Exide Industries Limited Vs The State of Jharkhand (Jharkhand High Court)
The present dispute pertains to the period 2012 -2013. The Petitioner during the said period, had made local purchases of scrap batteries worth Rs. 6,12,45,703/- on which it had claimed Input Tax Credit (ITC) of Rs. 30,62,285. However, in the assessment order ; the assessing officer, after applying Section 18(8)(ix) of the JVAT Act, 2005, has allowed only a portion of ITC claimed and availed since the Petitioner has made interstate stock transfers. The Assessment order categorically observed that the Petitioner is a trader within the State of Jharkhand. The said assessment order was confirmed by the appellate authority and thereafter the Ld. Tribunal , again by relying on Section 18(8)(ix) of the Act, confirmed the Assessment order.
It further transpires that there was not even a whisper of allegation in the assessment order or the appellate order that the petitioner was involved in manufacturing activities within the State of Jharkhand.
Thus, the only dispute in the present case relates to the interpretation and applicability of Section 18(8) (ix) of the JVAT Act in the case of this Petitioner.
Thus, the only dispute in the present case relates to the interpretation and applicability of Section 18(8) (ix) of the JVAT Act in the case of this Petitioner. For brevity, relevant portion of the Act, as it existed during the assessment year 2012-13, is reproduced herein below:
“S. 18 Input Tax Credit
(8) No input tax credit under sub-Section (1) shall be claimed or be allowed to a registered dealer:
(ix) in respect of goods consumed for manufacture of goods for Inter-State transfer of stock or for sale outside the State.”
From bare perusal of the aforesaid provision, it manifest that Section 18(8)(ix) of the JVAT Act is only applicable in case when some manufacturing activity is undertaken by the dealer. In the present case, admittedly, no manufacturing activity is carried out by the Petitioner in the State of Jharkhand. It is only a trader and hence Section 18(8)(ix) cannot be applied in the case of the Petitioner.
Further, the finding that scrap batteries could only have been used for processing or manufacturing is also incorrect, inasmuch as, a dealer such as the Petitioner is also free to trade in the said scrap batteries, i.e., sale and re-sale. It is incorrect to presume that scrap batteries can only be used for processing or manufacturing. If the interpretation of the Ld. Tribunal is accepted, then several traders would be debarred from eligible ITC since all products are ultimately processed or manufactured. The word ‘trader’ would itself lose its meaning.
In view of the aforesaid discussions and judicial pronouncements, it is held that Section 18(8) (ix) of the JVAT Act is not applicable in the case of this Petitioner.
