JAISHREE EXPORTS Vs. COMMISSIONER TRADE & TAXES DEPARTMENT

JUDGEMENT

(1.) These are two appeals filed by M/s Jaishree Exports which is a dealer registered under the Delhi Value Added Tax Act, 2004, (hereinafter referred to as "the Act"). The appellant is a recognized export house engaged in the business of exporting rice out of India. It purchases packing material for packing the rice which is exported out of India. Prior to the coming into force of the Act, the appellant was purchasing the packing material without payment of sales tax on the strength of its registration by furnishing declarations in for ST-1/ST-49/Form-H. After the coming into force of the Act, w.e.f. 1.4.2005, initially the packing material was being purchased by the appellant on payment of tax (hereinafter referred to as "VAT") and the input tax so paid on the purchases of the packing material was being claimed as a refund. However, it would appear that in the case of another dealer by the name Amar Products, the Commissioner, VAT gave a ruling that packing material can be purchased against Form-H also. Accordingly, under the Act which came into force from 1.4.2005, the appellant was also making purchase of packing materials on the basis of declaration filed in Form H.

(2.) In respect of the tax paid by the appellant on the packing material after the introduction of the Act, it claimed input tax credit and asked for refund of the input tax on the ground that the packing material was used to pack rice which was exported out of India. The claim was made under Section 9 (1)(b) of the Act which provided that a dealer, who is registered under the Act, shall be entitled to tax credit in respect of the turnover of purchase occurring during the tax period when the purchase arises in the course of his activities as a dealer and the goods are to be used by him directly or indirectly for the purpose of making sales which are not liable to tax under Section 7 of the Act. Section 7 provided that certain sales were not liable to VAT. Clause (c) of Section 7 provided that sales made in the course of import of the goods into India or export of the goods out of the territory of India were not liable to tax. The claim of the appellant was thus made under Section 9 (1)(b) read with Section 7(c) of the Act on the footing that the packing material, on which it paid tax, was used to pack rice which was to be exported in a packed condition, and, therefore, the tax paid on the purchase of the packing material shall be refunded under these provisions. Before the VAT authorities, the appellant also relied on the "working guide" issued by the VAT Department in support of the claim for refund.

(3.) In the default assessment made under the Act by order dated 23.09.2008, the assessing authority (hereinafter referred to as "VATO") rejected the claim of the appellant in the following words: -