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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 ..... , used for manufacture of goods, which is intended for sale. If the reasoning given by the Tribunal is accepted, then a manufacturer would get ITC on input if the goods are manufactured by it and sold by it itself. Whereas, the manufacturer would not be entitled to ITC if the goods are manufactured but not sold by manufacturer itself and stock transferred to its branch/stockyard/other units etc. up 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, GURGAON AND ANOTHER VERSUS EAST INDIA COTTON MFG. CO. LTD. [ 1981 (7) TMI 205 - SUPREME COURT ] - 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 C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that ITC on the goods manufactured and thereafter stock transferred within the State is not eligible in view of the provisions of Section 18(8)(ix) of JVAT Act, 2005. Under the said circumstances, notices were issued against the Petitioner initiating Before Assessment Proceedings under Section 40(2) of the JVAT Act and impugned Before Assessment Order dated 05.12.2012 was passed by Assessing Officer under Section 40(2), wherein claim of ITC on Intrastate stock transfer was disallowed and total liability along with interest thereupon was fastened upon the Petitioner of Rs. 42,15,419/-. The Assessment Order dated 05.12.2012 (at Annexure-4) is under challenge in the instant writ petition. (ii) W.P.(T) No. 790 of 2013 also pertains to Unit-II of the Petitioner for the period 2011-12 and pursuant to the inspection carried out by a team of officials of Commercial Taxes Department, proceeding under Section 40(2) of JVAT Act was initiated against the Petitioner and Order dated 05.12.2012 (Annexure-4) was passed by the Assessing Officer disallowing the claim of ITC on Intrastate stock transfer of goods, amounting to Rs. 63,57,867/-, which is under challenge in the instant wri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck transfer of approximately 14.88 per cent of its total turnover; to the extent of its turnover which pertains to Intrastate stock transfer, the Petitioner is not entitled to claim ITC. Accordingly, vide Assessment Order dated 28.03.2014, as against the claim of ITC of Rs. 57,07,648.99, only an amount of Rs. 48,58,350.65 was allowed and the claim of ITC of Rs. 8,49,928.14/- was denied by the Assessing Officer. The Petitioner, against the said Assessment Order, preferred appeal before the Appellate Authority and its Appeal was dismissed vide order dated 21.08.2015, wherein Appellate Authority relied upon un-amended provisions of Section 18(8)(ix) of the JVAT Act. Thereafter, Petitioner preferred statutory revision before the Commercial Taxes Tribunal, Jharkhand which was registered as Revision Case No. JR 206/2015, but the Revisional Court, vide order dated 10.08.2021, was pleased to dismiss the revision petition declaring that Petitioner is not eligible for ITC on Intrastate stock transfer of goods. 4. Mrs. Shilpi Sandil Gadodia, Advocate along with Mr. Rajneet Kushwaha, Advocate assailed the impugned orders of denial of ITC on Intrastate stock transfer by primarily contending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uated within the State of Jharkhand, the state of Jharkhand carried out amendment in Section 18(8)(ix), wherein the embargo on availability of ITC on Intrastate stock transfer of goods was lifted and the Judgment rendered in the Case of Tata steel Ltd. (supra) was made inapplicable through legislative enactment. However, despite the aforesaid facts, in the present cases, Assessing Officer has not only denied the benefit of ITC on Intrastate stock transfer by relying upon un-amended provision of Section 18(8)(ix) and the Judgment of Tata steel Ltd. (supra), but even the Commercial Taxes Tribunal has went a step ahead by declaring that no ITC whatsoever is available to an Industrial Unit under Section 18(4)(iii) of the JVAT Act, 2005 if goods are manufactured and are not sold but are stock transferred. 6. It has been further brought to our notice that the Judgment and order passed by this Court in the case of Tata Steel Ltd. has been quashed/set aside by Hon ble Apex Court recently in Civil Appeal No. 7398 of 2008 vide Judgment and Order dated 24.02.2022 and, thus, once the very basis of the Assessment Order i.e. the Judgment of Tata Steel Ltd. (supra) has been set aside by Hon bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel for the parties and after going through the materials available on record; it is evident that the Petitioner is a manufacturing dealer which is engaged in manufacturing and selling of Auto Parts and Leaf Spring assembly. 12. In order to properly appreciate the issues involved in the instant writ application, it would be appropriate to quote certain provisions of the Jharkhand Value Added Tax Act, 2005 and the Jharkhand Value Added Tax Rules, 2006 which are quoted hereunder: (I) Section-2 (xxii) Goods means all kinds of movable property (other than newspapers, actionable claims, electricity, stocks and shares and securities) and includes livestock, all materials, computer software sold in any form, Sim cards used in Mobile Telephony or for any other similar activation purposes, commodities and articles and every kind of property (whether as goods or in some other form) involved in the execution of a works contract, and all growing crops, grass, trees and things attached to, or forming part of the land which are agreed to be severed before sale or under the contract of sale; (II) Section-2 (xxviii) Input means, goods purchased in course of business (a) f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 dealer for any tax period after being registered, an input tax credit as determined under this Section shall be allowed to such registered dealer for the tax paid or payable in respect of all taxable sales other than any other sales as may be prescribed, or purchases under Section 10 during that period, (2) The input tax credit to which the registered dealer is entitled shall be the amount of tax paid by the registered dealer to another registered dealer, on his turnover of purchases made during any tax period, intended to be used for the purposes and subject to the conditions as specified in sub Section (3), sub-Section (4), sub-Section (5) and sub-Section(6) and calculated in such manner as may be prescribed. (3) Subject to such conditions and restrictions as may be prescribed, partial or proportionate input tax credit may be allowed in such cases as may be used (xxx) for their respective uses. (4) Input Tax credit shall be allowed on purchase of goods made within the State of Jharkhand fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 dealer in order to avail ITC on raw materials used by it in manufacturing or processing of goods for sale, namely;- (i) Purchase of goods should be made within the State of Jharkhand; (ii) Purchase should be made from registered dealer holding validity certificate of registration; (iii) Goods purchased should be intended for the purpose of use as raw materials for direct use in manufacturing or processing of goods for sale. 15. Admittedly, in the case of the Petitioner, there is no dispute that Petitioner purchased goods from a registered dealer within the State of Jharkhand and, thus, the first two conditions are satisfied. 16. It is further not in dispute that Petitioner purchased the goods and utilized it for use as raw materials for direct use in manufacturing or processing of goods for sale. Thus, the Petitioner is fulfilling all the three conditions. However, dispute in the present case has arisen that the Petitioner has not sold the goods itself but has made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, therefore, proportionate ITC was allowed over and above 4% as per the method of calculation provided under the Rule. This un-amended provision was causing hardship to local Industries where the local Industries were making Intrastate stock transfer of the goods within the State for sale. The hardship was evident from the fact that although local Industries were making Intrastate stock transfer within the State for sale, ultimately, the goods were sold and the State was realizing revenue on such sale, ITC was provided only in excess of 4% paid on raw materials. Due to this hardship, provision of Section 18(8)(ix) was amended and instead of the word transfer of stock which included both Intrastate and Interstate stock transfer, the words for Interstate transfer was inserted in Section 18(8)(ix) of the Act. 19. The effect of the aforesaid amendment is that the erstwhile bar on the availment of full ITC on transfer of stock was relaxed w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 need to resort to the object and purpose of the enactment because in such a case, the language best declares the intention of the law-giver. But, even if we look at the object and intendment of Section 8 (1)(b) read with Section 8(3)(b), we reach the same conclusion. The object of providing a lower rate of tax under Section 8(1)(b) for sales of goods described in Section 8(3)(b) clearly is that when goods are purchased by a registered dealer for being used by him in the manufacture or processing of goods which are intended for sale, the goods which are ultimately sold should not become unduly expensive to the consumer by addition of a high rate of sales tax on the purchase of goods which are used in the manufacture or processing of the goods ultimately sold. Now if this be the object of Section 8(1)(b) read with Section 8(3)(b) it should be immaterial whether the sale of the manufactured or processed goods is by the registere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich 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 concession and said concession is available only on fulfilling the stipulations and/or conditions prescribed under the Act. In the instant case, Petitioner is fulfilling all the conditions for availment of ITC, but despite the same it is being denied to the Petitioner on a wrongful interpretation of the provisions of Sections 18(4)(iii) and 18(8)(ix) of the JVAT Act. Thus, in our opinion, reliance placed by the learned counsel for the State upon the Judgment on the issue of ITC being a concession in the present case is misplaced as there is no dispute on the said proposition. 22. We have examined the Assessment Orders and the orders passed by the Appellate Authority and/or Tribunal, from which it is gathered that claim of ITC of the Petitioner-company was primarily rejected by placing reliance upon the Judgment rendered by this Court dated 24.04.2008 in the case of Tata Steel Ltd. (supra). The relevant extract of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (Annexure-4 in three writ petitions being W.P.(T) No. 786 of 2013, W.P.(T) No. 788 of 2013 and W.P.(T) No. 790 of 2013), impugned Judgment and order dated 10th August, 2021 passed by Commercial Taxes Tribunal, Jharkhand (Annexure-8 in W.P.(T) No. 4508 of 2021) and impugned Judgment and Order dated 10th August, 2021 passed by Commercial Taxes Tribunal, Jharkhand (Annexure-9 in W.P.(T) No. 4509 of 2021); are hereby quashed and set aside. Accordingly, if any amount has been realized from the Petitioner consequent upon passing of the impugned orders towards denial of its claim of ITC, the said amount shall be refunded to the Petitioner within a period of four months from the date of receipt/production of copy of this order; failing which, said amount shall be refunded along with interest @ 6% per annum from the date of recovery of the said amount till the date of actual refund. 26. Consequently, all t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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