Tata Steel has Locus Standi to Challenge denial of Input Tax Credit under JVAT to its Unit, rules Supreme Court [Read Order]

The Supreme Court of India has ruled that, Tata Steel has Locus Standi to Challenge denial of Input Tax Credit under Jharkhand Value Added Tax Act ( JVAT ) to its unit.

A two-judge bench comprising of Justice Sanjiv Khanna and Justice Bela M. Trivedi, remanded a matter back to Jharkhand High Court for a fresh decision on Tata Steel’s writ petition against the denial of input tax credit to its Naomundi unit.

While allowing the Writ Petition, the Apex Court has also observed that, “During the course of hearing of this appeal, the learned senior counsel agree that the reasoning given by the High Court in the impugned judgment on the locus standi of the appellant is not justified and correct. The Writ Petition preferred by Tata Steel Ltd., which is a juristic person, could not have been dismissed as not maintainable when it had challenged the denial of input tax credit to the unit at Naomundi, in respect of the purchases made and utilised in the said unit.

While dealing the issue examined and decided by the High Court relates to the interpretation of Clause (ix) to subsection (8) of Section 18 of the Jharkhand Value Added Tax Act, 2005, the Court also noted that, the reasoning given by the High Court in paragraph 7 of the impugned order is rather cryptic and does not examine the issues and contentions which arise and should have been considered for interpreting the clause.

The Court also set aside the impugned order interpreting Clause (ix) to sub-section (8) of Section 18 of the Jharkhand Value Added Tax Act, 2005, as it existed before the Jharkhand Value Added Tax (Amendment) Ordinance, 2011, with an order of remand to the High Court for a fresh decision. The respondent will be entitled to file an amended/additional counter affidavit relying on the amended clause. Equally, it will be open to the appellant to file proceedings challenging the ordinance and the notification.

The Supreme Court also clarified that we have not expressed any opinion on interpretation of Clause (ix) to subsection (8) of Section 18 of the Jharkhand Value Added Tax Act, 2005, pre and post the amendment or validity of the notification granting retrospective effect to the amendment.

TATA STEEL LTD vs THE STATE OF JHARKHAND AND ORS. & ORS

CITATION: 2022 TAXSCAN (SC) 109

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