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Issue of Interest and Penalty to arise only after Adjustment of Output Tax Liability

Issue of Interest and Penalty to arise only after Adjustment of Output Tax Liability - Value Added Tax - VAT and CST - By: - Rakesh Singh - Dated:- 9-1-2016 - 2015 (7) TMI 1037 - GUJARAT HIGH COURT State of Gujarat Versus Kairavi Steel Assesse is entitled to adjustment of ITC towards its output tax liability of the current year. If dues remain after the adjustment of the ITC towards output tax liability, then only the issue of liability towards interest and penalty arise. This case is .....

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2. The assesse is duly registered under the Gujarat Value Added Tax Act, 2003. The business of the assesse is of trading of iron and steel product and scrap thereof. The respondent was regularly maintaining the books of account of business and was making the payment of tax under the VAT and used to file returns in accordance with the act. The respondent submitted its returns for the assessment year of 2008-09 and produced relevant documents along with the returns. The Assessing Officer by passin .....

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the Deputy Commissioner of Commercial Tax, Ahmedabad the dismissed the appeal filed by the assesse. The order passed by the Assessing Officer as well as the order passed by the Deputy Commissioner of Commercial Tax, Ahemdabad confirming the order the Assessing Officer were challenged by the assessee by way of filing Second Appeal No.685 of 2014 before the Gujarat Value Added Tax Tribunal, Ahmedabad. By judgement and order dated 15.10.2014, the Gujarat Value Added Tax Tribunal, Ahmedabad partly a .....

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:p> (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) ...

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ner is satisfied that a dealer (a) has claimed tax credit for such stock for which he is not entitled for claiming tax credit as per the provisions of section 11 and subsections (3) and (4) of section 12, or (b) has claimed excess tax credit than what he is entitled to under section 11 or under this section the Commissioner may, after giving the dealer an opportunity of being heard direct him to pay a penalty equal to twice the amount of tax credit so claimed. 13 .....

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on of Tax (1) The net amount of tax payable under section 13 by a registered dealer, other than the dealer who has been granted permission to pay lump sum tax under Section 14, 14A read with clause (bb) of sub-rule (8) of rule 28, 14B, 14C or 14D shall be determined in Form-201. (2) If the amount calculated as per subrule (1) has a negative value - (a) the same shall be adjusted against tax liability, if any, under the Central Sales Tax Act (hereinafter called ce .....

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may be, the subsequent year. 2.. The Division Bench has observed in the relevant portion, which reads under: Section 11 of the VAT Act provides for an Input Tax Credit admissible and Rule 18 of the Rules, 2006 provides for calculation of the Input Tax Credit. It cannot be disputed that for the purpose of claiming Input Tax Credit, an assessee/dealer is required to submit its claim in the required format i.e. in Form No.108 and on that the assessment order is required to b .....

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deration. 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 .....

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in the current year under consideration. To deny such Input Tax Credit in the current year under consideration would be against 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. It is not in dispute that whatever is claimed by the assessee as Input Tax Credit by submitting the Form No.108 is always subject to the assessment/reassessment and the actual amount of Input Tax Credit is determined only on assessment by t .....

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