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2012 (4) TMI 458 - HC - VAT and Sales TaxPurchase of packing material against Form-H - Export of goods out of India - DVAT - assessee claimed input tax credit and asked for refund of the input tax on the ground that the packing material was used to pack rice which was exported out of India. - Section 9(1)(b) of DVAT - held that:- Section 9(7)(b) of the Act, when it says that no tax credit shall be allowed for the purchase of goods which are used exclusively for the manufacture, processing or packing of goods specified in the First Schedule, refers only to the sale of exempted goods within the meaning of Section 6(1) of the Act and does not refer to sales which are not liable to tax at all by virtue of the provisions of Section 7. Tax credit under Section 9(1)(b) is available in the case of goods purchased and used by a dealer, directly or indirectly, for the purpose of making sale of goods in the course of export of the goods out of India. Article 286 of constitution of India - The appellant dealer is not liable to pay VAT on the sale of rice because the sale is in the course of export out of India. The same rice, if it is sold within the State, would become liable to tax, though no tax would be payable because of the exemption granted under Section 6(1) of the Act. It is competent for the State Legislature to make amendment or modify the entries in the First Schedule to the Act to either withdraw the exemption granted to the goods or add more items that would be exempt from tax or change the conditions and exceptions set out therein, subject to which the exemption is granted. Such modifications or amendments cannot, however, be made to Section 7(c) of the Act by the State Government to provide for levy of tax on the sale of the goods, even though they are mentioned in the First Schedule to the Act, if they are made in the course of export of the goods out of the territory of India, because of Article 286(1). - Decided in favor of the assessee
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