TMI Blog2016 (4) TMI 1309X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of taxable goods; and (iii) such taxable goods, on the purchase of which, he paid or became liable to pay tax under the Act, are also specified in the First Schedule. What the petitioner claims is an input tax credit on the amount of duty paid for the purchase of a DEPB licence. The claim of the petitioner is that a DEPB licence is also a "good" within the meaning of the expression "goods" under Section 2(21) - A look at Section 19(1), which 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 19. Therefore, our answer to the first question of law would be that the Department was right in denying the benefit of input ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . However, the petitioner was served with a notice by the Assistant Commissioner (Commercial Taxes) dated 7.8.2009, proposing to reverse input tax credit to the extent of ₹ 2,01,164/- on the ground that the input availed for the goods sold without Form 'C' had to be reversed and that as per Section 19(4), the input tax credit had to be availed over and above 3%, on the transfer of goods to other State otherwise by way of sale. It was also proposed in the notice to reverse the ITC claim for the purchase of DEPB to the extent they were used for their own purposes. 5. The petitioner gave a reply to the notice contending that they had effected purchases within Tamil Nadu, outside Tamil Nadu and also from other countries and that the import purchase and Inter-State purchases were more than 90%. In so far as the Inter-State consignment sales effected without Form 'C' is concerned, the petitioner claimed that they related to imported goods, for which, they had not claimed input tax credit. 6. However, the Assessing Officer passed an order dated 18.9.2009. By the said order, the proposal to reverse the input tax credit in respect of the Inter-State consignment s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above revision. 10. Since the revision to this court is maintainable under Section 60(1) of the Act, only on the ground that the Appellate Tribunal had either decided erroneously or failed to decide any question of law, we have to see if the Tribunal has wrongly decided or failed to decide a question of law. 11. According to the petitioner, the scope of Section 19(2) has been wrongly interpreted by the Tribunal, without appreciating the definitions of the expression 'input' and 'input tax' given in Sub-Sections (23) and (24) of Section 2 of the Act and without appreciating the effect of the charging provision under Section 3(3). It is also the further contention of the petitioner that the categories mentioned in Clauses (i) to (vi) of Sub-Section (2) of Section 19 are only enumerative and not exhaustive. 12. In the light of the above, we are of the considered view that the following questions arise for our consideration: (i) Can the Department deny the benefit of input tax credit for the duty paid by the petitioner on the purchase of DEPB licences, when such licences are considered to be goods within the meaning of Section 2 (21) and the tax paid on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State otherwise than by way of sale. (v) Sub-Sections (5) and (6) stipulate four contingencies, under which, no input tax credit can be allowed. They are: (a) sale of goods exempted under Section 15; (b) goods brought into the State from outside the State; (c) 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; and (d) purchase of capital goods used exclusively in the manufacture of goods exempted under Section 15. (vi) Sub-Sections (7), (8), (9) and (10) of Section 19 list out the circumstances, under which, a registered dealer will not be entitled to input tax credit. (vii) Sub-Section (11) indicates the period, within which, a registered dealer should make a claim for input tax credit. (viii) Sub-Section (12) indicates the contingencies, when a credit availed on inputs would get reversed. (ix) Sub-Section (13) speaks about the denial of input tax credit to a registered dealer, who issues an invoice or bill or cash memo without actually entering into a transaction of sale, with a view to defraud the Government Revenue. (x) Sub-Section (14) provides for transfer of input tax credit, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a DEPB licence. The claim of the petitioner is that a DEPB licence is also a good within the meaning of the expression goods under Section 2(21), which reads as follows:- 2(21) goods means all kinds of movable property (other than newspapers, actionable claims, stocks and shares and securities) and includes all materials, commodities and articles including the goods (as goods or in some other form) involved in the execution of works contract or those goods to be used in the fitting out, improvement or repair of movable property; and all growing crops, grass or things attached to, or forming part of the land which are agreed to be severed before sale or under the contract of sale; 18. According to the petitioner, the DEPB licences purchased by him not only constitute goods within the purview of Section 2(21), but also constitute input within the meaning of the expression under Section 2(23) and constitute input tax within the meaning of Section 2(24). Sections 2(23) and 2(24) read as follows:- 2(23) input means any goods including capital goods purchased by a dealer in the course of his business; 2(24) input tax means the tax paid or payable und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either chose-in-actions nor actionable claims, but constituted goods that have an inherent value and also traded as such, independent of and unrelated to the goods that can be imported on their basis. Consequently, the Court held that REP licences were goods. 24. But, in Sunrise Associates v. Government of NCT of Delhi [2006 (5) SCC 603], a Constitution Bench of the Supreme Court overruled the decision in H.Anraj and held that the sale of lottery ticket was not a sale of goods. When the Constitution Bench was considering the correctness of the decision in H.Anraj, with reference to the decision in Vikas Sales Corporation, an issue was raised by the State of Maharashtra as to whether DEPB licences could constitute goods attracting Sales Tax under the Bombay Sales Tax Act, 1959 or not. But, the Constitution Bench refused to go into the same. 25. Therefore, a question arose in Yasha Overseas as to whether the three-Judge Bench decision in Vikas Sales Corporation, [holding that the transfer/sale of an import licence called replenishment licence (REP licence) granted under the 1992-97 Exim Policy was exigible to sales tax] stood impliedly overruled by the Constitution Bench de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... predominantly uses the expression 'goods' without any adjective, whether it be in relation to sale or purchase. 30. But, a look at Section 19(1), which 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. 31. In so far as the First Schedule is concerned, the same is divided into three parts namely Part A, Part B and Part C. While Part A gives a list of goods, which are taxable at the rate of 1%, Part B gives a list of goods, which are taxable at the rate of 5%. Part C gives a list of items, which are taxable at higher rates. We are not concerned in this case with the rates. 32. But, it can be seen from the First Schedule that DEPB licences are not included in any of the parts namely Part A, Part B and Part C. Therefore, the goods in relation to which, the petitioner claims input tax cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ION (ii): 37. The second question of law as to whether the purposes indicated in Clauses (i) to (vi) of Sub-Section (2) of Section 19 are enumerative or exhaustive. As we have pointed out earlier, Section 19(2) directs input tax credit to be allowed for the purchase of goods made within the State from a registered dealer, if they are for the purposes indicated in Clauses (i) to (vi) therein. The purposes indicated in these clauses are (i) re-sale within the State (ii) use as input in manufacturing or processing of goods in the State (iii) use as containers, labels and other materials for packing of goods in the State (iv) use as capital goods in the manufacture of taxable goods (v) sale in the course of Inter-State trade or commerce falling under Section 8(1) of the Central Sales Tax Act, 1956 and (vi) agency transactions by the principal within the State. 38. We have already summarised the scheme of Section 19 in paragraph 14 above and indicated that Section 19 is a complete Code in itself. There are 20 sub-sections under Section 19, each of which serves a different purpose. While Sub-Section (2) gives a list of purposes for the purchase of goods within the State, which woul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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