2016 (11) TMI 1318 - HC - VAT and Sales Tax

Input tax credit - when similar view has already been taken by this Court on identical facts, there is no reason to deviate with the judgment rendered in CTO Vs. M/s. Durgeshwari Food Limited, Shri Ganganagar 2011 (12) TMI 654 - RAJASTHAN HIGH COURT - the revision petition stands dismissed in the light of judgment rendered in the case of M/s. Durgeshwari Food Limited, Sri Gangangar , with a rider that in case the judgment by Hon ble Apex Court is decided in favour of the assessee in that case then this revision petition will be governed by the verdict of the Hon ble Apex Court in SLP in the case of Durgeshwari Food Limited, Shri Ganganagar.

Summary

Issues:
1. Interpretation of input tax credit under the VAT Act of 2003.
2. Imposition of penalty under Section 61 of the Act.
3. Impact of pending appeal in the Hon'ble Apex Court on the present petition.

Analysis:
1. The High Court addressed the issue of input tax credit under the VAT Act of 2003 in the context of a specific case involving the manufacturing and sale of taxable goods. The Court referred to a previous judgment in the case of CTO Vs. M/s. Durgeshwari Food Limited, where it was held that input tax credit could only be allowed proportionately to the extent of manufacturing and sale of taxable goods, not for VAT exempted goods. The Court ruled that the imposition of reverse tax disallowing proportionate input tax credit was unsustainable and quashed the Tax Board's order in that regard. However, the Court also considered the question of penalty under Section 61 of the Act and noted that in cases where a debatable issue was raised by the assessee, the benefit of doubt should go in favor of the assessee. Consequently, the Court upheld the deletion of the penalty imposed by the Assessing Authority.

2. The Court emphasized that since a similar view had been taken previously on identical facts, there was no reason to deviate from the judgment in the case of CTO Vs. M/s. Durgeshwari Food Limited. The Court highlighted the importance of consistency in judicial decisions to ensure fairness and predictability in tax matters.

3. The issue of a pending appeal in the Hon'ble Apex Court regarding the case of M/s. Durgeshwari Food Limited was also raised during the proceedings. The petitioner's counsel requested that the present petition be kept pending until the disposal of the appeal by the Hon'ble Apex Court. The Court, however, dismissed the revision petition in light of the judgment in the case of M/s. Durgeshwari Food Limited, with a provision that the outcome of the appeal in the Hon'ble Apex Court would govern the fate of the present petition. This decision reflected the Court's consideration of the potential impact of the pending appeal on the case at hand and the need for alignment with higher court decisions.

In conclusion, the judgment provided a detailed analysis of the issues related to input tax credit, penalty imposition, and the impact of a pending appeal on the present petition, ensuring a comprehensive and reasoned approach to resolving the legal complexities involved in the case.