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2016 (9) TMI 462 - HC - VAT and Sales TaxDenial of notional input tax credit - Rule 20(3)(a) of the Telangana VAT Rules – second hand vehicles – tax invoice – assessment order - pre-assessment show cause notice - Form VAT 305-A – Held that: - If the words already registered in the State under the Motor Vehicles Act, 1988 in Rule 20(3)(a) is construed to include vehicles initially registered in another State and thereafter, on its being brought within the State of Telangana, were again registered within the State, then that would render Rule 20(3)(a) ultravires the provisions of the Act, and a dealer being extended the benefit of input tax credit on vehicles which have not even suffered tax under the VAT Act, as VAT is imposed only on the sale of new vehicles by registered dealers within the State. The assessment order, to the limited extent the petitioner was denied notional input tax credit on their purchase of used/second hand vehicles on the ground that they had failed to produce a tax invoice, is set aside. The assessing authority shall afford the petitioner an opportunity of a personal hearing, and to produce documentary evidence to show (1) the price actually paid by them on the purchase of used/second hand vehicle, and (2) that the vehicles purchased by them had suffered VAT at the time of their initial registration, under the Motor Vehicles Act, 1988, within the State of Telangana. Matter remanded back - Decided partly in favor of assessee.
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