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TMI Blog2012 (7) TMI 868X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be ₹ 120. Suppose the product is also sold at ₹ 120 and suppose the same will also attract tax at the rate of 10 per cent, then the tax liability of the seller would be ₹ 12. Because the dealer has paid tax of ₹ 10 on the input, he will be entitled to input-tax credit of ₹ 10 and, accordingly, would be liable to pay tax of ₹ 2. In the instant case, the dealer, from whom purchase has been made, did not pay any tax, as he was exempted from paying the same. The amount of tax payable, which has been exempted, would also be ₹ 10 and the same would also be reduced from ₹ 12 exposing the liability of the seller to ₹ 12. The fact remains, the exemption has been given to the seller, from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Uttaranchal Value Added Tax Act, 2005 only to such dealers, who have added value to items purchased by them, while effecting sale of such value added items. There is also no dispute that the said Act recognizes grant of exemption to a dealer either wholly or partially from payment of value added tax. What will happen to a dealer, who shall purchase goods from such exempted dealers, was originally provided in section 76 (6) (c) of the said Act, which is as follows: 76. (6)(c) any taxable dealer purchasing goods from such dealer holding eligibility certificate and who is exempt from tax, whether wholly or partially, shall be entitled to input-tax credit of the aggregate amount of tax charged in the sale invoice of the selling de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r led to refusal on the part of the Deputy Commissioner (Assessment), Commercial Tax to allow input-tax credits on the items purchased by the petitioners from exempted dealers. The said action was called in question in the writ petitions and by the judgment and order under appeal the writ petitions have been allowed for just and sufficient reasons, which according to us are not interoperable. 6. The learned Chief Standing Counsel appearing in support of the appeals submitted that the change of the words used in section 76(6)(c) of the said Act made a great difference and has imposed an obligation to pay tax actually in order to obtain input-tax credit. A look at the unamended section 76(6)(c) of the Act would make it amply clear that by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing dealer was getting something, which he was not entitled to otherwise in law. The fact remains that a purchasing dealer will only be entitled to input-tax credit when he adds value to the input and then sells the same. While purchasing the input, he is required to pay tax thereon. While selling the value added input he is also required to pay tax thereon. While he is liable to pay tax on the article to be sold by him, having regards to addition of value to the item, the value thereof would be much more than the value of the item purchased. If he has paid tax on the input, for that he will be entitled to input-tax credit. In the event he has not paid tax, because the selling dealer, from whom he has purchased, was exempted from tax, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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