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2025 Supreme(Online)(AP) 15752
HIGH COURT OF ANDHRA PRADESH
NINALA JAYASURYA, TARLADA RAJASEKHAR RAO, JJ
M/s. Pearl Beverages Ltd. – Appellant
Versus
The State Of Andhra Pradesh – Respondent
TAX REVISION CASE No. 10 of 2024
For the Appellants/Petitioners: A SARVESWAR RAO
For the Respondents: GP FOR COMMERCIAL TAX
The court determined that amendments denying Input Tax Credit must not retrospectively affect existing rights unless explicitly permitted, preserving entitlements under the law.
Headnote:(A) AP Value Added Tax Act, 2005 - Section 13(1) and Section 20(2) - Input Tax Credit - Manufacturer sought Input Tax Credit on purchases of coolers, glass bottles, and stores claiming they are integral to the business - Tax Officer rejected claims, citing coolers not for resale - Appellate Deputy Commissioner allowed partial relief, but Tribunal reversed decision citing the negative list under amended Rules - Court examines retrospective effect of amendments to Input Tax Credit rules. (Paras 34-42)
(B) Retrospective amendments - Courts uphold that no existing right can be taken away unless expressly provided - Amendment that denies Input Tax Credit for coolers was deemed to be improper in revising existing rights. (Paras 26-36)
Facts of the case:
Revision petitioner is a soft drink manufacturer. Claims Input Tax Credit on purchases for business inclusively stated as necessary capital goods - coolers, glass bottles, and stores. Claims were initially denied, leading to appeals.
Findings of Court:
The order of the Sales Tax Appellate Tribunal is set aside; petitioner granted Input Tax Credit for coolers and refrigerators.
Issues: Whether the amendment denying Input Tax Credit for coolers has retrospective effect which alters the existing entitlement of the petitioner.
Ratio Decidendi: Court held that amendments that impair vested rights are unconstitutional unless explicitly stated, allowing for claims where goods are necessary for the business operation.
Result: Tax Revision case allowed partly.
| Table of Content |
|---|
| 1. claim for input tax credit on purchases. (Para 1 , 2) |
| 2. arguments on the eligibility of coolers and bottles for tax credit. (Para 3 , 4) |
| 3. rejections of claims by tax authorities. (Para 5 , 6) |
| 4. appellate deputy commissioner's decision on appeal. (Para 7 , 8) |
| 5. joint commissioner's rejection of claims. (Para 9 , 10) |
| 6. appellate tribunal's dismissal of the petitioner's appeal. (Para 11 , 12) |
| 7. legal arguments on retrospective application of clause (n). (Para 13 , 14 , 15) |
| 8. amendment implications and challenges raised. (Para 16 , 17 , 18) |
| 9. court's considerations on retrospective effects of the amendment. (Para 19 , 20 , 21) |
| 10. court's interpretation of legislative intent. (Para 22 , 23 , 24) |
| 11. principles on retrospective legislation. (Para 25 , 26 , 27 , 28 , 29 , 30) |
| 12. specific provisions and their implications. (Para 31 , 32) |
| 13. claim for input tax credit on bottle purchases. (Para 33 , 34) |
| 14. court's view on retroactive application of the amendment. (Para 35 , 36 , 37 , 38) |
| 15. storage and sale of bottles relevant to tax credit. (Para 39 , 40 , 41 , 42) |
| 16. final summary of decisions on claims. (Para 43) |
| 17. conclusion on the judgment. (Para 44 , 45) |
ORDER:
(Per Hon’ble Sri Justice Tarlada Rajasekhar Rao)
The revision petitioner herein is manufacturer of soft drinks under the brand name of Pepsi. In furtherance of such business, the appellant regularly purchases glass bottles and coolers. In view of transitional provision facilitating the change from one statutory regime to another' and under transition from the AP General Sales Tax Act, 1957, to the Value Added Tax system under section 13 (2) of VAT Act (for short „the Act‟), the petitioner herein made a claim to Input Tax Credit equivalent to the APGST paid on the value of the opening stock as on 01.04.2005 relating to the purchases of the Glass bottles, Coolers, stores and spares during the year 2004-05.
2. The request of the petitioner, i.e., M/s. Pearl Beverages Limited for the tax paid under APGST for a claim of relief of Rs.12,65,333/- on purchase of coolers and amount of Rs.1,98,224/- on Stores, spares, and Rs.9,75,085/- on glass bottles is disallowed on the ground that the coolers are not for resale purpose and the claim of glass bottles purchased for Rs.2,43,77,122/- is verified and noticed that during this year, the breakages are estimated to be Rs.1 crore, hence, the claim of Rs.4,00,000/- is disallowed and the other claim of Rs.1,98,224/- being taxes paid on stores, spares, etc., is also disallowed, as there is no provision in the Act, vide proceedings dated 06.09.2025 by the Assistant Commissioner, Large Tax Payer Unit, Guntur Division.
3. Against the said proceedings, the petitioner herein has made a representation dated 27.09.2005 to the Assistant Commissioner (CT), Large Tax Payer Unit, adverting that under Section 13(1) of the AP VAT Act, tax paid on purchase of all taxable goods in an eligible input tax credit, if such goods are for use in the business of a VAT dealer, that the definition of business includes any trade, commerce or manufacture and any transaction incidental to such trade, commerce or manufacture and coolers are essential for their business of soft drinks, as the customers normally prefer to consume them in chilled condition. The use of goods in a business which is a wide expression under the Act and the Input Tax Credit is not confined to goods meant for trading alone as construed in the notice. The capital goods, raw materials, consumables are all eligible for Input Tax Credit, except those which are disqualified under Rule 20(2) of the AP VAT Rules . Coolers are not mentioned in the said Rule. In the said circumstances, the appellant requested to allow the claim of Rs.12,65,333/- on coolers which are essentially used in their business and eligible for credit under Section 13 read with Section 2(6) of the AP VAT Act.
4. It is asserted in the said representation, for claim of Rs.9,75,085/- on glass bottles that the glass bottl
