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2015 (5) TMI 1028 - HC - VAT and Sales TaxEntitlement for input tax credit under the KVAT Act - Reduction in contract amount to the extent of input-tax credit - Petitioner purchased the materials on payment of tax and issued invoices, the statutory right available under the KVAT Act is to collect the entire tax from the purchaser but Board refused to pay the tax paid by the petitioner to his sellers - Held that:- even if the entire tax component was paid to the petitioner, the petitioner would have been liable only for payment of tax at four per cent. To the Government, on the value addition at his hands, since, the returns would have claimed the input-tax credit, being the tax paid by him to his seller, which his seller would be liable to pay to the Government. The clause , does not indicate waiver of the amount paid as input-tax credit, as agreed by the Board. The Board had specifically made a condition that the tax payable to the Government would be paid by the Board itself and not paid to the petitioner herein. This was to ensure that the tax component would definitely go to the Government. VAT as applicable under the KVAT Act, being the net tax after input tax credit, that alone would be the liability of the petitioner to the Government, which is paid by the Board. Otherwise, if the amounts already paid by the petitioner to his seller is also paid to the Government, then the very scheme of VAT would be put in jeopardy since then, for the first sale, the Government would get four per cent tax twice on the sale to the petitioner and also on his subsequent sale to the Board. In such circumstance, the input-tax credit available to the petitioner would have to be paid by the purchaser of the petitioner, i.e., the Board. Therefore, since the Board definitely comes within the purview of article 12 and the terms of the contract are clear, the tax component which is available to the petitioner by way of input-tax credit would be paid by the Board to the petitioner. - Decided in favour of petitioner
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