M/S.Atlas Export Enterprises vs. The Assistant Commissioner

Held

The Court held that the petitioner had waived their right to have the invisible loss ratio determined through an inspection of their manufacturing process. The petitioner had themselves submitted letters accepting the invisible loss ratio at 5%. The Court found that an assessee can waive a benefit granted under law, especially when it does not involve a constitutionally guaranteed fundamental right. Therefore, the respondent was not faulted for acting on the petitioner's letters. The Court further noted that the issue was being considered under Section 84 of the TNVAT Act, which allows intervention only if there is an error apparent on the face of the record. Since the petitioner had self-declared the 5% invisible loss, there was no such error. Consequently, the Court found no ground to interfere with the respondent's order and dismissed the writ petition.

Facts

The petitioner, M/s. Atlas Export Enterprises, an exporter registered under the Tamil Nadu Value Added Tax (TNVAT) Act, sought a refund of input tax credit for exports. The petitioner contended that the respondent, the Assistant Commissioner, arbitrarily applied an invisible loss ratio of 5% while calculating the refund. The petitioner relied on a previous High Court judgment in *Interfit Techno Products Ltd. Vs. The Principal Secretary, Commissioner of Commercial Taxes* which mandated an inspection of the manufacturing process to determine the invisible loss ratio, rather than an ad-hoc assessment. The petitioner's representation under Section 85 of the TNVAT Act was rejected by the respondent's order dated 06.11.2020, leading to the present writ petition. The respondent argued that refunds were promptly effected and that the petitioner themselves had accepted the 5% invisible loss ratio in their written submissions.

Key Issues

1. Whether the respondent erred in calculating the invisible loss ratio at 5% without inspecting the petitioner's manufacturing process, contrary to the mandate in *Interfit Techno Products Ltd. Vs. The Principal Secretary, Commissioner of Commercial Taxes* (2015) 81 VST 389, thereby violating Section 19(9)(iii) of the TNVAT Act, 2006? Petitioner's Contention: The respondent acted arbitrarily by applying a uniform 5% invisible loss ratio without conducting an inspection of the manufacturing process, as specifically directed by the High Court in the *Interfit Techno Products Ltd.* case. This ad-hoc assessment violates the principle that the invisible loss ratio must be determined after examining the actual manufacturing or production loss. Respondent's Contention: The petitioner themselves, in their written submissions dated 17.08.2017, accepted the invisible loss ratio at 5%. The respondent merely acted upon the petitioner's own computation and did not increase or decrease it. Therefore, the respondent cannot be faulted for accepting the quantum of loss reported by the petitioner, and the impugned order does not suffer from any error apparent on the face of the record.