2022 (10) TMI 1071 - HC - VAT and Sales Tax

Rejection of appeal by appellate Tribunal - reversal of input tax credit against purchase return beyond the period prescribed under the KVAT Act and Rules - goods are returned after period of 90 days the selling dealer - availability of benefit of turnover exemption from payment of tax - HELD THAT - The questions now formulated do not point out the illegality or irregularity in the finding recorded by the Tribunal. The finding of disallowing the claim of the dealer is agreed upon, and secondly, no exception is pointed out warranting interference of this Court under Section 63 of the Act. Revision dismissed.

Summary

Issues:
1. Entitlement of a dealer for tax credit paid on returned goods by the seller under the Kerala Value Added Tax Act, 2003.

Detailed Analysis:
The petitioner, a dealer in automobile spare parts registered under the Kerala Value Added Tax Act, 2003, filed a revision regarding disputes arising from the return filed for the year 2011-12. The main controversy revolved around returned goods amounting to Rs.23,08,616.63 with a tax implication of Rs.2,88,577, filed beyond the 90-day limit. The dealer argued that since the return was beyond 90 days, the seller might not be able to claim adjustment of tax paid on the returned goods, but the dealer, as the purchaser, should be allowed to claim input credit. Section 11(7) of the KVAT Act read with Rule 15 of KVAT Rules addressed the entitlement of the dealer for tax credit paid by the seller on returned goods.

The questions raised in the revision included whether the appellate tribunal erred in rejecting the appeal, whether the dealer should reverse input tax credit against purchase return beyond the prescribed period, and whether the dealer was justified in availing input against such purchases. The Tribunal considered whether the dealer had the right to avail input tax against purchase items returned after 90 days, emphasizing that input tax credit can be availed against output tax due. If goods are returned within 90 days, the selling dealer gets a deduction from the taxable turnover, but if returned after 90 days, the selling dealer loses the benefit of turnover exemption from tax payment.

The High Court, after considering the arguments and findings, agreed with the Tribunal's decision to disallow the dealer's claim. The court affirmed that when goods are returned, there is no output tax liability, and the tax paid at the point of purchase cannot be claimed as input tax credit upon return beyond the prescribed period. The court found no illegality or irregularity in the Tribunal's decision and dismissed the revision, confirming the Tribunal's findings regarding the dealer's entitlement for tax credit on returned goods by the seller under the KVAT Act.