2016 (1) TMI 4 - HC - VAT and Sales Tax

Adjustment of input tax credit - Whether the Hon ble Tribunal has erred in permitting adjustment of input tax credit arising from Value Added Tax Act to the Central Sales Tax Act - Held that - in the case of the assessee, while resorting to the provisions of subsection (3) of Section 11 of the Act, the Assessing Officer reduced from the input tax credit 4% of branch transfer and once again reduced input tax credit on purchases of fuel to the extent of 4%. This Court in the case of State of Gujarat Vs. Reliance Industries Ltd. (2014 (2) TMI 815 - GUJARAT HIGH COURT), on similar facts, held that from the provisions of sub-section-(3)(b) of Section 11, it is clear that reduction of tax credit had to be applied to any case which satisfies the description contained in sub-clauses (i) to (iii) not every time such description is satisfied. Further, reduction of amount of tax at the rate of 4 per cent is to be done for the taxable goods which fall in any of the three categories contained in sub-clauses (i) to (iii) and not every time a particular class of goods specified fall in more than one categories. Thus, the Tribunal has merely applied the decision of the jurisdictional High Court to the facts of the case and hence, it cannot be said that the impugned order passed by the Tribunal suffers from any legal infirmity, warranting interference. - Decided against Revenue.

Summary

Issues:
Challenge to order under Gujarat Value Added Tax Act - Adjustment of input tax credit under different categories.

Analysis:
The appellant-State of Gujarat challenged an order by the Gujarat Value Added Tax Tribunal regarding the adjustment of input tax credit under the Gujarat Value Added Tax Act. The respondent-assessee, engaged in manufacturing various products, was registered under the Act and the Central Sales Tax Act. The dispute arose from the reduction of tax credit by 4% on branch transfers and fuel purchases under Section 11 of the Act. The Assessing Officer and Joint Commissioner upheld the reduction, leading the assessee to appeal to the Tribunal. The Tribunal cited a previous High Court decision and reversed the lower authorities' order on the input tax credit issue.

The Assistant Government Pleader argued that the respondent was not similarly situated as in the referenced case and enjoyed exemption under a government scheme, making the previous decision inapplicable. On the other hand, the respondent's advocate highlighted that the Tribunal correctly applied the High Court decision to the case facts, emphasizing that the reduction of tax credit should apply based on specific categories under Section 11(3)(b) and not every time a particular class of goods falls under multiple categories.

The High Court observed that the Assessing Officer had reduced the input tax credit on branch transfers and fuel purchases by 4% each. Referring to the previous High Court decision, the Court reiterated that the reduction should be based on satisfying the descriptions in sub-clauses (i) to (iii) of Section 11(3)(b) and not every time these descriptions are met. Consequently, the Court found no legal flaw in the Tribunal's application of the High Court decision to the case facts, leading to the dismissal of the appeals as no substantial question of law arose from the Tribunal's order.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing the correct application of the law regarding the reduction of input tax credit under specific categories outlined in the Gujarat Value Added Tax Act. The Court found no grounds for interference, as the Tribunal's order did not raise any substantial question of law warranting review.