TMI Blog2021 (7) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... clear unambiguous, the word 'or' cannot be read as 'and' and the expression 'or' is disjunctive. The deduction of input tax has to be allowed on fulfillment of one of the conditions namely (1) after commencement of commercial production, (2) sale of taxable goods and (3) sale of any goods in the course of export out of the territory of India by the registered dealer. Rule 133 of the Rules provides for deduction of input tax subject to the conditions mentioned therein. It is pertinent to note that none of the conditions prescribed in Rule 133 provide that each unit of the petitioner has to be an independent unit to avail of the benefit of input tax. There is no element of any mens rea that the petitioner had the intention to evade tax. The petitioner had paid taxes according to the information furnished in the return and therefore, it should not have been penalized subsequently after the assessment proceedings are finalized and the amount of tax is determined. It is well settled in law that penalty cannot be imposed merely because it is lawful to do so. The substantial questions of law are answered in favour of the petitioner and against the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Phase II by which the rated capacity was enhanced to 9 MMTPA. The commercial production for Phase II commenced in the year 1999-2000. The petitioner thereafter made further investments and began expansion of Phase III in the year 2009-10 by which capacity was enhanced to 15 MMTPA. The petitioner linked the existing units to the new units undertaken after Phase III expansion project to form a continuous process plant with uninterrupted operations. The commercial production of Phase III commenced in March 2012. The petitioner, during the expansion of Phase III facilities, procured capital goods for use in Phase III expansion from registered dealers within the State of Karnataka with applicable value added taxes and availed and utilized input tax credit on the purchasers in the same month of purchase against the tax liability of the same month arising out of sales made out of the existing Phase I and Phase II facilities which continued to generate revenue / turn over / tax liabilities. 3. The re-assessment proceedings were initiated against the petitioner for the period 2009-10 and books of accounts, returns, etc. were verified. Thereafter, the proposition notice dated 29.02.2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and on fulfillment of any of the conditions mentioned in Section 12(2) of the Act, the petitioner becomes eligible to avail of the input tax credit. It is further submitted that the interpretation put forth by the Tribunal on Section 12(2) of the Act is erroneous and is not tangible in law. It is also urged that in the facts and circumstances of the case, no penalty and interest can be levied on the petitioner as there is mens rea established by the revenue to demonstrate that there was no intention on the part of the petitioner to evade tax. It is also submitted that the petitioner is entitled to refund of interest and penalty which has been paid by it under protest. In support of aforesaid submission, reliance has been placed on the decisions in 'COMMISSIONER, TRADE TAX Vs. RIX INDIA GRAMMODYOG SANSTHAN' (2010) 33 VST 9 (All), 'M.S.FREIGHT CARRIER (INDIA) PVT. LTD. Vs. STATE OF TRIPURA' (2010) 31 VST 549 (Gau), 'JAIPRAKASH ASSOCIATES LTD. Vs. STATE OF ARUNACHAL PRADESH ORS. (2009) 22 VST 310 (Gau) and 'PRO AGRO SEEDS CO. LTD. Vs. STATE OF BIHAR' (2003) 132 STC 226. 6. On the other hand, learned Additional Government Advocate for the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of capital goods wholly or partly for use in the business of taxable goods; (2) Deduction of input tax under this Section shall be allowed only after commencement of commercial production, or sale of taxable goods or sale of any goods in the course of export out of the territory of the India by the registered dealer and shall be apportioned over a specified period, as may be prescribed. 133. Capital goods scheme (1) Deduction of input tax under section 12 shall be subject to the following conditions:- (a) No deduction of input tax shall be allowed where the use of capital goods relates wholly to the sale of exempt goods, other than when such goods are sold in the course of export out of the territory of India. (b) Where there is a change in use of the capital goods from sale of exempt goods or non-taxable transactions to sale of taxable goods wholly or partially, within twelve months from the date of its purchase, the dealer shall be eligible for rebate on such capital goods. (c) Where the use of capital goods relates, to both the sale of goods in the course of export out of the territory of India or sale of taxable and exempt goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of taxable goods and (3) sale of any goods in the course of export out of the territory of India by the registered dealer. Rule 133 of the Rules provides for deduction of input tax subject to the conditions mentioned therein. It is pertinent to note that none of the conditions prescribed in Rule 133 provide that each unit of the petitioner has to be an independent unit to avail of the benefit of input tax. 10. In the instant case, the petitioner was effecting sale of taxable goods on payment of VAT / CST as applicable and was effecting sale of goods in the course of export out of the territory of India. Therefore, the petitioner had satisfied the conditions laid down in Section 12(2) of the Act namely sale of taxable goods / sale of goods in the course of export out of the territory of India and was eligible to avail of the credit under Section 12(2) of the Act. The finding recorded by the Joint Commissioner of Commercial Taxes as well as by the Tribunal that the petitioner, after expansion of Phase III, was eligible to claim input tax credit only after commencing of production or sale of goods from the expansion Unit III of the petitioner, cannot be sustained in the eye o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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