ITC cannot be denied since No Manufacturing Activity done within the State: Jharkhand HC [Read Order]

The Jharkhand High Court has ruled that Input Tax Credit cannot be denied on Inter-State sale or transfer of stock under Section 18(8)(ix) of the Jharkhand Value Added Tax Act, 2005 since there is no manufacturing activity is undertaken by the assessee within the State.

The Bench, consisting of Justices Aparesh Kumar Singh and Deepak Roshan, has held that in a taxing statue there is no room for intendment and therefore Section 18(8)(ix) cannot be stretched to cover persons who are not manufacturers so as to deny them Input Tax Credit under the Act.

The Petitioner/Assessee Exide Industries was assessed under the Jharkhand Value Added Tax (JVAT) Act, 2005. The Deputy Commissioner of Commercial Taxes passed an assessment order disallowing the Input Tax Credit to the Assessee on the basis of Section 18(8)(ix) of the JVAT Act. The Joint Commissioner of Commercial Taxes (Appeal) confirmed the assessment order of the Deputy Commissioner. Against the order of the Joint Commissioner (Appeal) the Assessee filed a revision application before the Commercial Taxes Tribunal who dismissed the Assessee’s appeal by confirming that Section 18(8)(ix) of the JVAT Act was applicable to it and therefore the Input Tax Credit was disallowed to it.

Noting that the Tribunal order confirming the orders of the lower authorities are erroneous, the High Court held that as per the aforesaid reasoning, the language of Section 18(8)(ix) of the JVAT Act cannot be stretched to deduce some non-existent intention that the said section would apply even if the dealer is not a manufacturer.

Concluding the order in favour of the assessee, the High Court held that “Section 18(8) (ix) of the JVAT Act is not applicable in the case of this Petitioner. Consequently, the instant Writ Petition is allowed and the Judgment and order dated 28.07.2021 passed by the Ld. Commercial Taxes Tribunal in JR 07 of 2016 (Period 2012-13VAT) (Annexure-6), order dated 19.10.2016 of the Joint Commissioner of Commercial Taxes (Appeal) passed in Appeal Case No. SG-VAT-A-43/2015-16 (Annexure-3) and also the Assessment order dated 05.10.2015 passed by the Respondent No.2 wherein the Input Tax Credit, amounting to Rs. 15,98,658/- was disallowed to the petitioner (Annexure-2), are hereby, quashed and set aside.”

Exide Industries Limited vs The State of Jharkhand

CITATION: 2022 TAXSCAN (HC) 239

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