- (1.) Since the issue involved in all these Writ Petitions are one and the same, they are all taken up together and decided by a common order.
(2.) These Writ Petitions have been filed under Article 226 of the Constitution of India praying for issuance of a Writ of Certiorari to call for the records on the file of the first respondent in VAT Cell/Roc.No.37188/2011/Circular No.22/2011 dated 20.10.2011, quash the same.
(3.) The subject matter in all these Writ Petitions are related to payment of VAT on the invisible loss of yarn pursuant to manufacturing activity. The said issue has been decided by this Court in a batch of Writ Petitions in W.P.Nos.13901,30852 to 30880 of 2013 in the case of "Interfit Techno Products Ltd., Vs. The Principal Secretary, Commissioner of Commercial Taxes", by order dated 26.11.2014. The relevant portion found in the said judgment reads as follows: - "The decision in the case of Steel Authority of India Ltd., Vs. Collector of Central Excise [1996(88)E.L.T.314(SC)] is an appeal filed challenging the order passed by the CEGAT and the question was whether the appellant was entitled for concessional rate of duty. The exemption notification provided for exemption in respect of raw naphtha which is intended in the use of manufacture of fertiliser exempting the manufacturing process. It was held that raw naphtha is utilised in its plant for the manufacture of fertiliser and the benefit of exemption notification is extended. In the present proceedings, the petitioner has approached this Court by way of Writ Petitions challenging the circular as well as the orders of assessment which are in most cases exparte orders since the dealer did not respond to the show cause notice. The assessing officer also made an adhoc assessment and adopted a uniform percentage stating that the same is treated as "invisible loss" and direction was issued to reverse the Input Tax Credit. The net result is there has been no examination of the manufacturing process as to what is the actual manufacturing loss or production loss or invisible loss. This cannot be done without examining each manufacturing process or identical manufacturing process. Infact, the association of Textile exporters were granted liberty by the Honourable Division Bench to make a demonstration before the concerned assessing officer. It is not known as to why they did not avail such opportunity which should have been availed as it is the appropriate method for ascertaining as to whether on facts there is a process loss or a manufacture loss. Therefore, the decision does not render support to the case of the petitioner. ........... 63.In the result, 1. the challenge to the impugned order is held to be unnecessary since the circular is a non -statutory circular and is in the nature of guideline and the prayer for quashing the circular is rejected. 2. Section 18 of the TNVAT Act is not an independent or a separate stand alone provision under the provisions of TNVAT Act but subject to other provisions of the Act including Section 19 of the VAT Act. 3. For the reasons assigned, it is not sufficient for a dealer claiming refund under Section 18(2) of the Act to show that he has paid Input Tax on the goods purchased; that those goods are used in the manufacture and nothing more but there is duty upon the dealer to satisfy the Assessing Authority that the claim is not hit by any of the restrictions or conditions contained under Section 19 of the VAT Act. In this regard, it is essential for the Assessing Authority to embark upon the fact finding exercise to ascertain the quantum of loss of the goods which were purchased on which tax was paid vis -s -vis the goods manufactured from and out of the goods purchased and to examine as to whether they fall within any of the restrictions contained in Section 19 of the VAT Act. The Assessing Officer has to conduct an exercise by which it is to be ascertained as to whether the representation made by the dealer is justified and is not hit by any of the restrictions and conditions contained in Section 19 and in particular Section 19(9) of the VAT Act. 4. It is held that the Assessing Authorities are not justified in adopting uniform percentage as invisible loss and calling upon the dealer to reverse the Input Tax Credit availed to that extent. Consequently, all notices issued to the petitioner for reopening and all consequential order passed reversing the Input Tax Credit to the extent of either 4% or 5% or on adhoc per centage stands set aside. However, liberty is granted to the concerned Assessing Officer to issue appropriate show cause notices to the petitioners clearly setting out under what circumstances they propose to revise or call upon the petitioner to reverse refund sanctioned and after inviting objections proceed in accordance with law. 5. The undertaking given by the dealer in Form W is with regard to information furnished for the purpose of verification by Assessing Officer under Rule 11(2) of the VAT Rules for being entitled to refund under Section 18(2). Therefore, it is not as if the Act does not provide a remedy in the event of a wrong or erroneous refund sanctioned when Section 18 cannot be treated as an independent provision but subject to restrictions and conditions under Section 19 of the VAT Act." ;