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2015 (11) TMI 1222 - HC - VAT and Sales TaxEligibility of input tax credit - Held that - No provision in the APVAT Act to compute input-tax credit division wise; and the Advance Ruling is not applicable to the present case in view of the judgment rendered by the A.P. High Court in Maxwroth Plywoods Private Limited 2010 (9) TMI 994 - ANDHRA PRADESH HIGH COURT . The tax revision case, preferred by the State of Andhra Pradesh against the said order of the STAT, was dismissed by a Division Bench of this court in State of A.P. v. Cavinkare (P) Ltd. (2013 (7) TMI 929 - High Court Of Andhra Pradesh). - In the absence of any statutory provision, restricting input-tax credit only to the output tax payable in a particular division, the respondents were not justified in holding that the petitioner was not entitled to claim adjustment of the input-tax credit with the output tax payable in their other divisions - Impugned order is set aside - Matter remanded back - Decided in favour of assessee.
Issues:
1. Interpretation of rule 20(6) of the Andhra Pradesh Value Added Tax Rules regarding input-tax credit for specific inputs meant for specific outputs. 2. Application of section 13(6) of the Andhra Pradesh Value Added Tax Act, 2005 on transfer of taxable goods outside the State. 3. Dispute over division-wise computation of input-tax credit. 4. Binding nature of Advance Ruling Authority's decision on the petitioner and the assessing authority. Issue 1: Interpretation of rule 20(6) of the Andhra Pradesh Value Added Tax Rules The petitioner, a registered dealer engaged in manufacturing and trading, claimed input-tax credit for the JOCIL unit. The assessing authority applied rule 20(6) of the Rules, stating it was a case of specific input for specific output, thus denying the input-tax credit. The petitioner argued that the formula A x B/C should be applied, but the claim was rejected. The Tribunal held that the method of division-wise computation of input-tax credit adopted by the assessing authority was permissible under the Act. The petitioner's failure to prove that specific inputs were not meant for specific outputs led to the dismissal of the appeal. Issue 2: Application of section 13(6) of the Andhra Pradesh Value Added Tax Act, 2005 Under section 13(6) of the Act, input-tax credit for transfer of taxable goods outside the State by any VAT dealer was allowed for the amount of tax in excess of four percent. The Tribunal referred to several Advance Rulings and held that the assessing authority's division-wise computation of input-tax credit was valid. The burden of proving non-liability to tax lay on the petitioner, and the Advance Ruling Authority's decision was binding as it was not reviewed by the petitioner or any other dealer. Issue 3: Dispute over division-wise computation of input-tax credit The petitioner relied on a Division Bench judgment to argue that they were entitled to claim input-tax credit for all divisions as a whole, challenging the division-wise restriction by the assessing authority. The Tribunal, however, upheld the division-wise computation based on the Advance Ruling Authority's decision. The court emphasized that restricting the claim of input-tax credit division-wise was not authorized by law, setting aside the order and remanding the matter to the assessing authority without restricting the claim to any particular division. Issue 4: Binding nature of Advance Ruling Authority's decision The Tribunal's decision was based on the Advance Ruling Authority's ruling, which was deemed binding on the petitioner and the assessing authority. However, the court held that in the absence of a statutory provision restricting input-tax credit to a specific division, the respondents were not justified in denying the petitioner's claim. The order under revision was set aside, and the matter was remanded for the petitioner to claim input-tax credit without division-wise restrictions. In conclusion, the High Court of Andhra Pradesh clarified the interpretation of rule 20(6) of the Andhra Pradesh Value Added Tax Rules, the application of section 13(6) of the Act, the dispute over division-wise computation of input-tax credit, and the binding nature of the Advance Ruling Authority's decision. The court emphasized that division-wise restrictions on input-tax credit claims were not authorized by law and remanded the matter for the petitioner to claim input-tax credit without such restrictions.
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