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2015 (8) TMI 1005 - HC - VAT and Sales TaxReversal of Input Tax Credit on issuance of credit note – Tribunal-VAT vide impugned order held that appellants were required to reverse input tax credits claimed on purchases made by them, on account of credit notes issued by selling dealers, despite selling dealers having confirmed that they have not reduced their output tax liability – Whether it can be said that returns filed by appellants were false, misleading or deceptive, attracting penalty under DVAT act – Held that:- Appellants have been able to produce certificates from selling dealers who have clarified that they are not claiming any output tax credit or seeking any refund – Therefore, there is no question of selling dealer resorting to procedure under Section 51(a) of DVAT Act to raise credit note – If purchasing dealer is not given credit note by selling dealer, question of purchasing dealer adjusting input tax does not arise – Settled legal position was that if by virtue of insertion of explanation in taxing statute “a substantive law is introduced, it will have no retrospective effect” – Any reduction in tax payable by selling dealer on account of reduction in sale price would correspondingly result in reassessment of tax credit claimed by buyer in cases where goods have been sold by one registered dealer to another – Same would necessarily involve issuance of credit notes as without issuance of such credit notes, it would not be open for buying dealer to adjust tax credit. In assessment order, nothing has been brought on record by Department to show that arrangement by which discounts/incentives were offered to purchasing dealers by selling dealers was with view to "defeat the application or purposes of" any provision of DVAT Act – Thus, Tribunal erred in holding that Appellants were required to reverse Input Tax Credit claimed on purchases made by them and returns filed by Appellants could not be held to be false, misleading or deceptive – Impugned judgment of Tribunal unsustainable in law and hereby set aside – Decided in favour of Appellant.
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