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TMI Blog2023 (9) TMI 1627X X X X Extracts X X X X X X X X Extracts X X X X ..... on 18 (1)(e) of the RVAT Act, and therefore this Court is not in agreement with the view taken by the Tax Board. Because the petitioner-assessee has purchased the goods in question from a registered dealer, after payment of VAT, and used the same against the import of raw material, which was admittedly used in the manufacturing of final product in the State of Rajasthan. The goods in question i.e. DEPB / Duty Free License / Duty Credit Scrip, by extension, would also necessarily be deemed to be part of the raw material as the cost of the goods in question would be embedded in cost of the raw materials, thereby affecting the purchase price and sale price - Because there is no specific exclusion of the goods in question by way of notification of the State Government, as prescribed in Section 18 (1)(e) of the RVAT Act and as observed earlier, the definition of raw material is broad and exhaustive and not narrow and inclusive. Although the judgment of Jagriti Plastics Ltd. [ 2015 (10) TMI 291 - DELHI HIGH COURT] is based on provisions which are not pari materia to Section 18 of the RVAT Act, the fact remains that the underlying principle / jurisprudence of ITC has been outlined in grea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State and has claimed and availed the ITC of the tax paid on purchase of these intangible goods. The enquiry officer found that no ITC is available on these items if the same are not disposed off in accordance with Section 18 of the RVAT Act. Accordingly, a case of tax-evasion was made out and it was transferred to the adjudicating/assessing officer (for short "AO"), who after affording an opportunity of hearing to the petitioner-assessee disallowed the input credit availed by them and levied interest on non-deposition of the due tax. The AO also held that the petitioner-assessee has availed wrong input tax credit and caused evasion of tax, and therefore imposed penalty under Section 61 (2) (b) of the RVAT Act. Being aggrieved of the assessment order, the petitioner-assessee preferred appeals before the appellate authority, who vide order dated 16.08.2017 confirmed the reversal of ITC and levy of interest and penalty and rejected the appeals. Against the appellate orders, the petitioner-assessee preferred appeal under Section 83 of the RVAT Act before the Rajasthan Tax Board, who vide its order dated 13.09.2018, confirmed the reversal of ITC and levy of interest, but set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce on Division Bench judgment of Madras High Court in the case of Sha Kantilal Jayantilal vs. The State of Tamilnadu reported in (2017) 97 VST 295 (Mad). Learned counsel for the revenue has also relied on Apex Court judgment of Jayam and Co. vs. Assistant Commissioner and Ors. reported in (2016) 15 SCC 125 to submit that the dealer has no vested right to claim benefit of ITC as the same is a concession granted by virtue of a statute and whenever concession is given by a statute or notification, the conditions mentioned thereof are strictly required to be complied with in order to avail the concession. Learned counsel for the revenue further submits that the judgments of Jagriti Plastics (supra) and Commercial Engineers and Body Building Company Ltd. (supra), relied upon by the petitioner-assessee, are under the regime of Delhi VAT Act and Madhya Pradesh VAT Act and the provision of ITC in RVAT Act are not pari materia with those statutes, and therefore these judgments have no application in the facts and circumstances of the present case. 6. Heard the arguments advanced by both the sides, scanned the record of the STRs and considered the judgments cited at Bar. 7. In the case in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from another registered dealer after payment of VAT. Therefore, the petitioner-assessee has satisfied the first condition mentioned in Section 18 (1) of the RVAT Act. The goods in question were then admittedly used for import of raw materials. The bone of contention in the present case is the second condition mentioned in Section 18 (1) of the RVAT Act, which prescribes the various purposes under which the dealer can claim ITC. The petitioner-assessee was denied the availment of ITC because, as per the Revenue, the case of the petitioner-assessee is not covered under any of the sub-clause of Section 18 (1) of the RVAT Act. To understand and interpret Section 18, the following provisions of the RVAT Act are also required to be analysed: "Section 2 - Definitions (15) "goods" means all kinds of movable property, whether tangible or intangible, other than newspapers, money, actionable claims, stocks, shares and securities, and includes materials, articles and commodities used in any form in the execution of works contract, livestock and all other things attached to or forming part of the land which is agreed to be severed before sale or under the contract of sale; (17) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lusive of any statutory levy or any sum charged for anything done by the dealer in respect of the goods or services rendered at the time of or before the delivery thereof, except the tax imposed under this Act; Explanation I.-In the case of a sale by hire purchase agreement, the prevailing market price of the goods on the date on which such goods are delivered to the buyer under such agreement, shall be deemed to be the sale price of such goods; Explanation II.-Cash or trade discount at the time of sale as evident from the invoice shall be excluded from the sale price but any ex post facto grant of discounts or incentives or rebates or rewards and the like shall not be excluded; Explanation III.-Where according to the terms of a contract, the cost of freight and other expenses in respect of the transportation of goods are incurred by the dealer for or on behalf of the buyer, such cost of freight and other expenses shall not be included in the sale price, if charged separately in the invoice (emphasis supplied)" 11. The term 'input tax' has been given a wide meaning to include tax paid on any goods. The definition of 'raw material' is also inclusive and not exhaustive and any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' to an actual direct tangible or physical use in the imported goods. 20. It is possible in this context to draw an analogy with CENVAT or MODVAT credit, the purpose of which, like VAT, was to mitigate the cascading effect of multiple taxes at various stages of the trade in goods. In Oil & Natural Gas Corporation Limited v. Commissioner of Central Excise, Sales Tax & Custom, Raigad: 2013 (32) STR 31 (Bom) the facts were that the Appellant set up a plant to make economic use of the crude oil and associated natural gas extracted from the oil wells. This resulted in production of lighter hydro carbons, natural gas and other downstream products. The crude oil was exempted from payment of excise duty, which was therefore, an exempted commodity. Inasmuch as ONGC also manufactured the downstream products, which were dutiable, it availed of the CENVAT credit in respect of the service tax paid on the input services in terms of the facility extended to manufacturer of excisable goods under the CENVAT Credit Rules. The Department took the stand that CENVAT credit pertained to the input service availed of and used exclusively at the oil fields of Mumbai Offshore and that since the crude ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty was paid. In para 13 of the said judgement it was held "in order to avoid the cascading effect the benefit of CENVAT credit on input stage goods and services must be ordinarily allowed as long as a connection between the input stage goods and services is established. Conceptually as well as a matter of policy, any input service that forms a part of the value of the final product should be eligible for the benefit of CENVAT credit." 23. Other decisions which hold likewise include Deepak Fertilisers and Chemicals Corporation Ltd. v. CCE, Belapur: 2013 (32) S.T.R. 532 (Bom.) and National Aluminium Co. Ltd. v. Deputy Commissioner of Commercial Taxes: (2012) 56 VST 68 (Orissa). In the latter decision, the Orissa High Court was considering the question: "Whether coal, alum, caustic soda, and other consumables used for generation of electricity is to be treated as an "input" as defined under section 2 (25) of the Orissa Value Added Tax Act and the tax which has been paid on purchase of coal, alum, caustic soda and other consumables, etc., can be claimed as input-tax credit under Section 2 (27) of the OVAT Act against the tax payable on sale of finished p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the DTT that input tax credit cannot be availed of unless the Assessees are themselves dealing in DEPB scrips. In other words, in order to avail of the input tax credit in the present case it is not necessary that the Assessees have to be dealers in the same commodity, i.e. the DEPB scrips which were used in payment of customs duty on the imported goods in which they were dealing. Such an interpretation will negate the object of introducing the system of value added taxes, i.e. to reduce the cascading effect of multiple taxes at various stages. As long as it is shown that use of the DEPB scrip has impacted the cost of the product that is sold, either directly or indirectly, the credit of the input tax paid on the DEPB scrip cannot be denied to the Assessees. (emphasis supplied)" 13. Para 14 of the judgment of Division Bench of Madhya Pradesh High Court in the case of Commercial Engineers & Body Building Company Ltd. (supra) is also noteworthy: "14. The intention of the legislature in providing a provision for grant of rebate of input tax as contained in the VAT Act is akin to the provisions of MODVAT credit and CENVAT Credit applicable in Excise Law and when sub section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowed the ITC and has rightly levied interest on non-deposit of the due tax. Therefore, the appellate order on this issue is confirmed and appeals of the appellant on this issue are rejected." 15. Having gone through the material on record extensively and after careful consideration of the arguments advanced, this Court is of the view that the case of the petitioner-assessee is covered by Section 18 (1)(e) of the RVAT Act, and therefore this Court is not in agreement with the view taken by the Tax Board, for the following reasons: 15.1) Because the petitioner-assessee has purchased the goods in question from a registered dealer, after payment of VAT, and used the same against the import of raw material, which was admittedly used in the manufacturing of final product in the State of Rajasthan. The goods in question i.e. DEPB / Duty Free License / Duty Credit Scrip, by extension, would also necessarily be deemed to be part of the raw material as the cost of the goods in question would be embedded in cost of the raw materials, thereby affecting the 'purchase price' and 'sale price'. 15.2) Because there is no specific exclusion of the goods in question by way of notification of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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