TMI Blog2020 (3) TMI 482X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it applies only to the sale of the goods as such. In other words, intention was to restrict the credit only in the case of dealers who were purchasing goods at higher rate of tax and accumulating credit and selling final product under interstate sale at a lower rate of tax - Section 19(2)(v) was never intended apply to a manufacturer as the input tax credit availed by a manufacturer under section 19(1) of TNVAT Act, 2006 was allowed on such input used in the manufacture or process of goods in the State. Since the proviso to Section 19(2) was confined to situations contemplated under Section 19(1)(v) alone, the restrictions contained therein could not apply to dealer engaged in the manufacture or process of goods in the state. The ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Balance 1,145/- 1,35,719/- 1,36,864/- 3.The operative portion of the impugned order reads as under:- 3.As per the amended provision made under Section 19(2)(v) of the TNVAT Act, a dealer who effects interstate sales under Section 8(1) of the Central Sales Tax Act is eligible to claim ITC in excess of three percent and therefore, ITC has to be reversed at 3% in respect of sales made under Section 8(1) of the Central Sales Tax Act. Hence, it was also proposed to reverse the ITC by applying the following formula: ITC claimed 5% / 14.5% X Sales falling Section 8(1) of the CST Act -------------------------------------------- X 3/5 / 14.5 Sales un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lance 1,145/- 1,35,719/- 1,36,864/- Notice in Form 'O' is issued. 4.In the impugned order, it has been held that the petitioner effected inter-state sales under Section 8(2) of the Central Sales Tax Act, 1956 and therefore under the provisions of Section 19(2)(v) of TNVAT Act, 2006 as it stood during the material period, the petitioner was eligible to restricted ITC. In other words, it is the contention of the commercial tax department that the petitioner was eligible for ITC only in excess of 3% of Central Sales Tax under Section 8(1) of Central Sales Tax Act, 1956 on the inputs locally purchased by the petitioner. 5.It is the contention of the learned counsel f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacturing or processing of goods in the State; or iii.use as containers, labels and other materials for packing of goods in the State; or iv.use as capital goods in the manufacture of taxable goods. v. sale in the course of inter-State trade or commerce falling under sub-section (1) of section 8 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956); vi.sale in the course of inter-State trade or commerce falling under sub-section (1) and (2) of section 8 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956) vii.Agency transactions by the principal within the State in the manner as may be prescribed. Provided that Input Tax Credit shall be allowed in excess of three per cent of tax for the purpose sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate sale at a lower rate of tax. 15.Section 19(2)(v) was never intended apply to a manufacturer as the input tax credit availed by a manufacturer under section 19(1) of TNVAT Act, 2006 was allowed on such input used in the manufacture or process of goods in the State. Since the proviso to Section 19(2) was confined to situations contemplated under Section 19(1)(v) alone, the restrictions contained therein could not apply to dealer engaged in the manufacture or process of goods in the state. The reason given in the budget speech which is extracted in paragraph 20.4 of the decision of this court in Everest Industries Ltd referred to supra proceeds on wrong interpretation of the provisions as it reads. The manufacturer or processor pay ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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