The Madras High Court recently held that the refund claim to be determined based on documents pertaining to availing of the input tax credit ( ITC ) and export of products on zero rated basis.
The petitioner stated that it is a manufacturer and exporter of steel casting and industrial valves. It was a registered dealer under the TNVAT Act and Central Sales Tax Act, 1956 ( the CST Act ). In relation to its exports, the petitioner asserts that Forms W were filed in time and ITC was claimed on capital goods from the year 2011 onwards.
The petitioner pointed out that its exports are zero-rated and, therefore, it is entitled to refund of unutilised ITC. The petitioner further asserts that the office of the Accountant General had raised objections with regard to refund of unutilised ITC on capital goods. It is further stated that the Commissioner of Commercial Taxes had issued Circular No.22/2011 dated 20.10.2011 ( Circular No.22 ) directing assessing authorities not to process and refund claims in respect of unutilised ITC on capital goods. In those circumstances, it is stated that the refund was not made.
The counsel for the petitioner invited my attention to the proceedings of the assessing officer in the additional typed set of papers and pointed out that in each of those proceedings, it is recorded that the claim relating to refund of unutilised ITC on capital goods would be settled at a later date. He further contends that the refund claim was not settled in view of a Circular No.22. After the Commissioner of Commercial Taxes clarified that refund could be made under Circular No.12, he submits that the assessing officer was in a position to process refund claims. Therefore, learned counsel submits that the rejection of the refund claims calls for interference.
The Additional Government Pleader, submitted in response that a refund claim is required to be made within 180 days from the date of making the zero rated sale by the exporter. In this connection, the counsel referred to sub-section (3) of Section 18 of the TNVAT Act. Since the petitioner did not make the refund claim within the specified period, the Additional Government Pleader submitted that the petitioner is not entitled to refund.
In addition, by drawing reference to Section 27 of the TNVAT Act, the counsel submitted that the six year period prescribed therein is the outer limit for revising the assessment. For these reasons, he submits that no interference is warranted with the impugned order.
A Single Bench of Justice Senthilkumar Ramamoorthy observed that “Thus, the petitioner has made the refund claims in time and cannot be faulted for the delayed processing of such claims by the respondent. If such claims were not processed on account of Circular No.22, which was superseded by Circular No.12, at a minimum, the limitation period should be reckoned from the date of such Circular. For such reason, the impugned order is unsustainable.”
“Notwithstanding the above conclusion, the refund claim has to be examined and determined based on documents pertaining to the availing of ITC as well as the export of products on zero rated basis. This factual determination cannot be undertaken by this Court. For such purpose, it becomes necessary to remand this matter. Accordingly, the impugned order is quashed and the matter is remanded for reconsideration of the refund claim of the petitioner on merits. It is made clear that the assessing officer shall not go into the issue of limitation” the Court noted.
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