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TMI Blog2006 (8) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... he purchase it pays tax as provided under section 14 of the VAT Act at four per cent, as raw petroleum coke falls under Schedule III of the Act. It manufactures calcinite petroleum coke and sells its produce partly to buyers in Bihar but mainly to HINDALCO, a company situate at Renukut in Uttar Pradesh. The sale to HINDALCO constitutes inter-State sale and on those sales the petitioner is liable to pay Central sales tax at four per cent. In C. W. J. C. No. 5767 of 2006 the petitioner-company purchases waste paper on payment of tax at four per cent as provided under section 14 read with Schedule III of the Act. It manufactures paper board for packing purposes and sells its produce partly within the State and partly to buyers outside the St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Constitution. On the other hand VAT Act was a State legislation under entry No. 54 of List II under Schedule VII of the Constitution. He submitted that a liability arising under the Central Act could not be adjusted against any credit arising under the State Act and hence, the claim of the petitioners was quite misconceived. Much clarity and light on the question came from Mr. K. N. Jain who by a previous order was appointed amicus curiae and was requested to assist the court. He took a stand contrary to the petitioners and referred to the different provisions of the Act and the Rules to show that the petitioner's claim was quite untenable. For a proper examination of the question it would be appropriate to begin from the definition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an input tax credit as provided in this section shall be claimed by a registered dealer, subject to such conditions and restrictions as may be prescribed, on sales of goods in the following circumstances, namely: (a) . . . . (b) when a registered dealer (i) purchases any input within the State from another registered dealer after paying him the tax under section 14, or (ii) purchases any input and pays tax on such purchase under section 4 of the Act, and consumes such goods in the manufacture of any goods mentioned in clauses (a), (b) and (d) of section 14, he shall claim credit of the said input tax in the manner prescribed, if the goods so manufactured are sold within the State of Bihar or in the course of inter-State trade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t their input tax credit. According to him the stand of the Revenue authorities was quite incomprehensible as it was contrary to the plain language of the Act. Mr. Jain on the other hand pointed out that the sale of the manufactured goods within the State of Bihar or in course of inter-State trade or commerce was the condition precedent for accrual of input tax credit. He submitted that Mr. Sanjay missed the basic difference between the accrual of input tax credit and the liabilities/tax(es) that can be adjusted against that credit. He submitted that section 16(1) dealt with the accrual of the credit and it was confused by the petitioners to mean that the credit so accrued could be used for non-payment of its CST liability and the adjustm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Part D of the form leaves no room for doubt that there is no provision for any adjustment of CST payable by the dealer against input tax credit. I find substance in Mr. Jain's submissions and I have no doubt in my mind that in their present form the Bihar Value Added Tax Act and the Rules do not permit the adjustment of CST against input tax credit. The position is slightly different under the Jharkhand Act and the Acts of some other States. In other relevant provisions the Jharkhand Act is quite similar to the Act framed by this State. But under the Jharkhand Rules a specific provision has been inserted as rule 19(ii) that expressly permits the adjustment of CST against input tax credit. We are told that similar provisions are made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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