Madras High Court Remands Steel Exporter's Refund Claim for Reconsideration
The Madras High Court has delivered a blow against delayed processing and misapplied limitations, overturning the denial of a refund claim by a steel castings and industrial valves manufacturer-exporter. This significant development for steel exporters sees the bench of Justice Senthilkumar Ramamoorthy remanding the case for fresh consideration based solely on merit.
The petitioner, dutifully registered under the Tamil Nadu Value Added Tax (TNVAT) Act and the Central Sales Tax Act, 1956, had been filing Forms W and claiming Input Tax Credit (ITC) on capital goods used for their zero-rated exports since 2011. However, their 2020 refund claim faced an unexpected rejection.
This hurdle stemmed from a combination of factors. Initially, Circular No. 22/2011, issued by the Commissioner of Commercial Taxes, stood as a barrier, restricting such refunds. Later, Circular No. 12/2018 clarified the eligibility for these very refunds, prompting the petitioner to file their claim. Despite this clarification, the department, citing the time limit under Section 18 of the TNVAT Act and the now outdated Circular No. 22, denied the claim.
Unwilling to accept this decision, the petitioner challenged it, arguing they had submitted their claim within the stipulated timeframe and should not be penalised for the department's administrative delays caused by outdated circulars. The Court, acknowledging the petitioner's timely claim and recognising the impact of the conflicting circulars, sided with them.
In a crucial move, the Court held that the petitioner's claim was filed within the stipulated timeframe and that they should not be held accountable for the department's administrative delays. It rejected the department's arguments regarding time limitations, stating that the period should be recalculated from the date of the clarifying circular (Circular No. 12). This ruling not only clarifies the rights of exporters seeking refunds for unutilised ITC on capital goods used for zero-rated exports but also highlights the potential impact of out-dated circulars on claims and underscores the importance of timely clarification by authorities.
The Court quashed the denial order and sent the case back to the assessing officer, demanding fresh consideration based solely on the claim's merits, excluding any arguments related to limitations. Furthermore, the officer must provide the petitioner with a fair opportunity to present their case and reach a decision within two months.