2009 (5) TMI 872 - AT - VAT and Sales Tax

Summary

Issues:
Challenge to order disallowing input-tax credit for four quarters ending on March 31, 2006 under the West Bengal Value Added Tax Act, 2003.

Detailed Analysis:

1. Claim of Input-Tax Credit Disallowed:
- The petitioner challenged the order disallowing input-tax credit for four quarters ending on March 31, 2006.
- The Deputy Commissioner rejected the claim based on the petitioner's failure to produce tax invoices and non-compliance with rule 19(8) of the West Bengal VAT Rules, 2005.

2. Legal Provisions:
- Section 22 of the West Bengal VAT Act, 2003 provides for input-tax credit eligibility.
- Rules 19 to 23, 87, and 91(7) of the West Bengal VAT Rules, 2005 are relevant.
- Sub-section (5)(a) of section 22 mandates the requirement of an original tax invoice for claiming input-tax credit.
- Rule 91(7) of the VAT Rules, 2005 specifies the details a tax invoice must contain for validity.

3. Tax Invoice Requirements:
- A tax invoice must include specific details like date of sale, dealer information, goods description, tax amount, among others.
- The purpose of these details is to verify the authenticity of the transaction and ensure proper tax charging.
- Deviation from the prescribed format does not invalidate a tax invoice if essential information is available.

4. Verification of Money Receipts:
- The petitioner provided money receipts issued by the State Government undertaking, which contained most essential information.
- The Deputy Commissioner did not verify these receipts to determine their genuineness, leading to a dispute regarding the input-tax credit claim.

5. Payment Method Dispute:
- Rule 19(8) requires payment by account payee cheque or draft exceeding Rs. 20,000, unless banking facilities are unavailable.
- The petitioner argued that the rule is directory, not mandatory, especially in cases where banking facilities are lacking.
- Cash transactions are permissible in such scenarios to ensure the genuineness of transactions.

6. Decision and Direction:
- The Tribunal held that if transactions are genuine, the petitioner is entitled to input-tax credit, despite non-compliance with payment method rules.
- The appellate order disallowing the claim was set aside with a direction to verify transactions and examine bills issued by the State Government undertaking.
- The verification process and appeal disposal were to be completed by a specified date.

7. Final Decision:
- The petition was allowed without costs, with both members of the Tribunal concurring on the decision.

This detailed analysis highlights the legal intricacies involved in the challenge to the disallowance of input-tax credit under the West Bengal Value Added Tax Act, 2003, emphasizing the importance of compliance with tax invoice requirements and the interpretation of payment method rules in specific circumstances.