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K.A. Devassykutty Versus Kerala State Electricity Board and others

2015 (5) TMI 1028 - KERALA HIGH COURT

Entitlement for input tax credit under the KVAT Act - Reduction in contract amount to the extent of input-tax credit - Petitioner purchased the materials on payment of tax and issued invoices, the statutory right available under the KVAT Act is to collect the entire tax from the purchaser but Board refused to pay the tax paid by the petitioner to his sellers - Held that:- even if the entire tax component was paid to the petitioner, the petitioner would have been liable only for payment of tax at .....

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ensure that the tax component would definitely go to the Government.

VAT as applicable under the KVAT Act, being the net tax after input tax credit, that alone would be the liability of the petitioner to the Government, which is paid by the Board. Otherwise, if the amounts already paid by the petitioner to his seller is also paid to the Government, then the very scheme of VAT would be put in jeopardy since then, for the first sale, the Government would get four per cent tax twice on .....

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W. P. (C). No. 10491 of 2009 (F) - Dated:- 25-5-2015 - Vinod Chandran K. J. For the Petitioner : Bobby John and P. N. Damodaran Namboodiri For the Respondents : Manoj P. Kunjachan, Government Pleader, P. Santhalingam, (Senior) and S. Sharan, Standing Counsel JUDGMENT The petitioner is aggrieved with the reduction in the contract amount to the extent of the input-tax credit, which the petitioner contends, is a statutory right under the Kerala Value Added Tax Act (KVAT) 2003. The brief facts to b .....

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credit; as per the provisions of the KVAT Act. 2. The claim is not against the sales tax authorities nor is there any reduction of the input-tax credit, by such authorities. The Board refused to pay the tax paid by the petitioner to his sellers, which tax is evidenced at exhibit P3 series. The rejection is based on paragraph 2 of annexure II, terms and conditions. Though the taxes and dues were to be admitted at actuals, on production of documentary evidence, it contained a rider contends the Bo .....

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not be reimbursed to the supplier. In addition to the above, wherever VAT is applicable under KVAT Act, 2003, only the net VAT after input credit, if any shall be paid. (supplied1). 3. The petitioner's contention is that, the petitioner's entitlement for input tax credit under the KVAT Act, will not absolve the Board from paying it to the petitioner. The petitioner purchased the materials on payment of tax and issued invoices on the petitioner's value addition as also the component .....

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titioner to his seller, would also be collected by the State from the seller. The concept of input tax requires no elaboration and the same is trite. 4. The learned standing counsel for the Board however, would contend that the terms of payment are regulated by a specific contract. The petitioner has specifically agreed to concede the amount of input-tax credit and not claim it from the Board. The specific terms of the contract interdicts the petitioner from recovering the tax, which is already .....

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he tax amounts due as per the 1Here italicised. invoices would be paid directly to the Government. In the value addition regime, as brought in by the KVAT Act, every sale is taxable and any tax paid at the earlier point, would be an entitlement for input-tax credit, to the purchasing dealer. In the present case, the first sale is the purchase of the petitioner from another dealer. The said invoice is produced as exhibit P3 series. The petitioner has paid four per cent. tax on the invoice price. .....

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s of his purchase, was deducted. Only the balance tax, i.e., the tax due on the value addition at the hands of the petitioner was remitted directly to the Government. The tax component paid by the petitioner, to his seller, which the petitioner could claim as input-tax, in his sales tax returns, was declined. 7. Even if the entire tax component was paid to the petitioner, the petitioner would have been liable only for payment of tax at four per cent. To the Government, on the value addition at h .....

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