TMI Blog2021 (3) TMI 896X X X X Extracts X X X X X X X X Extracts X X X X ..... er or not it wishes to avail of the benefit offered The exemption available under Entry 65/Schedule A is an option that has not been availed by the present petitioner and I see no legal flaw in the choice made. The petitioner will have to sink or sail on the basis of the decision taken by it, qua exemption. In this case, the petitioner has, while eschewing exemption, claimed ITC on purchases. The respondent, while rejecting the claim for ITC has fortified the tax collected in terms of Section 41 of the TNVAT - The grant of credit is conditional upon the status of a dealer as taxable , and hence a dealer falling outside the ambit of taxability was not extended the benefit of ITC, which is a concession under the statute, as seen from a re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale of rice bran oil was less than ₹ 5.00 crores, thus attracting exemption in terms of Entry 65/Schedule A of the Act. Thus, the tax collected on the sales, admittedly remitted to the Department, was proposed to be forfeited in terms of Section 40(2)(ii) and the Input Tax Credit (ITC) claimed, proposed to be reversed, along with penalty. 3. The petitioner filed a reply dated 08.11.2012 stating that its turnover was, in fact, in excess of ₹ 5.00 crores (₹ 5,18,01,968/- to be exact) and hence it was not entitled to exemption. This culminated in an order dated 15.03.2018, where the stand of the petitioner was accepted and the proposals dropped. Thereafter, a notice came to be issued on 28.06.2019 proposing revision of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the revenue to the effect that the turnover is less than ₹ 5.00 crores and that the petitioner is eligible to exemption, is thus vindicated. 5. Eligibility, however, does not tantamount to availment, and the question that presents itself is as to whether though eligible, an exemption could be thrust upon an assessee. The provisions of Section 19(5)(a) of the Act state that no ITC shall be allowed in respect of sale of goods exempted under Section 15 of the Act. However, it is for the eligible assessee to exercise such option, and claim exemption. If an assessee chooses not to avail the available exemption, then such option cannot be denied to it. 6. In this context, I draw an analogy from an identical situation that arose un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n between an exemption offered under Notification (as is the case under Central Excise law) or under the Schedule to the Act (as in the case before me. The crux of the matter remains that the assessee must have freedom to choose whether or not it wishes to avail of the benefit offered. 9. The exemption available under Entry 65/Schedule A is an option that has not been availed by the present petitioner and I see no legal flaw in the choice made. The petitioner will have to sink or sail on the basis of the decision taken by it, qua exemption. In this case, the petitioner has, while eschewing exemption, claimed ITC on purchases. The respondent, while rejecting the claim for ITC has fortified the tax collected in terms of Section 41 of the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be remitted to the Government and forfeited wholly as per Section 41 of the Tamil Nadu Value Added Tax Act, 2006 (Tamil Nadu Act 32 of 2006). Such persons cannot avail the benefit of input tax credit on their purchases. 2. The Government have, therefore, decided to amend the said section 41 of the said Act prospectively i.e. 1st April, 2012 to the effect that the amount collected as tax by any person or registered dealer will be forfeited to the Government after deducting the eligible input tax credit claim, if any, on the corresponding purchases if his turnover for the year falls short of the taxable limit specified under the said Act. 3. The Bill seeks to give effect to the above decision. 13. As per the objects, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 16. The feature of input tax credit is what gives value added taxes their main economic characteristic, that of neutrality. The full right to deduction of input tax through the supply chain, with the exception of the final consumer, ensures neutrality of the tax, whatever be the nature of the product, the structure of the distribution chain and the technical means used for its delivery, either via brick and mortar establishments, physical delivery or the Internet. This is a measure of avoiding the ills of cascading taxes. To deny the petitioner the benefit of ITC by thrusting an exemption not claimed by it, upon it, will, in my view, be contrary to the scheme of the enactment. 17. This Writ Petition is allowed. No costs. Connected ..... X X X X Extracts X X X X X X X X Extracts X X X X
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