Malaya Rub-Tech Industries (Manufacturers And Exporters) vs. The State Of Tripura And 2 Ors

Held

The Court held that the denial of input tax credit on tax paid from purchases of raw rubber from unregistered dealers was unlawful and arbitrary. The Court reasoned that Section 3, Section 5A, and Section 10 of the TVAT Act, 2004, when read with Schedule VIII, clearly established that tax was leviable on the purchase of raw rubber at the last purchase stage, and the liability to deposit this tax fell on the purchaser, including the petitioner. The Court found no stipulation in the Act that restricted input tax credit eligibility solely to purchases from registered dealers for items covered under Schedule VIII. Therefore, the purchase tax deposited by the petitioner on purchases from both registered and unregistered dealers qualified for input tax credit. The Court directed the matter to be remanded to the Assessing Officer for a fresh assessment, re-computing the input tax credit benefit within six months, and complying with previous directions in WP(C) 234/2015, subject to any Supreme Court outcome. The petitioner agreed to be bound by the Supreme Court's decision.

Facts

The petitioner, a registered dealer in Tripura processing raw rubber, challenged an assessment order for the years 2013-14 and 2016-2017. The petitioner purchased raw rubber from both registered and unregistered dealers, paid tax at the last purchase stage as per Schedule VIII of the Tripura Value Added Tax Act, 2004, and claimed input tax credit against output tax liability. The Assessing Officer denied input tax credit on tax paid from purchases made from unregistered dealers, citing that input tax credit is allowed against goods purchased from local registered dealers with tax invoices. The petitioner argued that the denial was unlawful and arbitrary, contrary to the Act's provisions, which specifically allowed tax on purchases from unregistered dealers under Schedule VIII and permitted input tax credit on such purchases.

Key Issues

1. Whether the denial of input tax credit in respect of tax paid by the petitioner on raw rubber purchases made from unregistered dealers within the State of Tripura was unlawful and arbitrary, and contrary to the provisions of the Tripura Value Added Tax Act, 2004? Petitioner's contention: The petitioner argued that Section 3, Section 5A, and Section 10 of the TVAT Act, 2004, along with Schedule VIII, clearly provided for the levy of tax on the purchase of raw rubber at the last purchase stage, irrespective of whether the purchase was from a registered or unregistered dealer. They contended that the Act did not stipulate that only purchases from registered dealers qualified for input tax credit for items covered under Schedule VIII. Revenue's contention: The judgment records that the Assessing Officer observed that input tax credit is allowed against goods purchased from local registered dealers with tax invoices. No further specific arguments were recorded for the revenue.