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TMI Blog2014 (7) TMI 889X X X X Extracts X X X X X X X X Extracts X X X X ..... contended that the first respondent has no powers under the TNVAT Act to issue any circular or clarification. He contended that even though there was section 28 A under the repealed TNGST Act, no such powers have been granted to the first respondent. The learned Senior counsel also contended that the second respondent has issued a notice proposing to reverse the Input Tax Credit on the purchase of capital goods used in the course of manufacturing activity based on the clarification of the first respondent without quoting the same. Since the first respondent is the superior most officer, any clarification issued by him without authority would prejudice the minds of the assessing officers who are duty bound to apply their mind independently a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old storage equipments; (c) components, spare parts and accessories of the goods specified in (a) and (b) above; (d) moulds, dies, jigs and fixtures; (e) refractors and refractory materials; (f) storage tanks; and (g) tubes, pipes and fittings thereof; used in the State for the purpose of manufacture, processing, packing or storing of goods in the course of business excluding civil structures and such goods as may be notified by the Government. 5. The definition only specifies that the goods which are used for the purpose of manufacture can be categorized as capital goods. The tax paid for the purchase of capital goods used in the case of manufacture is entitled to be claimed back as ITC. The issue on hand is whether cranes can be cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... number. Whenever any particular goods cannot be categorized to fall under a particular schedule, the same would fall in the residual entry. In the present case, the issue is not rate of tax but whether the goods are used in the course of manufacturing Activity. For claiming ITC, the rate of tax and the entry under which it falls unless exempted is irrelevant. When the schedules specify the rate of tax applicable to the respective goods, the first respondent unless there is any specific provision will not have any powers to issue any circular or clarification. Similarly, the first respondent also cannot classify that the goods would fall into one particular entry. 9. While dealing with the scope of Circulars issued by commissioner, Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctly or indirectly or did not have such an effect..." 10. In the judgment reported in [1994] 210 ITR 129; [1994] 4 SCC 375, the Apex Court has held as follows (page 135 in 210 ITR): "The fact that the circular to which Shri Salve has referred is one which had been issued in exercise of the powers conferred by section 119 of the Act has no significance insofar as the point under consideration, namely, whether the circular can override or detract from the provisions of the Act is concerned, inasmuch as what section 119 has empowered is to issue orders, instructions or directions for the 'proper administration' of the act or for such other purposes specified in sub-section (2) of the Section. Such an order, instruction or direction c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt proceedings are concerned. 13. Even though this court held that the authorities do not have any power to issue any clarification, the same was not quashed as it was treated as non est in the eye of law. 14. In the Order in W.P.No.26395 of 2012 (CDJ 2012 MHC 5354, this Court while dealing with Circular No.22 dated 20.10.2011, held as follows: "4. As it is clear that the Circular, dated 20.10.2011, issued by the office of the Commissioner of Commercial Taxes, Chennai, cannot abridge or overrule the provisions of Rule 11(2) of the Tamil Nadu Value Added Tax Rules, 2007, this Court finds it appropriate to set aside the impugned order of the first respondent, dated 7.8.2012. Hence, it is set aside. The first respondent is directed to consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory force. 23. In the light of the above discussion and taking note of the decisions cited supra, in our view the circular issued by the Commissioner though stated to be without jurisdiction, the circular having been issued by the highest officer in the department, the assessing officers, who are subordinate officers cannot be expected to take a different view and therefore, no useful or fruitful purpose would be served in directing the petitioners to avail the remedy under the Act and therefore, these writ petitions questioning the classification of the goods are held to be maintainable before this Court on account of the reasons recorded above. This conclusion of ours is fortified by the decision of the Hon'ble Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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