TMI Blog2022 (3) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... ld by the Division Bench. The issue with regard to reversal of input tax credit on evaporation was not subject matter before the Division Bench. However, a peripheral argument was raised by the petitioner that there would be an ever increasing gap between input tax available and the credit availed by dealers. The Division Bench rejected the argument considering that Ministry of Petroleum allowed evaporation losses to the extent of 0.6% for motor spirit and 0.2% for HSD - The Division Bench had not considered the language of Section 8 of the Act and Entry 1 of schedule E. Section 8 specifically provides that input tax shall not include tax paid on goods mentioned in schedule E when used or disposed of in circumstances mentioned against such goods. Against such goods is of importance. Even from the reading of Entry 5 of Schedule E, it is clear that entry applies to goods other than those mentioned in Entries 1 and 2 of Schedule E. The question is answered in favour of the dealer i.e. assessee shall be entitled to ITC on evaporation of the petroleum products - The appeals filed by the State are accordingly dismissed. - VATAP-242-2018 (O&M) and Others - - - Dated:- 14-3-2022 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oad and another, M/s Mohindera Fules, Litani Road Uchana and another, M/s Usha Highway Filling Station, Faridabad and another, M/s Lakhan Fuels, Palwal and another M/s Bhardwaj Service Station Palwal and another M/s Shree Jee Service Station and another M/s Hans Filling Station and another, M/s Civil Line Filling Station, Rohtak and another, M/s Civil Line Filling Station, Civil Road and another M/s Bhardwaj Service Station and another M/s Gupta Brothers, Bhiwani and another M/s Adampur Service Station, Adampur and another M/s Guru Jambheshwar Service Station and another M/s B. H. Filling Station, Ratia, Fatehabad and M/s Garg Petrolium, Ratia and another, M/s Garg Petrolium, Ratia and another, M/s Saheed Mahabir Singh Filling Station and another M/s Ganpati Petro, Hisar and another M/s Saheed Mahabir Singh Filling Station Hisar and another M/s Haryana Filling Station and another M/s Apna Filling Station and another M/s Bola Petro City and another M/s Multipurpose Service Centre and another Present: Mr. Samarth Sagar, Additional Advocate General, Haryana for the appellant. Mr. Sandeep Goyal, Advocate for the respondents. AVNEESH JHINGAN, J. [1] Excise and Taxati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edule E does not deal with petroleum products. It is argued that reversal of ITC for evaporated petrol and HSD was not the issue before the High Court in All Haryana Petroleum Dealers Association s case (supra). He raised an argument that considering the nature of the goods involved, it cannot be held that goods were disposed of otherwise than by way of sale. [5] For convenience, Section 2(1)(w), Section 2(1)(zg), explanation (v) to Section 2(1)(zg), Section 8 and Schedule E of the Act during relevant A.Y. and Rule 40 of the Haryana Value Added Tax Rules, 2003 are reproduced:- Section 2(1)(w) of the Act : Input tax means the amount of tax paid to the State in respect of goods sold to a VAT dealer, which such dealer is allowed to take credit of as payment of tax by him, calculated in accordance with the provisions of section 8; Section 2 (1)(zg) of the Act : sale price means the amount payable to a dealer as consideration for the sale of any goods, less any sum allowed at the time of sale as cash or trade discount according to the practice, normally prevailing in the trade, but inclusive of any sum charged for anything done by the dealer in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained in the certificate produced before it are true and correct. (4) The State Government may, from time to time, frame rules consistent with the provisions of this Act for computation of input tax and when such rules are framed, no input tax shall be computed except in accordance with such rules. Schedule E of the Act : Schedule E Goods not eligible for Input Tax Credit (See sub-section (1) of section 8) Sl.No. Description of Goods Circumstances in which input tax shall be nil 1 2 3 1. Petroleum products and natural gas. Subs. Vide SO 93, dated 08-07-2003 w.e.f. 01-08-2003 Petroleum based fuels and natural gas w.e.f. 01-04-2003 to 31-07-2003 (i) When used as fuel (ii) When exported out of State Except when re-sold 2. Capital goods (i) When intended to be used mainly in the manufacture of exempted goods or in the telecommunications network or mining or the generation and distribution of electric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (b) of sub-section (1) of section 7. (3) Input tax in respect of a VAT dealer for a tax period is the aggregate of tax paid in respect of goods purchased in the State from other VAT dealer(s) on tax invoice(s) during the tax period, which shall be the aggregate of entries made in column (g) in the Day Book (Purchase side) in respect of the said period, as reduced by the amount of tax paid in respect of goods specified in Schedule E of the Act, when used, intended to be used or disposed of during the said period or when left in stock at the end of the said period, in the circumstances mentioned therein against such goods. The amount to be reduced shall be calculated pro rata where the goods specified in Schedule E of the Act, have been partly used or disposed of in the circumstances mentioned therein and partly otherwise. Illustration - The aggregate of entries made in column (g) in the Day Book (Purchase side) in respect of a tax period in case of a VAT dealer D is ₹ 10,000. D exported goods worth ₹ 1,00,000/- out of State (sent for sale on consignment) during the said period. These goods were purchased by him in the State from VAT dealers on tax inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoice showing tax charged from dealer, issued to the VAT dealer shall be sufficient proof of tax paid, subject to the provisions of sub-section (3). [8.4] As per sub-section (3), in case input tax is questioned in the proceedings under the Act, the authority may ask production of certificate (as prescribed) in addition to the tax invoice. The claim would be allowed only after authority satisfying itself on making inquiry that the particulars contained in the certificate are true and correct. [8.5] As per sub-section (4), the State Government can frame rules in consistence with the provisions of the Act for computation of input tax, in case rules are framed, the input tax shall be computed in accordance with such rules. [9] The first item in Schedule E w.e.f. 01.08.2003 is petroleum products and natural gas and no input tax credit shall be available if these products are used as fuel or exported out of the State. [9.1] Entry 2 deals with the capital goods and prescribes circumstances in which if used, the input would be nil. [9.2] Entry 5 provides that all goods except the goods mentioned at Sr. No. 1 and 2, if used in six circumstances mentioned against Entry No.5, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and natural gas. [14] The contention raised by learned counsel for the State/appellant has a fallacy, it is based upon circumstances mentioned against Entry 5 i.e. when the goods are disposed of otherwise than by way of sale. If the contention is accepted, it would result in adding circumstance in Entry 1 of Schedule E. Suffice to say no such condition finds mention against Entry 1. [15] Explanation (v) to Section 2(1)(zg) was inserted vide notification dated 29.09.2011. Explanation gave deeming fiction that sale price of the retail outlets shall be deemed to be amount received by oil companies for sale of petrol and HSD made to retail outlets. [16] The vires of Explanation (v) to Section 2(1) (zg) of the Act was subject matter of challenge before the Division Bench of this Court in All Haryana Petroleum Dealers Association s case (supra). The vires of provisions were upheld by the Division Bench. The issue with regard to reversal of input tax credit on evaporation was not subject matter before the Division Bench. However, a peripheral argument was raised by the petitioner that there would be an ever increasing gap between input tax available and the credit availed by deal ..... 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