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2017 (11) TMI 927 - HC - VAT and Sales TaxInput tax credit - whether the petitioner is entitled to input tax credit on the tax amount shown in the invoices issued by the sellers who have availed benefit of remission under SRO 91 dated 16.03.2006 issued under Section 79 of the Jammu and Kashmir Value Added Tax, 2005? Held that: - It is well settled in law that circular/clarification cannot be contrary to the provisions of the Act and the Rules and by issuing subsequent circular, the department cannot incorporate new condition or restrict the scope of a notification granting exemption or whittle it down. Some purpose and policy decision is behind the notification issued by the State Government in exercise of statutory powers and therefore such benefit has to be provided to the investor/manufacturer which cannot be defeated by interpreting the notification in a different way - It is equally well settled legal proposition that once tax is paid, the assessee gets a vested right to avail the exemption/ refund as per the statutory provisions. Section 21(9)(X) restricts the benefit of input tax credit to a registered dealer who gets the benefit of tax remission. The tax remission is available under SRO 91 dated 16.03.2006 to the Industrial units that is the seller from whom petitioner has made purchases and not to the petitioner. Therefore, the restriction contained in Section 21(9)(X) does not apply to the case of the petitioner. The input tax liability of the petitioner has exceeded its tax liability, therefore, under Section 22 of the Act, the petitioner is entitled to refund of the input tax credit. The clarification dated 10.12.2007 insofar as it provides that there is no scope for allowing the refund by way of input tax credit because the benefit of remission also passes on from the manufacturer to the purchaser as he pays the tax notionally to the manufacturer by price adjustment is quashed, being contrary to the provisions of the Act - The orders of assessment passed by the assessing authority as well as the demand notices are hereby quashed - petition allowed - decided in favor of petitioner.
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