2018 (12) TMI 422 - HC - VAT and Sales Tax

Input tax credit - Denial of credit treating the same to be excess tax paid on purchase in comparison to the tax payable on such purchase - Held that - It is undisputed that the amount with respect to which the I.T.C. being claimed is admittedly the amount paid by the assessee by way of tax on purchase of goods that have given rise to the dispute - The language of Section 13(1)(a) table entry 1(1) read with Section 2(p) of the Act, is sufficiently clear and provides that the input tax credit would be referable to the entire amount of tax i.e. the aggregate amount of tax paid or payable, in respect of the purchase of goods. Insofar as the legislature has itself contemplated that amount paid, may itself give rise to input tax, there is no room to enter into any exercise of interpretation to restrict the plain meaning of the word 'paid'. While, it is undisputed that the sale was made by the assessee within the State, the reasoning offered by the authorities based solely on the excess realization of tax made by the seller cannot be sustained. Merely because the selling dealer may have acted with abundant caution in realizing the higher amount to avoid any litigation with the State authorities and in absence of any allegation of the assessee had passed on the liability of higher tax paid, the question of law raised in the present case is answered in the negative i.e. in favour of the assessee and against the revenue - revision allowed.

Summary

Issues:
1. Reversal of Input Tax Credit (I.T.C.) by the Commercial Tax Tribunal.
2. Interpretation of provisions under the Uttar Pradesh Value Added Tax Act, 2008 regarding I.T.C. eligibility.
3. Dispute over the amount of tax paid on purchase of goods and its utilization against tax payable on sale.

Analysis:
1. The revision pertains to the reversal of Input Tax Credit (I.T.C.) by the Commercial Tax Tribunal for the Assessment Year 2011-12 under the Uttar Pradesh Value Added Tax Act, 2008. The Tribunal upheld the lower authorities' decision, confirming the reversal of I.T.C. made against the assessee.

2. The main question of law revolved around whether the I.T.C. claimed by the assessee could have been rejected to the extent of a specific amount, treating it as excess tax paid on purchase compared to the tax payable on such purchase. The assessee had purchased SIM cards and was charged tax at a higher rate than the actual tax payable, resulting in a dispute over the I.T.C. claimed on subsequent sales.

3. The dispute arose from the Assessing Authority's decision to reverse the I.T.C. claimed by the assessee, citing that the excess tax paid represented 30% tax on the goods purchased, exceeding the 5% tax rate applicable. The assessee argued that there was no provision allowing the reversal of tax paid by the purchasing dealer, emphasizing entitlement to I.T.C. on the full amount of input tax paid. The State's counsel contended that any excess tax paid above the applicable rate may not give rise to I.T.C., especially when utilized against tax payable on subsequent sales.

4. The High Court analyzed the relevant provisions of the Act, particularly Section 13(1)(a) and Section 2(p), defining input tax and its credit eligibility. The Court emphasized that the language of the Act was clear in allowing input tax credit on the entire amount of tax paid or payable on the purchase of goods. It rejected the restrictive interpretation proposed by the revenue authorities, highlighting that the word 'paid' encompassed the actual tax paid by the assessee, irrespective of the scheduled rates.

5. Ultimately, the Court ruled in favor of the assessee, emphasizing that the excess realization of tax by the selling dealer did not justify restricting the I.T.C. claimed by the purchasing dealer. The judgment concluded that the assessee was entitled to I.T.C. on the full amount of input tax paid, as per the provisions of the Act. The revision was allowed, with no order as to costs.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the Court's interpretation of the relevant legal provisions, ultimately leading to the decision in favor of the assessee regarding the Input Tax Credit reversal.