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2019 (6) TMI 941 - HC - VAT and Sales TaxInput tax credit - KVAT Act - failure to remitting of tax on the part of seller - Whether remitting of tax by registered selling dealer is a condition precedent in claiming input tax credit by the purchasing dealer against a valid invoice with the tax component paid? - HELD THAT:- Sections 10[2]and [3] of the KVAT Act contemplates what is input tax in relation to any registered dealer and the net tax payable by a registered dealer in respect of each tax period. Section 11[a] [1] to [9] deals with input tax restrictions. Section 11[a][9] would be relevant for the purposes of the present case which spells out about the input tax restrictions inasmuch as the tax paid on goods purchased by a dealer who is required to be registered under the Act, but has failed to register. It is also admitted by the prescribed authority that there is no provision in KVAT Act which restricts input credit on purchases effected from defaulting dealers. It is clear that the benefit of input tax cannot be deprived to the purchaser dealer, if the purchaser dealer satisfactorily demonstrates that while purchasing goods, he has paid the amount of tax to the selling dealer. If the selling dealer has not deposited the amount in full or a part thereof, it would be for the revenue to proceed against the selling dealer - Indisputably, the petitioner has purchased the goods from a registered dealer not from an unregistered dealer. Section 9 of the KVAT Act provides collection of tax by registered dealers. If there is any default on the part of such registered dealers in not remitting the tax, so collected into the Government treasury or any designated bank and furnish monthly returns as specified under Section 35 to the prescribed authority, the proceedings are required to be initiated against such registered selling dealers in accordance with the provisions of the KVAT Act. The re-assessment orders and the demand notices at Annexures – A, B, C and D are set aside - proceedings are restored to the file of the respondent No.1 – prescribed authority for reconsideration. Respondent No.1 – prescribed authority shall re-consider the matter in accordance with law and after providing an opportunity of hearing to the petitioner shall conclude the re-assessments in an expedite manner - Petition allowed by way of remand.
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