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2018 (5) TMI 1038 - HC - VAT and Sales TaxInput Tax credit - inputs - Caprolactum - denial on the ground that such raw material is sent by the assessee to its factory situated at District Hoshiarpur, Punjab, for converting into nylon filament yarn before it is returned to the assessee in Gujarat, from where it is sold to its different customers within and outside the State - assessee contends that the tax credit is available in terms of section 11 of the VAT Act - Whether in facts and circumstances of the case, tax credit entitlement of the dealer was required to be reduced in terms of clause(b) of subsection (3) of section 11 of the Value Added Tax Act? Held that: - The present is not a case either of branch transfer or transfer to a consignment agent. Undoubtedly, the raw material was transported to the assessee's branch situated outside the State but it can still not be treated as a branch transfer. It was transfer of the goods for manufacturing activity and the goods were returned back to the assessee's principal place of business in the form of finished product. It is this finished product which was eventually sold by the assessee either within the State or by way of interState sale and prescribed duty at the prescribed rates was paid - clause(b) of subsection( 3) of section 11 did not apply so as to allow the department to reduce the assessee's tax credit by prescribed percentage. Subclause (iii) of clause(a) of subsection( 3) of section 11 is made specifically subject to the provision of subclause( b). Correspondingly subclause( b) starts with a nonobstante clause providing, that notwithstanding anything contained in the said section, the amount of tax credit would be reduced in the manner provided therein. However, this would not change our opinion on the correct interpretation of the said provision. The question is answered in favour of the assessees and against the department.
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