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State of Gujarat Versus Kiran Industries

Adjustment of tax liability – Out of input tax credit available – Appeal was filed before Tribunal against order of first Appellate Authority dismissing appeal on ground of non-deposit of pre-deposit – Tribunal after deciding issue on merits deleted levy of interest and penalty – Whether tribunal was justified on deciding matter on merits despite that appellate authority dismissed only on ground of pre-deposit and deleting interest and penalty levied – Held that, when appeal before Tribunal was .....

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e would be served – As per decision of Cosmos International Ltd [2015 (4) TMI 779 - GUJARAT HIGH COURT] dealer can adjust current year tax liability out of Input Tax Credit available in credit of dealer – In view of said decision, no substantial questions of law arises – Therefore, Tribunal rightly deleted interest and penalty – Decided against Revenue. - Tax Appeal No. 326 of 2015, Civil Application (OJ) No. 388 of 2015 - Dated:- 1-5-2015 - M. R. Shah And S. H. Vora, JJ. For the Appellant : Ms .....

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thority dismissed only on the ground of pre-deposit? (2) Whether the Hon ble Tribunal erred in deleting levy of interest and penalty?" 2. The main grievance voiced by Ms.Vacha Desai, learned A.G.P. 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 pre-deposit, in light of the decisions of this Court in Tax Appeal Nos.711/2013 dated 30/08/2013; 6 .....

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or to the learned first appellate authority. 3. However, Ms.Desai, learned A.G.P. appearing on behalf of the appellant-State has fairly conceded that even otherwise and so far as the merits of the case is concerned, the learned Tribunal, by passing the impugned judgment and order, has relied upon the decision of the Tribunal in the case of Cosmos International Ltd. V/s. State of Gujarat and, therefore, now, the substantial question No.2 which is on merits, is squarely covered against the Revenu .....

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allowed to be adjusted and/or appropriated towards tax liability in the current year. That is exactly the learned Tribunal has ordered. 4. We have heard Ms.Desai, learned A.G.P. appearing on behalf of the appellant-State and perused the impugned judgment and order passed by the learned Tribunal. 5. It is true that the appeal before the learned Tribunal was against the order passed by the first Appellate Authority dismissing the appeal on the ground of non-deposit of the amount of pre-deposit an .....

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bunal need not and/or should not enter into the merits of the case and the learned Tribunal is required to concentrate on the order passed by the learned first Appellate Authority dismissing the appeal on the ground of pre-deposit and/or the amount of pre-deposit only. However, 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 International Ltd. (supra), we .....

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r facts and circumstances of the case narrated hereinabove and without citing the same as precedent. 6. Now, so far as the substantial question of law proposed on merits i.e. question No.2 is concerned, the aforesaid question is squarely covered against the Revenue in view of the decision of the Division Bench of this Court dated 20/03/2015 passed in Cosmos International Ltd. (Supra). In the aforesaid decision, the Division Bench of this Court has confirmed the decision of the learned Tribunal b .....

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ength. 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 Assessing Officer as well as the fi .....

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rom 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 provisions of secti .....

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irect 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 period. 18. .....

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ability") 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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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 .....

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the Input 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 .....

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sessed 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 und .....

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dit towards 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 tha .....

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e 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 conside .....

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