2019 (8) TMI 1610 - HC - VAT and Sales Tax

Input Tax Credit - original tax invoices - Section 18(6) of Jharkhand Value Added Tax (JVAT) Act read with Section 18(8) of the said Act - HELD THAT - It appears that the issue involved in the instant writ application is similar to the issue raised in the case of BRAHMAPUTRA METALLICS LIMITED VERSUS STATE OF JHARKHAND AND OTHERS 2019 (9) TMI 521 - JHARKHAND HIGH COURT where it was held that It is always open for the State Tax Authorities on the strength of tax invoices produced before it by a dealer to verify the genuineness of said invoices and to ascertain that said dealer has in fact discharged liability of input tax on such invoices in respect of which ITC is being claimed. Thus the production of JVAT- 404 Fo rm for the purpose of claiming ITC is merely directory in nature and not mandatory. The respondent-State of Jharkhand are directed to re-examine the claim of the petitioner towards its claim of Input Tax Credit amounting to Rs. 1, 93, 85, 122.25/- in respect of which the petitioner has not submitted JVAT-404 Forms by verifying the said claim from tax invoices in original containing particulars of sale evidencing the amount of input tax paid and on being satisfied that the petitioner has paid input tax as aforesaid extend the benefit of Input Tax Credit to the petitioner. Petition allowed by way of remand.

Summary

Issues involved:
Claim of Input Tax Credit solely based on original tax invoices, quashing of orders denying ITC due to non-submission of JVAT Form 404, applicability of Rule 35(2) of JVAT Rules, 2006, interpretation of Section 18(6) of JVAT Act, 2005, comparison with previous judgment in Brahmaputra Metallics Limited case.

Analysis:

1. Claim of Input Tax Credit based on original tax invoices:
The petitioner sought a declaration for entitlement to Input Tax Credit (ITC) solely on the basis of original tax invoices, invoking Section 18(6) of the JVAT Act. The petitioner argued that the denial of ITC by the Assessing Officer due to non-submission of JVAT 404 form was unjustified. The petitioner contended that Section 18(6) of the JVAT Act only requires production of original tax invoices for claiming ITC and does not mandate submission of JVAT 404 forms. The petitioner relied on the provision allowing the Assessing Officer to dispense with the requirement of original tax invoices in certain cases for valid reasons.

2. Quashing of orders denying ITC due to non-submission of JVAT Form 404:
The petitioner sought to quash the orders passed by the Commissioner of Commercial Taxes and the revised demand notice, which denied ITC on the grounds of non-availability of JVAT Form 404. The petitioner argued that the reliance on Rule 35(2) of the JVAT Rules, 2006, which mandates the submission of JVAT 404 forms, was incorrect as it was inconsistent with Section 18(6) of the JVAT Act. The petitioner contended that Rule 35(2) should be considered directory rather than mandatory.

3. Interpretation of Section 18(6) of JVAT Act, 2005:
The petitioner's case was compared to a previous judgment in the Brahmaputra Metallics Limited case, where it was held that Section 18(6) of the JVAT Act does not make the submission of JVAT 404 forms mandatory for claiming ITC. The Court reiterated that the provision allows for the Assessing Authority to consider alternative evidence in the absence of original tax invoices. The judgment emphasized that Rule 35(2) of the JVAT Rules, 2006 should be considered directory and not mandatory, requiring the Assessee to substantiate the ITC claim through other documents specified under Section 18(6) of the JVAT Act.

4. Comparison with previous judgment in Brahmaputra Metallics Limited case:
The Court found that the issues raised in the instant case were similar to those addressed in the Brahmaputra Metallics Limited case. The judgment in the previous case clarified the requirements for claiming ITC under Section 18(6) of the JVAT Act and the interpretation of Rule 35(2) of the JVAT Rules. The Court concluded that the petitioner in the present case should be granted ITC based on the principles established in the Brahmaputra Metallics Limited case.

5. Decision and Directions:
Based on the analysis of the legal provisions and the previous judgment, the Court allowed the writ application, setting aside the orders denying ITC and directing the Assessing Authority to re-examine the petitioner's claim for Input Tax Credit. The Court instructed the State of Jharkhand to verify the ITC claim based on original tax invoices and extend the benefit of ITC to the petitioner if the tax payment was duly evidenced. The Court emphasized the need for compliance with Section 18(6) of the JVAT Act while considering ITC claims, irrespective of the submission of JVAT 404 forms.

Conclusion:
The judgment in the present case reaffirmed the principles established in the Brahmaputra Metallics Limited case regarding the interpretation of provisions related to Input Tax Credit under the JVAT Act. It clarified the requirements for claiming ITC based on original tax invoices and emphasized the discretionary nature of Rule 35(2) of the JVAT Rules, 2006. The decision provided relief to the petitioner by granting entitlement to Input Tax Credit and quashing the orders that denied ITC due to non-submission of JVAT Form 404.