CTO (A Vs. DURGESHWARI FOOD LTD., SRIGANGANAGAR

JUDGEMENT

(1.) The petitioner - Revenue has filed these two revision petitions being aggrieved by order dated 13.03.2009 of the Rajasthan Tax Board, Ajmer dismissing Revenue's appeals against the order of Deputy Commissioner (Appeals) dated 05.11.2007 and holding that for the period of assessment 2006-07 (01.04.2006 to 30.06.2006), the assessee was entitled to full Input Tax Credit under Sec. 18 of the Rajasthan VAT Act, 2003 enforced w.e.f. 01.04.2006 (for short, hereinafter referred to as 'VAT Act 2003'); and such input tax credit was not liable to be reduced proportionately by 25% to the extent of manufacture of tax exempted "Chaff' ("Chokar") in the process of manufacture of "Aata", "Maida" and "Suji", which are taxable wheat products and for manufacture of which the wheat (raw material) was purchased by the respondent-assessee upon payment of Sales Tax/VAT and full input tax credit in respect of which was claimed under Sec. 18 of the Act against the tax payable by the assessee on the sale of "Aata", "Maida" and "Suji" during the period in question.

(2.) The Assessing Authority vide the assessment order dated 30.08.2007 disallowed the input tax credit to the extent of sale of exempted goods, namely, wheat bran (Chaff/Chokar) by the assessee, which was assessed by him @ 25% of total input tax credit, which was not in the list of exempted goods in Schedule-I to the VAT Act, 2003 during the relevant period and imposed reverse tax, as provided in the said Act holding that since only the finished goods "Aata", "Maida" and "Suji" were taxable whereas wheat bran (Chaff/Chokar) was not taxable or was exempted from payment of tax, therefore, the Input Tax Credit was not allowable to the assessee to the extent of 25% of its claim assuming that production of wheat bran (Chaff/Chokar) was to the extent of 25% of the total production, out of such wheat used as raw material by the assessee-respondent.

(3.) The first appeal filed by the assessee was, however, allowed by the learned Deputy Commissioner (Appeals) vide order dated 05.11.2007 relying upon the decision of Honourable Supreme Court in the case of Commissioner of Sales Tax, Bombay Vs. Bharat Petroleum Corporation Ltd., reported in (1992) 85 STC 220 (SC) : (1992) 2 SCC 579 and Punjab & Haryana High Court D.B. decision in the case of Sharda Cotton Ginning & Pressing Factory Vs. State of Haryana & Ors., reported in (2001) 123 STC 449 (P&H) .