P. I. Polymers Vs Commerical Tax Officer (Madras High Court)
The Madras High Court considered two intra-court appeals filed by an assessee challenging reassessment orders dated 13.11.2015 passed by the Commercial Tax Officer for the assessment years 2012-13 and 2013-14. The dispute concerned the assessee’s claim of Input Tax Credit (ITC) under Section 19 of the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act) on the tax paid while purchasing Duty Entitlement Passbook (DEPB) licences.
The assessee had purchased DEPB licences and utilised them for importing plastic granules. It claimed that the imported plastic granules were partly used for manufacturing plastic products and partly sold as granules for manufacturing other plastic products such as PET bottles. According to the assessee, being a registered dealer, it was entitled to claim ITC on the purchase of DEPB licences under Section 19(1) of the TNVAT Act because the purchase of DEPB licences was an ancillary business activity connected with the import and sale of plastic granules. It further contended that the purchase of DEPB licences constituted an activity carried out “in the course of business” and that DEPB licences qualified as “input” under Section 2(23) of the TNVAT Act.
The assessee relied upon the Commissioner’s clarification dated 12.03.2007, contending that there need not be a one-to-one correlation between the input, namely the DEPB licence, and the goods on which the input tax credit was utilised. It asserted that the input tax paid on the purchase of DEPB licences could be adjusted against the output tax payable on the sale of imported plastic granules.
