Jupiter Industries vs. The State Of Tamil Nadu

Held

The Court allowed the writ petition and quashed the impugned pre-revision notice. The Court followed its previous decision in M/s. Everest Industries Limited vs. The State of Tamilnadu. In that case, it was held that manufacturers who have paid tax on inputs, which are referred to in the first schedule of the 2006 Act, and have used these tax-suffered inputs in manufacturing or processing of goods, should be granted full credit of the tax paid on such inputs. The Court concluded that the proviso to Section 19(2)(v) of the TNVAT Act, 2006, would not be fatal to such claims. Applying this principle to the present case, the Court found that the petitioner was entitled to the benefit granted in the Everest Industries Limited judgment. Therefore, the notice proposing the reversal of ITC was set aside.

Facts

The petitioner, Tvl. Jupiter Industries, a dealer under the erstwhile Tamil Nadu Value Added Tax (TNVAT) Act, 2006, filed its return for the Assessment Year 2010-2011. Subsequently, the respondent revenue issued a pre-revision notice dated 07.06.2012. The notice alleged that the petitioner had effected interstate sales amounting to Rs. 29,26,844/- during the period, but only submitted 'C' declaration forms for Rs. 20,49,821/-. This left a deficit of Rs. 8,77,023/- for which no 'C' declaration form was available. Consequently, the revenue proposed a reversal of Input Tax Credit (ITC) under Section 19(2)(v) read with Section 19(5)(c) of the TNVAT Act, 2006, and Rule 10(9)(a) of the TNVAT Rules, 2007. The petitioner challenged this notice through a writ petition.

Key Issues

1. Whether the proviso to Section 19(2)(v) of the TNVAT Act, 2006, which mandates the availability of 'C' declaration forms for interstate sales, can be applied to deny Input Tax Credit (ITC) to a manufacturer who has paid tax on inputs used in manufacturing or processing goods, as per the petitioner's contention. 2. Whether the decision of this Court in M/s. Everest Industries Limited vs. The State of Tamilnadu (2017) can be applied to the present case, as argued by the petitioner. Petitioner's Arguments: The petitioner contended that the issue was covered by the High Court's decision in M/s. Everest Industries Limited, which held that manufacturers paying tax on inputs should be allowed full ITC without being prejudiced by the proviso to Section 19(2)(v) of the TNVAT Act, 2006. They argued that the same logic and principle should apply to their case. Revenue's Arguments: The learned Government Counsel for the respondent stated that it needed to be ascertained whether the judgment in the Everest Industries Limited case had been appealed. If an appeal was filed, the petitioner would have to face the same outcome.