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IN THE HIGH COURT OF JUDICATURE AT MADRAS
ANITA SUMANTH, J.
R.K. Knits, Rep.by its Partner, Ajay Agarwal, Guindy, Chennai - Appellant
Versus
The Assistant Commissioner, Commercial Taxes, Chennai & Another - Respondent
W.P. No. 2198 of 2020 & W.M.P. No. 2571 of 2020
Decided On : 13-09-2022
Mandamus - Refund of Input Tax Credit - Tamil Nadu Value Added Tax Act, 2007 - Section 19(18), Rule 10(10)(b) - The court discussed the provisions of Section 18(3) of the Act r/w Rule 11(2) of the VAT Rules, 2007, Section 19(11), and the judgments in R.K.Knits Vs Assistant Commissioner and ALD Automotive Pvt. Ltd. Vs. The Commercial Tax Officer and Ors. The court emphasized that the strict application of timelines under the Act for refund of accumulated ITC is not applicable when the assessee is otherwise entitled in law to the same, and concluded that the petitioner's claim for refund is liable to be accepted.
Fact of the Case:
The petitioner, a private limited company engaged in export sales, sought a mandamus directing the respondents to refund the amount of Input Tax Credit (ITC) along with interest for the period from January, 2007 to August, 2007.
Finding of the Court:
The court held that the delay in filing the refund application was not fatal to the claim of refund, and the petitioner's claim for refund is liable to be accepted. The court also directed the respondent to decide the representation filed by the petitioner within a period of twelve weeks.
Issues: Delay in filing the refund application, entitlement to Input Tax Credit, and the applicability of timelines under the Act for refund of accumulated ITC.
Ratio Decidendi: The strict application of timelines under the Act for refund of accumulated ITC is not applicable when the assessee is otherwise entitled in law to the same.
Final Decision: The Writ Petition is allowed, and the refund is to be paid over expeditiously and in any event within a period of four weeks from the date of the order. The court also directed the respondent to decide the representation filed by the petitioner within a period of twelve weeks.
JUDGMENT
(Prayer: Writ Petition filed under Article 226 of the Constitution of India praying to issue a Writ of Mandamus, directing the Respondents to refund the amount of Input Tax Credit accrued to the petitioner under Section 19(18) read with rule 10(10)(b) of the Tamil Nadu Value Added Tax Act, 2007 for the period from January 2007 to August 2007.)
1. Heard Mr.Srisankar, learned counsel for Mr.R.Saravanakumar, learned counsel for the petitioner and Mr.V.Prashanth Kumar, learned Government Advocate for the State Commercial Taxes Department/R1 & R2.
2. The petitioner seeks a mandamus directing the respondents to refund the amount of Input Tax Credit (ITC) along with interest in relation to the period from January, 2007 to August, 2007.
3. The petitioner is a private limited company and claims to have been engaged in export sales that have been treated as zero rated sales in the returns filed for the respective periods. Since there was nil output tax liability, available ITC was claimed in terms of Section 18(3) of the Act r/w Rule 11(2) of the VAT Rules, 2007, as a refund, in prescribed form, being Form-W.
4. Form-W has been filed, admittedly, belatedly and beyond the period as provided for under the Rules, being 180 days from the date of exports as per Section 18 of the TNVAT Act, 2006. The application was filed on 12.08.2008 with an insubstantial delay, that in my view, is not fatal to the claim of refund. For this purpose, one need only refer to the oft-quoted decision of this Court in this very assessee, in R.K.Knits Vs Assistant Commissioner (CT), Adyar-II Assessment Circle, Chennai and Others [2015 (84) VST 521 (Mad)] that has been consistently followed in several other cases.
5. The petitioner has filed a representation seeking refund as early as on 02.01.2019 that has been kept pending on the ground that the State has filed a Writ Appeal challenging the order passed in the case of R.K.Knits (supra) and thus, the refund application must await a decision in the Writ Appeal.
6. I have, in very similar circumstances as before me now, in the case of Mohib Shoes Private Limited Vs Assistant Commissioner (ST) in W.P.No.12762 of 2019 dated 30.06.2022, decided the same issue applying the ratio of R.K.Knits, particularly for the reason that there was no stay of the decision of the learned Single Judge in the case of R.K.Knits.
7. The operative portion of the order in Mohib Shoes (supra) reads as follows:
“4. The issue dealt with in that matter is identical to the present one, and that assessee too had filed the form-W belatedly. However, this Court had concluded that the petitioner was entitled for refund of ITC, its entitlement to ITC itself not being disputed. Thus, the delay in filing of Form W would not militate against its claim as it was only a procedural requirement that must not stand in the way of a substantive claim.
5. The conclusion as above would apply on all fours to the present matter as well in light of the undisputed position that (i) the assessee is an exporter (ii) the turnover attracts zero rate of tax (iii) there are no taxable sales, either domestic or interstate (iv) monthly returns are being filed in time, disclosing the turnover as well as the carry forward of ITC (v) with the filing of the returns in time, assessments are deemed to have been completed as on 31.10.2016 as deemed assessments accepting the returns filed by the petitioner including the component of refund sought for by it.
6. That apart, learned Government Advocate seeks to distinguish the decision of R.K.Knits (supra) relying on the judgement of the Hon'ble Supreme Court in the case of ALD Automotive Pvt. Ltd. Vs. The Commercial Tax Officer and Ors. [2018 (70) GST 751 (S.C.)], wherein the provisions of Section 19(11) of the TNVAT Act was challenged. Section 19(11) states as follows:
“Section 19 – Input Tax Credit –
(11) In case any registered dealer fails to claim input tax credit in respect of any transaction
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