Point of Law: feature of input tax credit is what gives value added taxes their main economic characteristic, that of neutrality -To deny the petitioner the benefit of ITC by thrusting an exemption not claimed by it, upon it, will be contrary to the scheme of the enactment.

JUDGMENT :

ANITA SUMANTH, J.

Prayer: Writ Petition filed under Article 226 of the Constitution of India praying to issue a writ of Certiorari, to call for the entire records of the respondent in TIN 33973123831/2011-12 dated 30.08.2019 and quash the order passed therein.

1. Heard Mr. A.P. Srinivas, learned counsel for the petitioner and Mr. Shaffiq as well as Ms. Dhanamadhri, learned counsels for the respondent.

2. The Petitioner is a dealer on the file of the respondent officer in terms of the provisions of the Tamil Nadu Value Added Tax Act, 2006 (in short ‘TNVAT Act’). The period of assessment is 2011-12. The petitioner was put to notice on 12.09.2012 that its turnover from sale of rice bran oil was less than Rs. 5.00 crores, thus attracting exemption in terms of Entry 65/Schedule A of the Act. Thus, the tax collected on the sales, admittedly remitted to the Department, was proposed to be forfeited in terms of Section 40(2)(ii) and the Input Tax Credit (ITC) claimed, proposed to be reversed, along with penalty.

3. The petitioner filed a reply dated 08.11.2012 stating that its turnover was, in fact, in excess of Rs. 5.00 crores (Rs. 5,18,01,968/- to be exact) and hence it was not entitled to exemption. This culminated in an order dated 15.03.2018, where the stand of the petitioner was accepted and the proposals dropped. Thereafter, a notice came to be issued on 28.06.2019 proposing revision of assessment and the proposal contained in notice dated 12.09.2012 was reiterated. The petitioner was called upon to file written objections and also appear for a personal hearing. The petitioner duly filed written objections dated 13.08.2019 as well as appeared for a personal hearing and order dated 30.08.2019 has come to be passed rejecting the stand of the petitioner as against which, the present Writ Petition is filed.

4. There was a factual dispute on what the turnover of the petitioner was, and whether the interstate sales during the relevant year have been excluded and learned counsel were directed to confirm the particulars thereof. Notice dated 28.06.2019, at paragraph 1, states that the petitioner has reported varying figures of turnover for the same year. The turnover as per the returns filed was an amount of Rs. 3,36,90,637/- whereas the turnover reported in Annexure II of the returns filed was an amount of Rs. 4,18,83,402/- and the turnover reported in the income tax return was an amount of Rs. 5,18,01,968/-. No difficulty presents itself in regard to the first two turnovers, as both figures are less than Rs. 5.00 crores. However, it is seen that turnover reported in the income tax return did not take into account the interstate sales that are to be excluded while computing turnover for the purpose of the TNVAT Act. Reducing a sum of Rs. 97,59,386/-, the turnover for the purposes of the TNVAT Act is an amount of Rs. 4,20,42,582/-. The stand of the revenue to the effect that the turnover is less than Rs. 5.00 crores and that the petitioner is eligible to exemption, is thus vindicated.

5. Eligibility, however, does not tantamount to availment and the question that presents itself is as to whether though eligible, an exemption could be thrust upon an assessee. The provisions of Section 19(5)(a) of the Act state that no ITC shall be allowed in respect of sale of goods exempted under Section 15 of the Act. However, it is for the eligible assessee to exercise such option, and claim exemption. If an assessee chooses not to avail the available exemption, then such option cannot be denied to it.

6. In this context, I draw an analogy from an identical situation that arose under the Central Excise Act, 1944, which came to be discussed by the Supreme Court in two judgments in the case of H.C.L. Limited vs. Collector of Customs, New Delhi, 130 ELT 405 and Collector of Central Excise, Baroda vs. Indian Petro Chemicals, 92 ELT 13 applied by me in Sudan Spinning Mills (P) Ltd. vs. Commissioner of C. Ex. Madurai, (2019) 368 ELT 953.

7. The ratio deci