Home Case Index All Cases VAT and Sales Tax VAT and Sales Tax + HC VAT and Sales Tax - 2020 (2) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (2) TMI 1189 - HC - VAT and Sales TaxReversal of input tax credit - inputs utilised in the manufacture of internal combustion engine - clearance to SEZ unit - petitioner had effected sale to units located in Special Economic Zones outside the State of Tamil Nadu and therefore the 1st respondent has taken a stand that the petitioner was not entitled to proportionate input tax credit on the inputs used in the manufacture of ICE cleared to such units - Section 19(1) of the TNVAT Act, 2006. HELD THAT:- From section 19, it is clear that if goods are used for manufacturing or processing of goods in the state, a registered dealer would be entitled to avail credit on the tax paid by the seller - it is evident that input tax credit could be denied only Section 19(5)(a),(b) & (c) of the TNVAT Act, 2006 on inputs. The restrictions in Section 19(5)(a) of the TNVAT Act, 2006, will apply only to such inputs which are bought and sold as such and not to inputs used in the manufacture of goods. 19(5)(b) is not relevant for the present case. Under Section 19(5)(c) of the TNVAT Act, 2006, no input tax credit can be allowed on the purchase of goods sold as such or used in the manufacture of other goods and sold in the course of inter-State trade or commerce falling under sub-Section (2) of Section 8 of the Central Sales Tax Act, 1956 - Thus, the sale effected under an exemption in terms of Section 8(6) is not covered by the exception in 19(5)(c ) of the TN VAT Act, 2006. If the sale in question does not fall under Section 8(2) of the CST Act, 1956, but under Section 8(6) of the CST Act, 1956, the credit cannot be denied - The sale of Internal Combustion Engine by the petitioner to units located in Special Economic Zones, outside the State of Tamil Nadu was not an exempted sale within the meaning of Section 15 of the TNVAT Act, 2006 - Such sale is neither exempted under 4th Schedule of the TNVAT Act, 2006 nor exempted under a Notification of the State Government as the expression of “Government” in Section 15 can only mean the “State Government” has defined Section 2(22) of the said Act. If Section 19(5) of the TNVAT Act, 2006 is applied plainly to the facts of the case, it is evident, credit cannot be denied on inputs merely because inputs were used in the manufacture of goods and such manufactured goods were sold to a buyer without payment of tax under Section 8(6) of the CST Act, 1956. Unless, there is a specific restriction imposed under the Act, credit cannot be denied. As there is no provision for denying credit under the circumstances, the demand proposed in the impugned notices may not be correct - this writ petitions is partly allowed by relegating the petitioner to file a reply to the impugned notices within a period of thirty days from date of receipt of a copy of this order - Petition allowed in part.
|