TMI Blog2015 (4) TMI 779X X X X Extracts X X X X X X X X Extracts X X X X ..... redit, in that case, Rule 18 of the Rules, 2006 which provides for calculation of tax would come into play. On conjoint reading of section 11 of the VAT Act read with Rule 18 of the Rules, 2006, a dealer is entitled to adjust its output tax liability against its admissible Input Tax Credit in the current year under consideration. When on assessment the assessee / dealer is held to be entitled to a particular Input Tax Credit, in that case, the assessee/dealer is entitled to the benefit of Rule 18 of the Rules, 2006 and is entitled to adjust such Input Tax Credit against its output tax liability under the VAT Act of the current year under consideration. Merely because while submitting the Form No.108 the assessee/dealer submitted the claim of Input Tax Credit more than which is held to be admissible on assessment may be original assessment or even audit assessment or even reassessment, by that itself is no ground to deny the assessee/dealer to adjust the admissible Input Tax Credit against its output tax liability of VAT Act of the current year under consideration. - assessee/dealer is entitled to adjust the Input Tax Credit against its output tax liability of the VAT Act of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e liability of CST of the current year which tax credit the assessee had carried forward, the Tribunal was not required to give a specific direction for reversal of such carry forward of credit of input tax for subsequent years? In Tax Appeal No.1362/2014, the following substantial questions of law arise. (1) Whether Tribunal erred in deleting levy of interest merely because assessee had excess input credit adjustable against tax demand? (2) Whether Tribunal erred in not directing that for computing interest liability for subsequent year the assessee shall not enjoy benefit of such input tax credit? (3) Whether Tribunal erred in deleting levy of penalty? In Tax Appeal No.1319/2014, the following substantial questions of law arise. [1] Whether the Hon'ble Tribunal has erred in holding that the input tax carried forward is required to be adjusted against the liability of CST? [2] Whether Hon'ble Tribunal has erred in not giving a specific direction requiring us to execute reversal of carry forward of input credit in subsequent year? 2.1 At the outset it is required to be noted that question Nos.2 and 3 which arise in Tax Appeal No.1362/2014 which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis, the Tribunal was of the opinion that the assessee had sufficient Input Tax Credit and those tax credits could have been adjusted against the assessee s additional assessed tax liability. That being the position, the Tribunal correctly held that the interest could not be charged. Further, we notice Section 34(7) of the Gujarat Value Added Tax Act, which pertains to the power of the Commissioner to impose penalty, begins with the expression if a Commissioner is satisfied that the dealer, in order to evade or avoid payment of tax........ Under the circumstances, the basic intention of attempting to evade or avoid payment of taxes would be necessary for imposing penalty. 4. When the Tribunal found on facts that in view of availability of input tax credit as against the assessed additional tax, there was no intention on part of the assessee to avoid payment of taxes, no question of law arises. Tax appeal is dismissed. Civil Application also dismissed. 7. Same situation arises in the present matters inasmuch as the demand is confirmed and the adjustment is confirmed under interest and penalty imposed are deleted. 8. It is not in dispute that the respective assessees had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er applied for registration under the Gujarat Sales Tax Act, 1969 as well as the Central Sales Tax Act and the registration came to be granted with effect from 12.11.2005 only. That the assessee claimed Input Tax Credit of ₹ 8,05,709/in respect of the goods in stock as provided in Section 12 of the Gujarat Value Added Tax Act, 2003 (hereinafter referred to as VAT Act ) by filing the Form No.108. It is required to be noted that the goods were partly purchased and sold before the date of registration, while some goods were in stock as on 31.03.2006. It appears that while filing the returns the assessee also claimed Input Tax Credit of ₹ 4,55,483/on the amount of tax paid on the goods purchased during the year 200607 after the effective date of registration. It appears that Assessing Authority hold that though the tax was paid on purchases, the dealer/assessee was not a registered dealer under the Gujarat Sales Tax Act, 1969 at the time of purchases and therefore, it was not entitled to Input Tax Credit on goods in stock on 31.03.2006 as claimed in Form No.108. That being aggrieved and dissatisfied with the decision of the Assessing Authority in denying the Input Tax C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,55,483/to the next year simply because the assessee had carried forward the Input Tax Credit of ₹ 5,24,669/in the return submitted by it. Thus, the Assessing Officer carried forward the admissible Input Tax Credit of ₹ 4,55,483/to the next year instead of adjusting the admissible Input Tax Credit towards the output tax liability of the assessee of the current year. That the Assessing Officer also charged the interest on the outstanding dues. Moreover, the Assessing Officer also imposed huge penalty at the rate of 200% under Section 12(7) of the VAT Act on the ground of wrongful claim of Input Tax Credit as well as penalty at the rate of 150% under Section 34(12) of the VAT Act. 4.3 Feeling aggrieved and dissatisfied with the assessment order insofar as not adjusting the Input Tax Credit towards the output tax liability of the assessee of the current year and levying interest and imposing penalty under Sections 12(8) and 34(12) of the VAT Act, the assessee preferred First Appeal before the learned Appellate Authority. That the learned Appellate Authority confirmed the assessment order by observing that the goods which were in stock as on 31.03.2006 had been purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as the first Appellate Authority. It is submitted that the learned Tribunal has materially erred in holding that the assessee/dealer is entitled to set off admissible Input Tax Credit against the output tax liability under the VAT Act, during the current year. 5.1 It is submitted by Shri Dave, learned AGP that when the assessee/dealer wrongly claimed the Input Tax Credit of ₹ 8,05,709/on the opening stock as on 01.04.2006 though was not entitled to that much Input Tax Credit, therefore made a wrong claim/excess claim of Input Tax Credit, the Assessing Officer had rightly, while allowing the Input Tax Credit which was permissible under the VAT Act, not adjusted such Input Tax Credit against the output tax liability of the dealer/assessee with respect to current year and had rightly directed to carry forward the said Input Tax Credit to the next subsequent year. It is submitted that it is not that the Assessing Officer had denied the Input Tax Credit to the dealer/assessee at all. It is submitted that the learned Assessing Officer only directed to carry forward the Input Tax Credit to the next subsequent year. 5.2 It is further submitted that the learned Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l holding that the dealer is entitled to adjust the Input Tax Credit against its output liability of output tax credit under the VAT Act in the current year under consideration is absolutely just and proper and in consonance with the provisions of the VAT Act and the Rules, 2006 more particularly section 11 of the VAT Act read with Rule 18 of the Rules, 2006. 6.1 It is submitted that once on assessment/reassessment it is found that the assessee/dealer is entitled to have Input Tax Credit, in that case, considering the provisions of Section 11 of the VAT Act read with Rule 18 of the Rules, 2006, the assessee/dealer is entitled to adjust the said Input Tax Credit against its liability towards its output tax liability under the VAT Act in the current year under consideration. It is submitted that therefore once it is held that the dealer/assessee is entitled to a particular Input Tax Credit, to deny to adjust the same against its output tax liability under the VAT Act under current year under consideration and to direct to carry forward the same in the subsequent year would be denying the Input Tax Credit to the dealer under the year under consideration, though on assessment it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Input Tax Credit adjustment against its output tax liability under the VAT Act under the current year under consideration and whether the learned Tribunal has committed any error in quashing and setting aside the order passed by the Assessing Officer as well as the first Appellate Authority in directing to carry forward such Input Tax Credit to the next subsequent year? 7.1 While considering the aforesaid issue, the relevant provisions of VAT Act and the Rules, 2006 are required to be referred to and considered which are as under: 11. Tax Credit (1)(a) A registered dealer who has purchased the taxable goods (hereinafter referred to as the purchasing dealer ) shall be entitled to claim tax credit equal to the amount of, (i) tax collected from the purchasing dealer by a registered dealer from whom he has purchased such goods or the tax payable by the purchasing dealer to a registered dealer who has sold such goods to him during the tax period. (ii) ... (iii) ... (b) ... (2) ... to (4) ... (5) Notwithstanding anything contained in this Act, Tax credit shall not be allowed for purchases- (a) ... to (d) ... (dd) made prior to the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to submit its claim in the required format i.e. in Form No.108 and on that the assessment order is required to be passed and on assessment the Input Tax Credit admissible to an assessee/dealer is determined. Once on assessment it is found that dealer is entitled to a particular Input Tax Credit, in that case, Rule 18 of the Rules, 2006 which provides for calculation of tax would come into play. On conjoint reading of section 11 of the VAT Act read with Rule 18 of the Rules, 2006, a dealer is entitled to adjust its output tax liability against its admissible Input Tax Credit in the current year under consideration. Thereafter and after adjusting the Input Tax Credit against its output tax liability of the current year under consideration, if still there is any Input Tax Credit available to a dealer/assessee, a dealer is entitled to adjust such balance Input Tax Credit against its central sales tax liability of the current year under consideration. If thereafter still there is any Input Tax Credit in the credit of the assessee/dealer, such balance Input Tax Credit is required to be carried forward to the next subsequent year and that is the scheme of the VAT Act and the Rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the State/Revenue that while submitting the Form No.108, the assessee with malafide intention claimed more/excess Input Tax Credit than it was entitled to and/or admissible under the VAT Act and the Rules, 2006 and therefore, the assessee is not entitled to adjust such Input Tax Credit against its output tax liability of the current year under consideration and the same is required to be carried forward to the next subsequent year is concerned, the aforesaid has no substance and cannot be accepted. As observed hereinabove, on assessment only the amount of Input Tax Credit is assessed and determined. As observed herein above the claim made by the assessee/dealer towards the Input Tax Credit made while submitting Form No.108 is always subject to the assessment or in a given case reassessment. Therefore, when on assessment the assessee / dealer is held to be entitled to a particular Input Tax Credit, in that case, the assessee/dealer is entitled to the benefit of Rule 18 of the Rules, 2006 and is entitled to adjust such Input Tax Credit against its output tax liability under the VAT Act of the current year under consideration. Merely because while submitting the Form No.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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