2016 (6) TMI 64 - HC - VAT and Sales Tax

Whether the Tribunal is justified in confirming the orders passed by the authorities, disallowing the input tax credit on capital goods during the tax periods 2006-07 for the purchase of capital goods made in the tax periods 2005-06 - Forms VAT 170 were filed on 19.04.2006 and 19.05.2006, the assessee purchased the capital goods during September 2005 to December 2005 and revised returns were filed during the year 2005-06 claiming input tax credit on these capital goods. Held that - it is held that no reconsideration of the concluded issue is warranted and the claim is not maintainable. Thus, the claim of input tax credit was negated which cannot be found fault with. There is no provision under the Act and Rules to carry forward the rejected input tax credit to the subsequent year. The claim made by the assessee is not in consonance with Section 12 of the Act read with Rule 133(e) and the proviso thereto. Therefore, we do not see any illegality or infirmity in the order passed by the Tribunal. - Decided against the assessee

Summary

Issues:
Challenge to disallowance of input tax credit on capital goods under the Karnataka Value Added Tax Act, 2003.

Analysis:
The petitioner, a registered dealer engaged in cement manufacturing, challenged the disallowance of input tax credit on capital goods amounting to ?18,06,533 for the assessment year 2006-07. The assessing authority disallowed the credit, leading to appeals and subsequent rejections by the First Appellate Authority and the Karnataka Appellate Tribunal. The main issue was whether the Tribunal was justified in confirming the disallowance of input tax credit on capital goods for the tax periods 2006-07, related to purchases made in 2005-06.

The petitioner argued that despite filing Form 170 declaring the purchase of capital goods in 2005-06, the authorities rejected the credit due to the absence of Form 175 for carrying forward input tax credit. The petitioner contended that the non-issuance of Form 175 should not hinder the credit claim as per Section 12 of the Act. On the contrary, the Government Advocate supported the Tribunal's decision, stating that the rejection of input tax credit for 2006-07 was justified based on the finality of the rejection for 2005-06.

Upon review, the Court found that the petitioner's claim was based on purchases made in 2005-06, with revised returns filed in 2006. The authorities rejected the claim for 2005-06, which was upheld by the First Appellate Authority, making it final. As per Rule 133(e), there was no provision to carry forward rejected input tax credit. The Court ruled that the claim was not in line with Section 12 and Rule 133(e), and the Tribunal's decision to deny the credit was lawful. Consequently, the question of law was answered in favor of the revenue, and the revision petition was dismissed.