whether Intrastate or Interstate under the un-amended provision, ITC was only denied to the extent of 4%. The reason was obvious that the State intended to retain the tax of 4% which would have been otherwise charged by the State if the goods would have been sold within the State and, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p to the stage when the final product is sold. This is clearly not the intent of the Scheme of JVAT Act and the manufacturer is not required to wait for availment of ITC to a stage of ultimate sale of goods but it is entitled for ITC if the goods are merely 'intended for sale'. Almost identical issue came up for consideration before the Hon'ble Apex Court by interpreting almost pari materia provisions contained under Section 8(3)(b) of the Central Sales Tax Act, 1956 in the case of Assessing Authority cum Excise and Taxation Officer, Gurugram and Anr. Vs. East Indian Cotton Manufacturing Company Ltd., Faridabad, reported in (1981) 3 SCC 531. In the said Judgment, Hon'ble Apex Court in categorical term has held that the words 'for sale' following the word 'goods' in Section 8(3)(b) of the Central Sales Tax Act 1956 clearly indicate that the goods manufactured or processed must be goods 'for sale'; in other words, they must be 'intended for sale' either by registered dealer himself or by anyone else. For brevity, relevant paragraphs of the said Judgment is extracted herein-under:- "7. Now ordinarily when the language of a statutory provision is plain and unambiguous, there is no n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a third party on a job contract and uses in the manufacture or processing of such goods, materials purchased by him against his Certificate of Registration and the declarations in Form C, so long as the manufactured or processed goods are intended for sale by such third party. It is of course, true that if proceedings are taken against the registered dealer under Section 10, clause (d) or Section 10-A, the question would arise whether the goods manufactured or processed by the registered dealer for a third party were intended for sale by such third party and that would have to be decided by the Court or the competent authority according to the appropriate and relevant rules of evidence, but merely because some difficulty may arise in the determination of this question by reason of the third party coming into the picture that would be no ground for refusing to place on the language of Section 8(3)(b) the only construction which it can reasonably bear. 21. We have carefully perused the Judgments relied upon by the counsel for the State and we are of the opinion that said Judgments are of no help for the Revenue. It is an undisputed fact that availment of ITC is in the nature of con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Value Added Tax (Amendment) Ordinance, 2011, with an order of remand to the High Court for a fresh decision. The respondent will be entitled to file an amended/additional counter affidavit relying on the amended clause. Equally, it will be open to the appellant to file proceedings challenging the ordinance and the notification. It is clarified that we have not expressed any opinion on interpretation of Clause (ix) to subsection (8) of Section 18 of the Jharkhand Value Added Tax Act, 2005, pre and post the amendment or validity of the notification granting retrospective effect to the amendment." 24. In view of the aforesaid facts, the very foundation, on the basis of which, claim of ITC of the Petitioner was denied i.e., the Judgment of Tata Steel Ltd. (supra) as well as un-amended provision of Section 18(8)(ix) of the JVAT Act does not exist and, resultantly, it can be safely declare that claim of ITC of the Petitioner on Intrastate stock transfer has been wrongly denied in the impugned orders. 25. Accordingly, we hold that Petitioner is entitled to claim full ITC on Intrastate stock transfer of goods and, consequentially, the impugned orders being the orders dated 05.12.2012 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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