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TMI Blog2010 (8) TMI 828X X X X Extracts X X X X X X X X Extracts X X X X ..... h, learned senior advocate appearing along with Shri D. Kar, advocate on behalf of the petitioner, has challenged the assessment order as aforesaid mainly on the ground that disallowance of ITC for the period as aforesaid is contrary to the object of the VAT Act and unjustified. It is argued by the learned senior advocate that the provision of subsection (1) of section 22 as well as clause (19) of section 2 of the VAT Act restricting the benefit of ITC only to a registered dealer and denying the said benefit to an unregistered dealer although being liable to pay tax under the said Act is ultra vires the VAT Act as such provisions are contrary to the object of the VAT Act. It is admitted by the learned senior advocate that the assessment in question was in relation to the period during which the petitioner was not registered though she incurred liability to pay tax under the VAT Act with effect from May 10, 2005 but at the same time argues that she (petitioner) was a registered dealer on the date when the relevant assessment order was passed. The learned senior advocate strongly relies on the object of the VAT Act which it aims to fulfil. The object of the VAT Act which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fairly assessed from the statement of objects and reasons and it is desired that the provisions of the Act should be framed in such a manner so that the provisions help to achieve the object of framing the Act. He relies on the decision of the honourable Supreme Court in the case of S.C. Prashar v. Vasantsen Dwarkadas [1963] 49 ITR 1 and submits that the restrictive provisions of sections 22(1) and 2(19) of the VAT Act run counter to the object of the VAT Act. It is explained by the learned senior advocate that the Act has been enacted for the purpose of levy of tax on sales of goods on the basis of value added to the purchase value of such goods at each stage of sale of such goods and the purchase of such goods in specified circumstances. It is the removal of the cascading effect which the Act intended to achieve by taxing only on the value added to the purchase price. That is why for arriving at the net tax payable, tax paid on purchase (input tax) is deducted from the output tax (tax paid at the time of sale). The statement of objects and reasons has nowhere required that in respect of the transaction effected only in between two registered dealers, ITC would be available. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned senior advocate, has done it knowingly and obviously keeping the object of the VAT Act in mind. It has been pointed out by the learned advocate that the petitioner has not challenged the provisions of the aforesaid two clauses. According to the learned advocate appearing for the State respondents the Legislature has made a reasonable classification between two groups of dealers registered and unregistered. It is claimed by the learned advocate that such classification has been made upon an intelligible differential having a strong nexus to the furtherance of the object of the VAT Act. It is settled principle of law and in support of his submission he relied on decisions of the honourable Supreme Court in the case of Budhan Choudhry v. State of Bihar AIR 1955 SC 191 and State of West Bengal v. Anwar Ali Sarkar AIR 1952 SC 75. He further places his reliance on the decision of this Tribunal in the case of Asit Baran Ghosh v. Sales Tax Officer, Krishnagar Charge [2009] 25 VST 124 (WBTT); [2008] 52 STA 234 clarifying that a dealer is not eligible for ITC for the pre-registration period. This decision upon being challenged before the honourable Calcutta High Court was conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (19) and clause (23) of section 2 define input tax input tax credit and net tax as below: (18) 'input tax', in relation to a tax period on or after coming into force of this Act, means the amount of tax, (a) paid or payable under the Act, other than under section 11, by a registered dealer, other than those enjoying composition under sub-section (3), sub-section (3A), or sub-section (3B), of section 16 or sub-section (4) of section 18, to a registered dealer, or a dealer who has made an application under sub-section (1) of section 24 within thirty days from the date of incurring liability to pay tax under the Act, at the time of purchasing taxable goods, other than such taxable goods as may be prescribed, during that period. (19) 'input tax credit' or 'input tax rebate', in relation to any period, means the setting off of the amount of input tax, or part thereof, by a registered dealer against the amount of his output tax; (23) 'net tax', in relation to any period, means (a) in case of a registered dealer, other than those referred to in sub-clause (c) and sub-clause (d), the amount of output tax in excess of the net tax cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k. It is, therefore, necessary to analyse the provisions of the VAT Act, 2003 enacted by the State Legislature in West Bengal to find out the object and purpose as reflected by its provisions. VAT Act, 2003 as enacted by the State Legislature in West Bengal has intended to allow only the registered dealers to get the benefit of setting off input tax against output tax payable. The said benefit has not been extended to dealers other than the 'registered dealers'. Section 22 providing for input tax credit or input tax rebate has conferred the said right only on registered dealers. Sub-sections (1) and (2) of section 22 are quoted below: '22. (1) Every registered dealer other than those specified elsewhere in the Act, shall be entitled to claim an input tax credit or input tax rebate, as defined in clause (19) of section 2, and in such manner, and subject to such conditions and restrictions as may be prescribed. (2) The input tax credit or input tax rebate, as referred to in sub-section (1), shall be allowed to the registered dealer who has purchased taxable goods (hereinafter referred to as, the purchasing dealer ) during a tax period for use by him in West Bengal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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