Ms Soni Auto And Allied Industries LTD Unit Ii vs. Comercial Taxes

Held

The Court held that the Petitioner is entitled to claim full Input Tax Credit (ITC) on intrastate stock transfers of goods. The primary basis for the denial of ITC by the revenue authorities was the High Court's judgment in Tata Steel Ltd. vs. State of Jharkhand and the un-amended provision of Section 18(8)(ix) of the JVAT Act. However, the Court noted that the Supreme Court, in its judgment dated February 24, 2022, had set aside the High Court's decision in the Tata Steel Ltd. case and remanded it for a fresh decision. Consequently, the foundation upon which the Petitioner's ITC claims were denied no longer existed. The Court found that the Petitioner was fulfilling all conditions for ITC availment, and the denial was based on a wrongful interpretation of the relevant provisions. Therefore, the impugned assessment orders, appellate orders, and revisional orders were quashed and set aside. The Court directed that any amount realized from the Petitioner consequent to these orders should be refunded with interest at 6% per annum if not refunded within four months.

Facts

The Petitioner, M/s. Soni Auto & Allied Industries Ltd., operates two units in Adityapur Industrial Area, Jamshedpur. The company engages in intrastate stock transfers of goods between its Unit-I and Unit-II. The Commercial Taxes Department initiated proceedings against the Petitioner for claiming Input Tax Credit (ITC) on these intrastate stock transfers. For the periods 2010-11 and 2011-12, assessment orders were passed disallowing ITC, leading to demands for tax and interest. The Petitioner challenged these orders, which were upheld by the Appellate Authority and the Commercial Taxes Tribunal, primarily relying on the un-amended provisions of Section 18(8)(ix) of the Jharkhand Value Added Tax Act, 2005 (JVAT Act) and a High Court judgment in the case of Tata Steel Ltd. vs. State of Jharkhand. The Petitioner filed writ petitions before the High Court challenging these disallowances.

Key Issues

1. Whether the Petitioner-company is entitled to claim Input Tax Credit (ITC) on intrastate stock transfers of goods, and if the denial of such ITC is contrary to the amended provisions of Section 18(8)(ix) of the Jharkhand Value Added Tax Act, 2005? Petitioner's Arguments: The Petitioner contended that the revenue authorities, including the Commercial Taxes Tribunal, erred in denying ITC on intrastate stock transfers. They argued that the denial was based on an incorrect interpretation of Section 18(8)(ix) of the JVAT Act, particularly the un-amended provision. The Petitioner relied on the fact that the Supreme Court had set aside the High Court's judgment in the Tata Steel Ltd. case, which formed the basis for the denial of ITC by the authorities. Revenue's Arguments: The revenue authorities relied on the High Court's judgment in Tata Steel Ltd. vs. State of Jharkhand and the un-amended provisions of Section 18(8)(ix) of the JVAT Act to justify the denial of ITC on intrastate stock transfers. They argued that ITC is a concession and is only available upon fulfilling prescribed conditions, which they believed were not met in this case for stock transfers.