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2023 (11) TMI 816 - HC - VAT and Sales TaxEligibility for input tax credit - exemption of inter-state sales from tax - HELD THAT:- Since the statutory provisions under the KVAT Act restrict the availment of input tax credit to only such situations where tax is payable on outward sales and there is a prohibition against availment of input tax credit in situations where the outward inter-state sale is exempted, the issuance of the exemption notification by the State Government under Section 8(5) of the CST Act must be seen as bringing into operation the prohibition under the 3rd proviso to Section 11(3) in respect of input tax credit and the 3rd proviso to Section 12(1) in the case of special rebate - the question really is not whether the petitioners had an option to avail the exemption envisaged in the notifications or not; rather, the point is that by virtue of the notifications aforementioned, the inter-state sale of rubber had to be seen as exempted for the purposes of the 3rd proviso to Section 11(3) and the 3rd proviso to Section 12(1) of the KVAT Act. The petitioners were therefore not entitled to avail input tax credit of the tax paid on purchases of rubber within the State so long as Annexures-I and II notifications were in force and operational. The amendments to the said notifications in 2019, with retrospective effect, only enable those who had paid CST in terms of Section 8(1) of the CST Act to adjust the said payments towards the demands served on them consequent to the disallowance of the input tax credit/special rebate availed by them. The impugned order of the Tribunal which grants the petitioners the limited relief aforesaid does not require modification or interdiction - Revisions are therefore disposed by answering the questions of law raised therein against the assessees and in favour of the Revenue.
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