TMI Blog2016 (4) TMI 968X X X X Extracts X X X X X X X X Extracts X X X X ..... - SUPREME COURT OF INDIA], the Supreme Court held that lottery tickets constituted "goods" within the meaning of the expression "goods" as given in the Tamil Nadu General Sales Tax Act, 1959 and the Bengal Finance (Sales Tax) Act, 1941. In view of the above said Supreme Court judgments, the petitioner is basically right in contending that DEPB licences are goods. But, the mere fact that these licences constitute goods within the meaning of Section 2(21) of Tamil Nadu Act 32 of 2006, is not sufficient to make the petitioner entitled to input tax credit. Section 19(1) provides for input tax credit shows that the entitlement for such credit is restricted only to the amount of tax paid or payable under the Act by the registered dealer to the seller on his purchases of taxable goods specified in the First Schedule. Therefore, unless the claim for input tax credit relates to the tax paid or payable on the purchase of taxable goods specified in the First Schedule, it is not possible to grant credit. DEPB licences do not even fall under any of the categories mentioned in Section 19(2). The case of the petitioner does not even fall under Sub-Section (3) or Sub-Section (4) of Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to specifics in the other Sub-Sections of Section 19. It does not mean that the very entitlement to credit could be traced only to Sub-Sections (2) to (4) and the non-entitlement could be traced to Sub-Sections (5) to (10). If a dealer satisfies the essential conditions stipulated in Sub-Section (1), he is entitled to credit. Therefore, we are of the considered view that Sub-Section (2) of Section 19 is enumerative and not exhaustive. The second question of law is answered accordingly. But, our answer to the second question of law as above, will not actually advance the cause of the revision petitioner. This is in view of our answer to the first question of law that no input tax credit can be claimed merely on the purchase of DEPB licences. Therefore, despite the fact that on the second question of law, we agree with the submission of the learned counsel for the petitioner, the revision petitioner is not entitled to any relief. - Decided against the petitioner - Tax Case Revision No. 63 of 2015 - - - Dated:- 12-4-2016 - V. Ramasubramanian And T. Mathivanan, JJ. For the Petitioner : Mr. V. Sundareswaran For the Respondent : Mr. A. N. R. Jayapratap, AGP (T) ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner filed a statutory appeal under Section 51 of the Tamil Nadu Value Added Tax Act, 2006, to the Appellate Deputy Commissioner contending that the input tax credit was utilized for the purpose of import of goods and that therefore it cannot be reversed. However, by an order dated 23.11.2010, the Appellate Deputy Commissioner dismissed the appeal, holding that under Section 19(2), input tax credit can be allowed only for resale within the State, manufacturing or processing in the State or in the course of Inter-State trade or commerce. Since the petitioner had purchased DEPB licence from local registered dealer and used it for their imported goods to reduce the customs duty, the Appellate Deputy Commissioner held that the credit already given was liable to be reversed. 8. Aggrieved by the order of the Appellate Deputy Commissioner, the petitioner filed a further appeal under Section 58 of the Act to the Tamil Nadu Sales Tax Appellate Tribunal, Chennai Bench. But, the Tribunal, by an order dated 30.04.2015 dismissed the appeal in T.A.No.22 of 2011. It is against the said order that the petitioner has come up with the above revision. 9. As seen from the order of the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Added Tax Act, 2006, is an Act to consolidate and amend the law relating to the levy of tax on the sale or purchase of goods in the State of Tamil Nadu. The Act speaks about various types of levies such as (a) levy of taxes on sale of goods; (b) levy of taxes on the right to use any goods; (c) levy of tax on transfer of goods involved in works contract; (d) levy of tax on food and drinks, bullion and jewellery; (e) levy of tax on sugarcane and (f) levy of purchase tax. 14. Though a variety of levies are contemplated under the Act, the Act seeks to protect a registered dealer from double taxation. The Act seeks to give this protection in the form of what is known input tax credit under Section 19. Instead of extracting Section 19 in entirety, at the cost of few more pages, we would better summarise the scheme of Section 19, which provides for input tax credit, in simple terms, without technical jargons as follows:- (i) Sub-Section (1) of Section 19 entitles a registered dealer to input tax credit, of the amount of tax paid or payable under the Act, to the seller, on the purchases of taxable goods specified in the First Schedule, subject to the condition that the registere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evoke the input tax credit, under certain circumstances. (xiii) Sub-Section (17) deals with the contingencies, when the input tax credit determined by the assessing authority for a particular year exceeds the tax liability for that year. (xiv) Sub-Section (18) speaks about the carrying forward of the excess input tax credit to the next year. (xv) Sub-Section (19) deals with the reversal of input tax credit, whenever goods remain unsold at the time of closure of the business. (xvi) Sub-Section (20) deals with one more contingency, when the input tax credit can be reversed. 15. Therefore, it appears that Section 19 was conceived by the Legislature to be a complete Code in itself, as it speaks of (i) entitlement to tax credit (ii) the transactions on which, the entitlement would arise (iii) the persons, who are entitled to tax credit (iv) the transactions on which, there is no entitlement (v) persons, who are not entitled to tax credit (vi) the manner and the period, within which, a claim for credit is to be made (vii) the circumstances, under which, the credit availed could be reversed and the authority, who is competent to reverse the credit (viii) the circumstances, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces, are liable to be given credit to. Reliance is placed on the language of Section 3(3), which reads as follows:- 3(3) The tax payable under sub-section (2) by a registered dealer shall be reduced, in the manner prescribed, to the extent of tax paid on his purchase of goods specified in Part-B or Part-C of the First Schedule, inside the State, to the registered dealer, who sold the goods to him. 20. In support of his contention that DEPB licences constitute goods within the meaning of the Act, the learned counsel for the petitioner relies upon the decision of the Supreme Court in Yasha Overseas v. Commissioner of Sales Tax [2008 (17) VST 182 (SC)]. 21. We have carefully considered the above submissions. 22. Before considering the issue as to whether DEPB licences constitute goods within the meaning of Section 2(21) of TNVAT Act, 2006, it may be useful to look at the ratio decidendi of the decision of the Supreme Court in Yasha Overseas. The said decision arose under interesting circumstances. In H.Anraj v. The State of Tamil Nadu [1986 (1) SCC 414], the Supreme Court held that lottery tickets constituted goods within the meaning of the expression goods as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision in Sunrise Associates did not affect the position in so far as REP licences are concerned and that the decision in Vikas Sales Corporation reflected the correct legal position. Having arrived at such a conclusion with regard to REP licences, the Court then went on to consider whether the rationale applied in respect of REP licences could be equally applied in the case of DEPB licences. 27. It was contended on behalf of the assessees in Yasha Overseas that the transfer of a DEPB licence was nothing more than a mere transfer of a credit in the pass book and that therefore, such a credit could never be called goods under the Sales Tax Laws. Alternatively, it was contended that the sale of DEPB licence involved a mere transfer of the right to claim credit on a future import and that therefore, it could at the most be an actionable claim. But, both the contentions were rejected and the Supreme Court held that like REP licences, a DEPB licence also has its intrinsic value and that a purchaser buys something for its value. Eventually, the Supreme Court held that DEPB licences are goods within the meaning of the Sales Tax Laws. 28. Therefore, Mr.V.Sundareswaran, learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (3) or Sub-Section (4) of Section 19. Therefore, our answer to the first question of law would be that the Department was right in denying the benefit of input tax credit in respect of the duty paid by the petitioner on the purchase of DEPB licences, despite the fact that these licences constitute goods within the meaning of Section 2(21). 34. Despite the fact that DEPB licences are goods, they are certainly different and distinct from the goods that can be imported on the strength of those licences. These licences confer a right upon the licensees to import goods at some concession. It is only the goods that are imported on the strength of these DEPB licences, that may fall within the ambit of Section 19(1) provided a tax is payable or paid under the Tamil Nadu Value Added Tax Act, 2006 on those goods and those goods are also listed in the First Schedule to the Act. 35. Apart from the fact that DEPB licences purchased by the petitioner are not goods enumerated in the First Schedule, it is to be pointed out that the petitioner does not pay any tax under this Act namely the Value Added Tax Act on these purchases. What the petitioner is now seeking is a credit for the duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sub-Section (2) of Section 19. It arises actually out of Sub-Section (1) of Section 19. But, since Sub-Section (1) covers all types of purchases of all types of goods specified in the First Schedule by all types of registered dealers, it is generic in nature. Out of such generic entitlement stipulated in Sub-Section (1), the statute carves out- (i) certain purchases made for the purposes specified in Sub-Section (2) within the State (ii) certain purchases of capital goods under Sub-Section (3) (iii) certain purchases, made for purposes indicated in Sub-Section (4), etc. 40. Therefore, entitlement, non-entitlement, etc., are covered with reference to specifics in the other Sub-Sections of Section 19. It does not mean that the very entitlement to credit could be traced only to Sub-Sections (2) to (4) and the non-entitlement could be traced to Sub-Sections (5) to (10). If a dealer satisfies the essential conditions stipulated in Sub-Section (1), he is entitled to credit. Therefore, we are of the considered view that Sub-Section (2) of Section 19 is enumerative and not exhaustive. The second question of law is answered accordingly. 41. But, our answer to the second qu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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