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Goods must be exempted goods as pre-requisite for denial of ITC

Value Added Tax - VAT and CST - By: - Rakesh Singh - Dated:- 5-1-2016 Last Replied Date:- 30-12-1899 - 2015 (11) TMI 1321 - SUPREME COURT Commercial Taxes Officer Versus A. Infrastructure Ltd. ITC under Rajasthan VAT can be availed unless goods fall under the category of exempted goods in general. This concept has been dealt by Honorable Supreme Court in the case of M/s A. Infrastructure Ltd., at length. The assesse was denied ITC based upon the contention that assesse / transaction being exempt .....

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Pipe and Asbestos Cement Sheets and it had availed ITC on the purchase of raw material used in the manufacture of A.C. Sheets. The AO issued notice to the assessee for the purpose of disallowing ITC on purchase of raw material used in manufacturing A.C. Sheet and passed orders under Section 22 of the Act disallowing the ITC and charged interest. The said orders were assailed before the Appellate Authority which declined to interfere. Assesse filed second appeals before the Board which placed re .....

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emption on the sale of manufactured goods on the fulfillment of certain conditions and in view of the specific conditions stipulated in Section 18(1)(A) of the Act, ITC was not allowed. Reliance was placed on notification S.O. 377, dated 09.03.2007 issued under Section 8(3) of the Act to harp that A.C. Sheets clearly fall within the category of exempted goods. Reference was made to the definition of exempted goods and goods contained in Section 2(13) & (15) of the Act. It was further submitt .....

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denying Input Tax Credit to the petitioner based on interpretation put by them on inclusion of the petitioner in Schedule-II under Section 8(3A) and notification S.O. 377 dated 09.03.2007 issued under Section 8(3) of the Act. The expression of the said view and the ultimate setting aside of the orders of the Court , is the subject matter of assail. Held: There is no doubt that a distinction has to be drawn between exempted goods, which means complete exemption for the specified goods, and when t .....

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axable goods. Exemptions with reference to taxable events or taxable persons would not exempt the goods as such, for a subsequent transaction or when the goods are sold or purchased by a non-specified person, the subsequent transaction or the taxable person would be liable to pay tax. It is, in this context, it has been highlighted by the respondent and, in our opinion, absolutely correctly that Section 4 of the Act provides for levy of tax in a situation where the goods, which were not exempted .....

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cement sheets would be taxable. The transaction of sale by the manufacturer/dealer covered by the exemption notifications issued under Section 8(3) of the Act would be protected or an exempted transaction, but the goods not being exempted goods would be taxable and could be taxed on the happening of a taxable or charging event. It is simply because the goods are not exempt from tax or exempted goods, but are taxable. As a logical corollary it follows that the Value Added Tax would have to be pa .....

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