M/S.Rajapalayam Mills Limited vs. The Assistant Commissioner(CT)

Held

The Court, considering the limited scope of the prayer and without delving into the merits of the case, directed the respondent to consider the petitioner's representation dated 10.06.2017. The consideration was to be made in light of the High Court's order dated 06.02.2017 in W.P.No.7969 of 2014 etc. batch, reported in (2017) 100 VST 158 (Madras). The respondent was instructed to pass appropriate orders in accordance with the law within a period of four weeks from the date of receipt of a copy of the order. The Court did not decide the substantive issue of whether the petitioner was entitled to the refund, but rather directed the authority to process the representation based on the existing legal precedent.

Facts

The petitioner, M/s. Rajapalayam Mills Limited, a registered dealer under the TNVAT Act, 2006, filed a writ petition seeking a Mandamus to direct the respondent, The Assistant Commissioner (CT), Rajapalayam, to consider their representation dated 10.06.2017 and refund Input Tax Credit (ITC) reversed under the Proviso to Section 19(2) of the TNVAT Act, 2006. The petitioner had reversed ITC for the period November 2013 to March 2014, amounting to Rs. 60,82,375/-. They contended that a recent judgment by the High Court in W.P.No.7969 of 2014 etc. batch (dated 06.02.2017) clarified that the Proviso to Section 19(2) applies only when inputs purchased locally are sold as such on an inter-state basis, and not when inputs are used in manufacturing within the state. The petitioner argued that their inputs were used for manufacturing within the state as per sub-clause (ii) of Section 19(2). Despite their representation, the respondent had not taken action.

Key Issues

1. Whether the Proviso to Section 19(2) of the TNVAT Act, 2006, inserted with effect from 11.11.2013, applies to inputs purchased within the State and used in the manufacture of other goods within the State, or for purposes other than inter-state sales of inputs as such. Petitioner's Arguments: - The petitioner argued that the Proviso to Section 19(2) of the TNVAT Act, 2006, as interpreted by this Court in M/s. Everest Industries Limited Vs. The State of Tamil Nadu (dated 06.02.2017), applies only to inter-state sales of inputs as such, as prescribed under Section 19(2)(v). - They contended that since their inputs were purchased within the State on payment of tax and used for manufacturing within the State as per sub-clause (ii) of Section 19(2), they are not liable to reverse ITC under the Proviso. - They relied on a similar order dated 29.06.2017 in W.P.No.16349 of 2017. Respondent's Arguments: - The respondent's counsel sought time to consider the petitioner's representation and refund the reversed ITC in light of the aforementioned High Court judgment.