1. The relief sought for in all these writ petitions are more or less identical and common grounds were raised by all the learned counsels appearing for the petitioners and the prayer made in the writ petitions having been resisted by the learned Special Government Pleader by advancing common arguments, the writ petitions were heard together and are disposed of by this common order.

2. To decide the controversy in this batch of writ petitions, it would suffice to take note of the facts in one of the writ petitions as except the products manufactured all transactions are said to be export sales. The facts as set out in W.P.No.24828 of 2012 are that the petitioner is engaged in the business of manufacture and sales of Hosiery Garments and registered as dealer under the provisions of Tamil Nadu Value Added Tax Act, 2006 (VAT Act) and the Central Sales Tax Act, 1956(CST). The petitioner purchase yarn among other inputs inside the State of Tamil Nadu from various registered dealers on payment of VAT of 4%/5% which is converted into fabric in the manufacturing unit of the petitioner and the fabric was thereafter processed and Hosiery garments were manufactured. The resultant Hosiery Garments were exported by the petitioner periodically.

3. It is submitted that during the knitting process, there was a process loss due to the flying of loose fibres and such loss was termed as “invisible waste” of yarn by the Trade and the same is less than 0.5% and such loss was unavoidable. It is further submitted that the yarn locally purchased from registered dealers had been put to a manufacturing process and therefore the petitioner availed Input Tax Credit of the VAT paid by them in purchases of yarn in terms of Section 19(1) read with Section 19(2)(ii) of the VAT Act. The resultant final product viz., Hosiery Garments being exported periodically, the petitioners made a claim for refund of Input Tax Credit on the purchases of yarn in terms of Section 18(2) read with 18(3) of the VAT Act. Such claim of refund was made in an application in Form “W” as prescribed under Rule 11(2) of VAT Rules, 2006. The refunds were granted to the petitioner periodically. While so, the place of business of the petitioners was inspected and the Inspecting Officers informed the petitioner that they have to pay VAT on the invisible loss, which was arrived at 5% of the total value of the yarn purchased by them. As that of the petitioner, the other persons, who were also involved in the same trade were required to pay VAT on the invisible loss of yarn emerging during manufacturing process.

4. Representation was made by the Textile Exporters Association to the Joint Commissioner of Commercial Taxes (Enforcement) as well as Joint Commissioner of Commercial Taxes, Coimbatore objecting to the proposal made by the assessing officers. It appears that the representations did not yield any result as desired by the Association. At that juncture, the Principal Secretary/Commissioner of Commercial Taxes issued a circular dated 20.10.2011 instructing that refund issuing Authority/the Assessing Authority, while considering the case of Manufacturing concerns, if there was any wastage of raw material during the manufacturing process, the Input Tax availed on such raw material, to the extent of the wastage, was required to be reversed; if excess refunds had been granted, taking into account such wastage, orders were required to be passed, which demands were required to be deducted from subsequent refunds payable to a dealer and if no refunds were payable, the same was to be recovered under the provisions of TNVAT Act. Further instruction was given in the circular that the Officers should not cite the circular while initiating proceedings, instead to cite relevant provisions of the Act. Therefore, Textile Exporters Association filed W.P.No.28114 of 2011 to prohibit the respondents from revoking or disallowing the claim on Input Tax Credit in respect of the members of the Association.