Ms Simplex Infrastructures LTD Through Its Vice President Sri S B Das vs. Finance

Held

The Court held that the issue in the present writ application is squarely covered by the decision in Brahmaputra Metallics Limited (supra). The Court reiterated the findings from that case, specifically that Section 18(6) of the JVAT Act, 2005, does not contemplate the production of JVAT-404 Forms as a mandatory condition for availing ITC. It was held that Rule 35(2) of the JVAT Rules, 2006, to the extent it stipulates the production of JVAT-404 Forms, is inconsistent with Section 18(6) of the Act and is therefore directory, not mandatory. However, the Court clarified that an assessee failing to produce JVAT-404 Forms must substantiate their ITC claim by producing documents enumerated under Section 18(6) of the JVAT Act, 2005. The Court directed the respondent-State to re-examine the petitioner's ITC claim of Rs. 1,93,85,122.25/- by verifying the claim from original tax invoices and, if satisfied that input tax was paid, to extend the benefit of ITC. The impugned orders and demand notice were set aside.

Facts

The petitioner, M/s Simplex Infrastructures Limited, Ranchi, sought a declaration that it was entitled to Input Tax Credit (ITC) solely on the basis of original tax invoices, as per Section 18(6) of the Jharkhand Value Added Tax (JVAT) Act. The petitioner challenged an order by the Commissioner of Commercial Taxes and an assessment order by the Deputy Commissioner of Commercial Taxes (DCCT), Special Circle, Ranchi, which denied ITC amounting to Rs. 1,93,85,122.25/-. The denial was based on the petitioner's failure to submit JVAT Form 404 for this amount, despite possessing original tax invoices. The petitioner contended that Rule 35(2) of the JVAT Rules, 2006, requiring JVAT Form 404, was directory, not mandatory, and inconsistent with Section 18(6) of the JVAT Act, 2005.

Key Issues

1. Whether the petitioner is entitled to claim Input Tax Credit (ITC) solely on the basis of original tax invoices, in terms of Section 18(6) of the Jharkhand Value Added Tax (JVAT) Act, 2005, notwithstanding the requirement of JVAT Form 404 under Rule 35(2) of the JVAT Rules, 2006? Petitioner's arguments: The petitioner argued that Section 18(6) of the JVAT Act, 2005, only requires production of original tax invoices and allows for dispensing with this requirement for good cause. It contended that Rule 35(2) of the JVAT Rules, 2006, which mandates JVAT Form 404, is inconsistent with the Act and should be treated as directory, not mandatory. The petitioner relied on the High Court's decision in Brahmaputra Metallics Limited, Ranchi Vs. The State of Jharkhand and others (W.P.(T) No.2775 of 2017). Respondent's arguments: The respondent-State argued that while the issue of Form 404 was decided in Brahmaputra Metallics Limited, the facts of the present case are different. Specifically, the respondent contended that the petitioner had not availed the alternative remedy of filing a revision application before the Tribunal, unlike the petitioner in the cited case, making the precedent not squarely applicable.