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STATE OF GUJARAT Versus NAVJIVAN PACKING MACHINERY

2015 (5) TMI 295 - GUJARAT HIGH COURT

Adjustment of carried forward input tax credit - Levy of penalty - Demand of interest - Held that:- 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 sub .....

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it of the dealer. - Decision of State of Gujarat Versus Cosmos International Ltd. [2015 (4) TMI 779 - GUJARAT HIGH COURT] followed - Decided against Revenue. - TAX APPEAL NO. 312 of 2015 - Dated:- 24-4-2015 - MR. M.R. SHAH AND MR. S.H.VORA, JJ FOR THE APPELLANT : MS VACHA DESAI AGP FOR THE OPPONENT : MR TUSHAR P HEMANI ORDER (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1.00. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Gujarat Value Added Tax Tribunal .....

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stable against tax demand? (C) Whether Tribunal erred in directing that interest is payable on demand reduced by input tax credit carried forward and tax paid after assessment? 2.00. The main grievance voiced by Ms.Vacha Desai, learned Assistant Government Pleader appearing on behalf of the appellant-State is that as the appeal before the learned Tribunal was against the order of first appellate authority dismissing the appeal on the ground of non-deposit of predeposit, in light of the decisions .....

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ned Tribunal and remand the matter either to the learned Tribunal or to the learned first appellate authority. 3.00. Mr. Tushar Hemani, learned advocate appearing on behalf of the respondent-dealer has as such fairly conceded that as the appeal before the learned Tribunal was against the order passed by the learned first appellate authority dismissing the appeal on non-deposit of the amount of pre-deposit, in view of the decisions of this Court in the aforesaid Tax Appeals, the learned Tribunal .....

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of Gujarat Vs. Cosmos International Ltd. rendered in Tax Appeal Nos.857 of 2013 and other allied Tax Appeals, and, therefore, it is requested not to remand the matter either to the learned Tribunal or to the learned first appellate authority. It is submitted that such an exercise would be now academic. It is submitted that therefore now when on merits the issue has been concluded by this Court in favour of the respondentdealer and against the revenue, it is requested to dismiss the present Tax A .....

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that in light of the decisions of this Court in aforesaid Tax Appeals, the impugned order passed by the learned Tribunal deserves to be quashed and set aside and the matter is to be remanded to the learned Tribunal or to the learned first appellate authority. However, for the reasons stated hereinbelow and in the facts and circumstances of the case, more particularly, when the main issue involved is now squarely covered by the decision of the Division Bench of this Court in the case of Cosmos In .....

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all be in the peculiar facts and circumstances of the case narrated hereinabove and without citing the same as a precedent. 5.00. Now so far as the other questions of law on merits i.e. question nos.(B), (C) & (D) are concerned, the aforesaid questions are squarely covered against the revenue in view of the decision of the Division Bench of this Court dated 20/3/2015 passed in Cosmos International Ltd. (Supra). In the aforesaid decision, the Division Bench of this Court has confirmed the dec .....

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half of respective parties at length. A short question of law which is posed before this Court to be considered in the present Tax Appeals is whether the learned Tribunal has committed any error in declaring and holding that an assessee/dealer is entitled to the 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 Asse .....

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ax 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 be allowed for purchases- (a) ... to (d) ... (dd) made prior to the date of registration. 12. Tax Credit for stock on (31st March, 2006). 12(1) to 12(6) - The prov .....

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f being heard direct him to pay a penalty equal to twice the amount of tax credit so claimed. 13. Net amount of Value Added Tax The net amount of Value Added Tax for a tax period payable shall be determined after the adjustment of tax credit in the manner as may be prescribed. GUJARAT VALUE ADDED TAX RULES, 2006 15. Calculation of Tax Credit u/s.11 15(1) ... 15(2) ... 15(3). A registered dealer shall calculate tax credit as per Form201 and such calculation shall be made separately for each tax p .....

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ax liability ) for the said tax paid and the remaining amount of central sales tax shall be payable : or (b) if there is no Central Sales Tax liability or if the central sales tax liability for the said tax period is less than the said negative amount, then no tax under the Act as well as under the Central Act will be payable and the net amount, after adjusting the Central Sales tax liability, shall be carried forward to the next tax period of the same year or, as the case may be, the subsequent .....

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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 consi .....

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nput Tax Credit. Therefore, merely because while submitting the form and raising the claim of Input Tax Credit, the assessee had claimed more / excess Input Tax Credit than admissible, is no ground to deny the assessee/dealer to adjust the admissible Input Tax Credit (which is held to be admissible only after assessment) against its output tax liability under the VAT Act in the current year under consideration. To deny such Input Tax Credit in the current year under consideration would be agains .....

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and determined. Once on assessment or reassessment, as the case may be, a final amount of Input Tax Credit is assessed and determined, an assessee/dealer is entitled to such Input Tax Credit and on such Input Tax Credit the assessee is entitled to adjust such Input Tax Credit against its output tax liability under the VAT Act of the current year under consideration. Only in a case where the admissible available Input Tax Credit is less than the output tax liability of the current year under con .....

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wards its output tax liability of the current year under consideration, the learned Tribunal has rightly observed and held that the assessee is liable to pay interest only on the dues rising on assessment after adjusting the admissible Input Tax Credit towards its tax liability. [7.2]. So far as the submission by Shri Dave, learned AGP appearing 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 .....

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im 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 consideratio .....

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