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2018 (5) TMI 1104 - HC - VAT and Sales TaxInput tax credit - Whether the Tribunal was justified in denying the benefit of the first proviso to Section 16(2) for claiming input tax credit and thus rejecting the claim of input tax credit from the date of commencement of business; and ought not the Tribunal have granted the benefit as held in the binding precedent of Sales Tax Officer v. Kerala Curry House 2009 (12) TMI 856 - KERALA HIGH COURT ? Held that - The Division Bench in the aforecited decision had categorically found that the deemed retrospective effect of registration granted from the date of commencement of business would only be for availing the benefit of clauses (a) and (b) of the proviso to Section 16(2). Clauses (a) and (b) are confined to payment of tax under Section 6(5) and opting for payment of tax under Section 8. This would not take in the input tax credit as claimed by the petitioner. A reading of Section 11 would indicate that only a registered dealer would have the benefit of input tax credit. The benefit conferred under the proviso to Section 16(2) as substituted in the statute book in 2009 only grants benefit for payment of tax under Section 6(5) and exercising an option for payment of tax under Section 8. The benefit of input tax credit does not flow necessarily from the proviso as substituted in 2009. Appeal dismissed - decided against assessee.
Issues:
- Claim of input tax credit between the alleged date of commencement of business and the date of registration under the Kerala Value Added Tax Act, 2003. - Interpretation of the proviso to Section 16(2) of the Act regarding the date of registration. - Impact of the substitution made by the Kerala Finance Act, 2009 on the proviso to Section 16(2). - Applicability of the benefit of retrospective registration for payment of tax under specific clauses of the proviso. - Availability of input tax credit to a registered dealer under Section 11 of the KVAT Act. Analysis: The petitioner, a dealer under the Kerala Value Added Tax Act, claimed input tax credit between the alleged date of commencement of business and the date of registration for the assessment year 2005-06. The main question was whether the Tribunal was justified in denying the benefit of the first proviso to Section 16(2) for claiming input tax credit. The proviso stated that the date of registration shall be the date of filing a valid application before the registering authority. The registration was granted from the deemed commencement of business, and the petitioner failed to challenge this decision at the appropriate time, as highlighted in the Sales Tax Officer v. Kerala Curry House case. The argument revolved around the substitution made by the Kerala Finance Act, 2009 to the proviso to Section 16(2), which allowed registration to be deemed from the date of commencement of business for specific purposes related to tax payment. The Court noted that the benefit of retrospective registration only applied to clauses (a) and (b) of the proviso, which did not cover the input tax credit claimed by the petitioner. The Division Bench judgment in K.K.Abraham & Company v. Sales Tax Officer emphasized that input tax credit is only available to a registered dealer under Section 11 of the KVAT Act. Ultimately, the Court rejected the petitioner's claim for input tax credit, affirming the judgment of the learned Single Judge in K.K. Abraham & Co. The decision was made in favor of the Department, emphasizing that the benefit of input tax credit did not necessarily flow from the substituted proviso in 2009. The parties were directed to bear their respective costs, concluding the legal judgment.
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