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2014 (7) TMI 1266 - HC - VAT and Sales TaxInput tax credit - full deduction - as the assessee has failed to maintain evidence to segregate non-deductible input tax relating to exempt transactions it has failed to establish the claim of deductible input tax on direct method as explained to segregate non-deductible input tax - Held that: - it is clear that the input tax in relation to any registered dealer means tax collected or payable under this Act on the sale by him on any goods for use in the course of his business. Output tax in relation to any registered dealer means, the tax payable under this Act in respect of any taxable sale of goods made by the dealer in the course of his business. Sub-rule (3) of Rule 10 makes it clear that subject to input tax restrictions specified in Sections 11, 12, 14, 17, 18 and 19, net tax payable by the registered dealer in respect of each tax period shall be the amount of output tax payable by him for that period less input tax deductible by him, as prescribed in that period. Merely because the said de-oiled cake also has a value and he sells the same, there is no justification to deny the benefit of deduction to the assessee, because there is no direct nexus between the sunflower oil cake and the de-oiled cake. Sunflower oil cake was purchased for the purpose of extracting oil from the said cake and for the sale of the de-oiled cake, the assessee has not put-up a separate unit. Therefore, it is not the case that assessee has put-up a separate industry for the purpose of manufacture of de-oiled cake and merely because the de-oiled cake has some value and it is sold, that would not take away the benefit conferred on the assessee by the statute. A harmonious interpretation of Sections 10, 11(a)(1) and 17 of KVAT Act and Rule 131 of the Karnataka Value Added Tax Rules, 2005, makes it very clear that it is only when there is direct relationship to the taxable sales, the assessee is entitled to the benefit. The assessee is entitled to the benefit of 'Full Input Tax Deduction' - appeal allowed - decided in favor of appellant.
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