L.Jeverchand Jewellers PVT. vs. The Commercial Tax Officer
Held
The Court allowed the writ petitions, holding that the denial of input tax credit (ITC) under Section 19(4) of the Tamil Nadu Value Added Tax Act, 2006, was invalid. The Court relied on the Division Bench judgment in Patina Gold Ornaments Pvt. Ltd. vs. The Assistant Commissioner (CT) and another. The reasoning was that Section 19(2)(ii) of the 2006 Act was declared invalid to the extent it denied ITC for units that despatch tax-suffered raw materials for conversion outside the State, if the converted product is received back and sold within Tamil Nadu. The Court found that the mere location of the manufacturing unit outside Tamil Nadu could not be a basis for denying ITC under Section 19(1) of the Act. Consequently, Clause (ii) of Sub-Section (2) of Section 19 of the 2006 Act was declared bad in law. The orders of the Assessing Authority were quashed.
Facts
The petitioner, Tvl.L.Jeverchand Jewellers Pvt Ltd., is a dealer in gold bars and ornaments. The petitioner transferred gold to other States for conversion into ornaments. The Assessing Authority (first respondent) reversed the input tax credit (ITC) for the tax periods 2013-14 and 2014-15, citing Section 19(4) of the Tamil Nadu Value Added Tax Act, 2006, on the ground that the sale was effected in other states. The petitioner challenged these orders dated 15.10.2015 through writ petitions before the Madurai Bench of the Madras High Court.
Key Issues
1. Whether the denial of input tax credit (ITC) under Section 19(4) of the Tamil Nadu Value Added Tax Act, 2006, is valid when the petitioner despatches tax-suffered raw materials (bullion/worn-out jewellery) outside the State for conversion into a final product (jewellery), which is then received back and sold within the State of Tamil Nadu? Petitioner's Contention: The petitioner argued that their taxable transaction of sale is within the State of Tamil Nadu. They contended that the denial of ITC on the ground that the transaction was an inter-state sale, despite the final product being sold within the State, was incorrect. Revenue's Contention: The revenue, represented by the Government Advocate, fairly stated that the issue was covered by a previous decision of the Division Bench of the High Court in Patina Gold Ornaments Pvt. Ltd. vs. The Assistant Commissioner (CT) and another.
Sections Cited
Section 19(4), Section 19(2)(ii), Section 19(1)
AI-generated summary — verify with the full judgment below
1 BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 17.07.2019 CORAM THE HONOURABLE DR.JUSTICE ANITA SUMANTH W.P(MD)Nos.20893 and 20894 of 2015 and M.P.(MD)No.1 and 1 of 2015 Tvl.L.Jeverchand Jewellers Pvt Ltd., Rep.by its Authorised Signatory Bharat Gehlot, No.53, 24, Big Street, Vadiveeswaram, Nagercoil-629 002. ..Petitioner in both petitions Vs. 1.The Commercial Tax Officer, Nagercoil (Town) Assessment Circle, No.131, MEAD Street, C.T.Building, Nagercoil-629 001. 2.The Special Commissioner of Commercial Taxes, “Ezhilagam”, Chepauk, Chennai-600 005. 3.The State of Tamil Nadu, Represented by the Secretary, to Government Commercial Taxes and Registration b(1) department, Fort St.George, Chennai-600 009. ..Respondents in both petitions COMMON PRAYER:- Writ Petition filed under Article 226 of the Constitution of India praying for the issuance of writ of Certiorari, to call for the records on the files of the first respondent in TIN.33276102601/2013-14 and TIN.33276102601/2014-15 dated 15.10.2015 or any other appropriate writ, direction or order under Article 226 of the Constitution of India, 1950 quashing the same.
For Petitioner : Mr.S.Raveenkum
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