TMI Blog2017 (11) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... of input tax credit to a registered dealer who gets the benefit of tax remission. The tax remission is available under SRO 91 dated 16.03.2006 to the Industrial units that is the seller from whom petitioner has made purchases and not to the petitioner. Therefore, the restriction contained in Section 21(9)(X) does not apply to the case of the petitioner. The input tax liability of the petitioner has exceeded its tax liability, therefore, under Section 22 of the Act, the petitioner is entitled to refund of the input tax credit. The clarification dated 10.12.2007 insofar as it provides that there is no scope for allowing the refund by way of input tax credit because the benefit of remission also passes on from the manufacturer to the purchaser as he pays the tax notionally to the manufacturer by price adjustment is quashed, being contrary to the provisions of the Act - The orders of assessment passed by the assessing authority as well as the demand notices are hereby quashed - petition allowed - decided in favor of petitioner. - OWP No. 958/2008 c/w OWP No. 288/2010 - - - Dated:- 5-9-2017 - Alok Aradhe And B. S. Walia, JJ. For the Petitioner : Mr. Sparsh Bhargava, Adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of remission also passes on from the manufacturer to the purchaser as he pays the tax notionally to the manufacturer by price adjustment. Based on the aforesaid clarification, the assessing authority in exercise of powers under Section 39(5) of the Act, disallowed the claims of the petitioner for input tax credit on the ground there is no actual payment of tax, in respect of assessment years 2005-2006 and 2006-2007 and issued demand notices which are subject matter of challenge in the instant writ petitions. 4. Learned counsel for the petitioner submitted that the view taken by the Commissioner of Commercial Taxes as well as the assessing authority is untenable as the restriction contained in Section 21(9)(X) of the Act does not apply to the case of the petitioner. It is submitted that the petitioner has paid the tax reflected in the tax invoices issued in terms of Rule 63 of the J K Valued Added Tax Rules, 2005 and therefore, the petitioner is entitled to refund of input tax credit. It is submitted that the case of the respondents that it has not received tax on goods is incorrect and is contrary to record. It is argued that in view of policy decision taken by the Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nicipal Corporation of Greater Mumbai, (2014) 15 SCC 689)]. It is equally well settled legal proposition that once tax is paid, the assessee gets a vested right to avail the exemption/ refund as per the statutory provisions (See: DGFT vs. Kanak Exports (2016) 2 SCC 226). 7. Before proceeding further, it is apposite to take note of relevant statutory provisions. STATUTORY PROVISIONS: The relevant extract of Section 21 of the Act reads as under: Section 21: Input Tax Credit. (1) Subject to the provisions of the Act, for the purpose of calculating the net tax payable by a registered dealer for any tax period after being registered, an input tax credit as determined under this section shall be allowed to such registered dealer for the tax paid or payable in respect of all taxable sales other than the sales as may be prescribed, or purchases under section 14 during that period. (2) (9) No input tax credit under sub section (1) shall be claimed or be allowed to a registered dealer. (i) in respect of any taxable goods under the Act purchased by him from another registered dealer for resale but given away by way of free sample or gift; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt the price adjustment has been made and rest of the tax amount shall have to be deposited with the Government. The descriptive sale invoice for industrial units claiming tax remission shall be as per Annexure IV-A or IV-B as the case may be and the formula for working out the price adjustment shall be as per Annexure V to this Notification. Sub-Joined Schedule. Whereas the industry in the state is still in a formative stage it is necessary to continue with the tax incentives provided to the industry so that competitiveness of the local industries does not suffer and at the same time sufficient employment opportunity is provided to the unemployed youth of the State. It therefore becomes imperative that for the larger public interest Government patronage is provided to the industry allowing it to sustain also to attract investment in this fast growing sector so important for the economic prosperity of the State. Now, therefore, it is the considered opinion of the Government that there is a need to provide tax incentive to the industry in the shape of tax remission under the Value Added Tax regime in a manner as does not break the VAT chain. 8. Thus, from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merits. (See: Collector of Monghayr and others vs. Keshav Prasad Goenaka and others AIR 1962 SC 1694, L. Hirday Narian vs. Income Tax Officer Bareilly AIR 1971 SC 33, Smt. Kanak vs. U.P. Avas Evam Vikas Parishad, AIR 2003 SC 3894]. At this point of time, when the writ petitions are pending before this court since 2008 and 2010, we are not inclined to relegate the petitioner to the alternative remedy which even otherwise is an exercise in futility, as the clarification issued by the Commissioner is binding on the appellate authority. (See: CIT vs. Chhabil Dass Agarwal, (2014) 1 SCC 603). 10. In view of preceding analysis, the clarification dated 10.12.2007 insofar as it provides that there is no scope for allowing the refund by way of input tax credit because the benefit of remission also passes on from the manufacturer to the purchaser as he pays the tax notionally to the manufacturer by price adjustment is quashed, being contrary to the provisions of the Act. The orders of assessment passed by the assessing authority as well as the demand notices are hereby quashed. In view of order dated 25.02.2009, passed in OWP No.958/2008, the petitioner had deposited the amount mentioned i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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