Section 15 of PVAT Act 2005 deals with the Net Tax Payable by a taxable person. Sub section 1 of Section 15 provides that the output tax under PVAT Act shall be adjusted from the Input Tax Credit for determining Net Tax Payable by a taxable Person. If any excess ITC is still left then it is to be adjusted from the CST liability under CST Act 1956 at the option of the taxable person as per section 15(2) of PVAT Act.
Section 15(3) of PVAT Act provides that the Excess ITC if any left after adjustment of output tax or CST liability u/s 15(1) and 15(2) then such ITC shall be adjusted against any outstanding tax, Penalty or Interest under PVAT Act 2005 or CST Act 1956 as the case may be.
Section 15(3) of PVAT Act runs as under:
'Excess amount of input tax credit, if any, after adjustment under sub-section (2) shall be adjusted against any outstanding tax, penalty or interest under this Act or under the Central Sales Tax Act, 1956, as the case may be'
Thus the Penalties levied or interest under PVAT Act 2005 or CST Act,1956 can be adjusted from the Excess ITC. Moreover the word 'Shall' has been used u/s 15(3) which makes mandatory exhausting of Excess ITC if any left after adjustment u/s 15(2) for any outstanding tax,Penalty or Interest under PVAT Act 2005 or CST Act 1956.
Pre deposit of 25% u/s 62(5) can also be adjusted from Excess ITC: The Punjab VAT Tribunal has confirmed in Ganesh Iron and General Store, Killinwari (muktsar) Vs. State of Punjab decided on 18-05-2009 [(2010) 14 STM 486] and in many other cases that Excess ITC can also be utilised for payment of 25% of total tax, penalty or interest which is pre condition before hearing of an appeal u/s 62(5) of PVAT Act 2005.
Thus if a person wants to file an appeal under Punjab VAT Act 2005 for which he is required to deposit 25% of Total Tax, Interest or Penalty u/s 62(5) as a pre condition for hearing of appeal, he can adjust such 25% of demand from the excess ITC if available and produce a certificate to that effect from the concerned ETO cum Designated officer before the appellant authority to satisfy the conditions of section 62(5) of PVAT Act 2005.
By: AMIT BAJAJ ADVOCATE - April 30, 2011