ORDER :

1. The present Sales Tax Revisions/References (for short “STRs”), filed under Section 84 of the Rajasthan Value Added Tax Act, 2003 (for short “RVAT Act”), were admitted on following questions of law:

“i) Whether the claim of Input Tax Credit (for short “ITC”) on tax paid for purchase of Duty Entitlement Pass Book (for short “DEPB”)/Duty Free Licences/Duty Credit Scrip can be refused, even though the scrips have been used for the purpose of manufacture of finished goods, within the State of Rajasthan?

ii) Whether interest can be levied and charged, even though full amount of tax due from the dealer under the Act according to returns has been deposited and as such, interest on differential tax determined on reopened assessment could be validly and legally charged?”

2. As common issue is involved in all these STRs, with the consent of the parties, they were heard together and are now being decided by way of this common order. STR No. 13/2019 is taken as lead file to peruse the facts.

3. Brief facts leading to these STRs are that the petitioner-assessee is a manufacturer of various types of bearings used for automotive, industrial and railway purposes. The Anti-Evasion Authorities surveyed the business premises of the appellant on 23.08.2016 and found that the appellant has purchased DEPB/Duty Free Licenses/Duty Credit Scrip within the State and has claimed and availed the ITC of the tax paid on purchase of these intangible goods. The enquiry officer found that no ITC is available on these items if the same are not disposed off in accordance with Section 18 of the RVAT Act. Accordingly, a case of tax-evasion was made out and it was transferred to the adjudicating/assessing officer (for short “AO”), who after affording an opportunity of hearing to the petitioner-assessee disallowed the input credit availed by them and levied interest on non-deposition of the due tax. The AO also held that the petitioner-assessee has availed wrong input tax credit and caused evasion of tax, and therefore imposed penalty under Section 61(2)(b) of the RVAT Act. Being aggrieved of the assessment order, the petitioner-assessee preferred appeals before the appellate authority, who vide order dated 16.08.2017 confirmed the reversal of ITC and levy of interest and penalty and rejected the appeals. Against the appellate orders, the petitioner-assessee preferred appeal under Section 83 of the RVAT Act before the Rajasthan Tax Board, who vide its order dated 13.09.2018, confirmed the reversal of ITC and levy of interest, but set aside the penalty.

4. Learned counsel for the petitioner-assessee submits that they had purchased DEPB/Duty Free Licenses/Duty Credit Scrip from the registered dealer which are used for import of machinery/raw material and that raw material was further used in manufacturing of the taxable goods in the State of Rajasthan. The claim of ITC on purchase of DEPB is on the basis of VAT charged by the selling dealer in the invoices. Learned counsel for the petitioner-assessee further submits that VAT paid on purchase of such DEPB Scrips shall be deemed to be input tax paid on the goods purchased for further use in manufacturing of the final products, therefore, it fulfills the conditions of Section 18 of the RVAT Act and the petitioner-assessee is eligible for ITC on these DEPB/Duty Free Licenses/Duty Credit Scrip. In support of his submissions, learned counsel for the petitioner-assessee has relied on Apex Court judgments of J.K. Cotton Spinning and Weaving Mills Co. Ltd. vs. Sales Tax Officer, Kanpur and Ors. reported in AIR 1965 SC 1310; Vikas Sales Corporation and Ors. vs. Commissioner of Commercial Taxes and Ors. reported in AIR 1996 SC 2082; Yasha Overseas and Ors. vs. Commissioner of Sales Tax and Ors. reported in (2008) 8 SCC 681; judgment of Division Bench of Madhya Pradesh High Court in the case of Commercial Engineers and Body Building Company Ltd. vs. Divisional Deputy Commissioner, Commercial Tax Office and Ors. reported