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2020 (2) TMI 296 - HC - VAT and Sales TaxInput tax credit - levy of purchase tax - Section 12(1) of the TNVAT Act, 2006 - HELD THAT:- Value Added Tax (tax) is payable on the sale of goods under Section 3 of the Act. Section 12(1) of the Act is an exception. As per Section 12(1) of the Act purchase tax is payable by a recipient-dealer who in the course of his business, purchases any goods (the sale or purchase of which is liable to purchase tax under the Act) under the circumstances prescribed therein. This provision is subject to the charging provisions of section 3(1) of the Act - These two taxes are available as an input tax credit under Section 19 and Section 12(2) of the Act respectively. As per section 12(2) of the Act, such dealer is also entitled to input tax credit (ITC) on the tax paid on the goods specified in the 1st schedule. In other words, purchase tax payable under section 12(1) of the Act is available as an input tax credit. This provision is also exception to Section 19 of the Act. Input tax credit that is made available under Section 12(2) and under Section 19 of the Act can be adjusted under Section 3(3) of the said Act. As per Section 3(3) of the Act, tax payable under Section 3(2) by a registered dealer is to be reduced in the manner prescribed to the extent of tax paid on the purchase of goods specified in Part B or Part C of the 1st schedule, inside the State, to the registered dealer, who sold the goods to him - there is no scope for ambiguity. Input tax credit can be adjusted only for payment of tax under Section 3(2) and not under Section 12(1) of the Act. Purchase tax payable under Section 12(1) of the Act has to be paid in cash. Such purchase tax can be adjusted on the output tax in terms of section 3(3) of the Act. The impugned order passed by the 1st respondent is sustainable - the above writ petition is liable to be dismissed and it is hereby dismissed.
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