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2020 (2) TMI 680 - HC - VAT and Sales TaxReversal of proportionate Input Tax Credit - credit of tax paid on purchase of Duty Entitlement Passbook (DEPB) - section 19 of the Tamil Nadu VAT Act, 2006 - HELD THAT:- It may be mentioned that an Assessing Officer cannot rely on clarifications and instructions of his superior as has been done in the present case - If assessing officers were follow such clarifications of their superior, their orders would be arbitrary. As such, such assessment cannot be completed based on clarifications as such exercise would amount to assessment by circular contrary to the view taken by the Honourable Supreme Court in ORIENT PAPER MILLS LTD. VERSUS UNION OF INDIA [1968 (5) TMI 15 - SUPREME COURT]. As an assessing officer, the respondent ought to independently come to a conclusion whether the provisions of the Tamil Nadu VAT Act, 2006 were to be invoked in the facts and circumstances of the case or not - Therefore, initiation of proceedings vide notices dated 15.6.2015 prima facie appears to be ill conceived and proceeds on a wrong assumption of jurisdiction by the respondent. DEPB qualifies as ‘goods’ within the meaning of the Sales Tax laws and its sale is exigible to tax. DEPB scrips/licence is liable to tax at the rate prescribed under Entry 70 of Part B of the 1st Schedule of the Tamil Nadu VAT Act, 2006 - Since DEPB scrips/license is liable to tax at the rate prescribed under Entry 70 of Part B of the 1st Schedule of the Tamil Nadu VAT Act, 2006, the petitioner was entitled to input tax credit in terms of Section 19(1) of the Tamil Nadu VAT Act, 2006. It must be remembered that DEPB Scrips were given by the Joint Director of General of Foreign Trade as an export incentive to an exporter under the Export Import Policy. Instead of giving cash refund on exports, the Central Government through the Minsitry of Commerce & Trade gave it in the form of credit of duty in the DEPB Scrips/licence which could be used for discharging the Customs duty at the time of import of goods. Such DEPB Scrips/licence could be either used by the exporter himself in whose name such scrips/licence were issued as an export incentive or it can be sold in the open market to be purchased by person like the petitioner like REP Licence. Petition dismissed.
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