2013 (5) TMI 134 - HC - VAT and Sales Tax

Availing input tax credit - Not a registered dealer at the relevant time - The business was being run earlier, as a proprietorship concern , which expired , than a partnership deed was executed and the business was taken over accordingly. It was much later, the new partnership firm who has approached this Court - Held that - Section 11 (12) and 11 (13) make it explicitly clear that the benefit contemplated there in can be claimed only by a registered dealer and never by anybody else. Since the present partnership took its breath for the first time only much later, the petitioner was never an entity before the concerned respondents/authorities anytime before and it cannot be said that the petitioner firm is entitled to have the input tax credit as a matter of right, irrespective of the mandate under the statute, by entertaining the application preferred in January 2006 for retrospective registration under the KGST Act - This Court finds that the writ petition is ill-conceived - None of the grounds raised in support the same is tenable - Assessee Appeal is Dismissed .

Summary

Issues:
Entitlement to input tax credit on opening stock of goods as on 1-4-2005 for a partnership firm formed after the relevant period.

Analysis:
The petitioner partnership firm, a dealer of petroleum products, arose from a proprietorship concern after the demise of the owner. The petitioner applied for registration under the KVAT Act in 2006, seeking input tax credit for opening stock of goods as on 1-4-2005. However, the department rejected the claim citing non-registration as a dealer on the relevant date. The petitioner argued that registration was not explicitly mandated for claiming input tax credit, relying on Sections 11(12) and 11(13) of the KVAT Act, which were deemed applicable only to registered dealers.

During the proceedings, the assessment was finalized, and a demand notice was issued to the petitioner. The petitioner amended the writ petition, challenging the rejection of the input tax credit claim. The respondents contended that the statutory provisions clearly required registration for availing the benefit. The petitioner, citing two court decisions, argued for entitlement to the benefit without registration.

The court analyzed the legal provisions and the precedents cited. It noted that the benefit of input tax credit was intended for registered dealers, which the petitioner was not on the relevant date. The court examined the cases referenced by the petitioner, highlighting that those instances involved different circumstances and did not support the petitioner's claim. Additionally, the court emphasized the importance of the entity's identity, noting the transition from a proprietorship concern to the current partnership firm.

Ultimately, the court dismissed the writ petition, finding it ill-conceived and untenable. The petitioner's claim for input tax credit on opening stock of goods as on 1-4-2005 was rejected due to non-registration as a dealer on the specified date, in accordance with the statutory provisions. The judgment upheld the requirement of registration for availing input tax credit benefits under the KVAT Act, emphasizing the significance of compliance with legal mandates for such claims.