The Supreme Court of India has ruled that Tata Steel has standing to challenge the denial of input tax credit under the Jharkhand Value Added Tax (JVAT) Act to its unit.
A two-judge panel consisting of Justice Sanjiv Khanna and Justice Bela M. Trivedi, remanded the case to the High Court of Jharkhand for re-determination on Tata Steel’s writ petition against denial of tax credit on inputs to its Naomundi unit.
While allowing the motion in brief, the Supreme Court also observed that, “During the hearing of this appeal, learned counsel agrees that the reasoning given by the High Court in the impugned judgment on the locus standi of the appellant is not justified and correct The motion in writ brought by Tata Steel Ltd., which is a corporation, could not have been dismissed as inadmissible when it challenged the disallowance of the input tax credit to the unit of Naomundi, with respect to purchases made and used in the said unit.
While dealing with the issue considered and decided by the High Court relates to the interpretation of Clause (ix) of Subsection (8) of Section 18 of the Jharkhand Value Added Tax Act 2005, the Court also noted that, the reasoning given by the High Court in paragraph 7 of the order under appeal is rather cryptic and fails to address the issues and arguments which arise and should have been considered in interpreting the clause.
The Court also set aside the contested order interpreting Clause (ix) of Subsection (8) of Section 18 of the Jharkhand Value Added Tax Act 2005 as it existed prior to the Jharkhand Value Added Tax (Amendment) Order 2011, with an order to return to the High Court for redetermination. The respondent will have the right to file an amended/additional counter affidavit relying on the amended clause. Similarly, it will be open to the appellant to lodge an appeal challenging the order and the notification.
The Supreme Court also clarified that we had expressed no opinion on the interpretation of clause (ix) of subsection (8) of section 18 of the Jharkhand Value Added Tax Act 2005, before and after modification or validity of the notification granting retroactive effect. to the amendment.
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