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TMI Blog2015 (4) TMI 779X X X X Extracts X X X X X X X X Extracts X X X X ..... 13, the following substantial questions of law arise. "(A) Whether present Opponent is entitled to set off admissible Input Tax Credit (ITC) though there is a price difference, and Credit Notes issued in this regard, and the opponent had not reduced ITC to the extent of Credit Notes in the same Assessment Year? (B) Whether the Hon'ble Tribunal erred in permitting adjustment of tax demanded as difference of assessed tax and returned tax from carried forward of input tax credit of Rs. 70,872/of 200607. The Tribunal erred in interpreting Sec. 13, R/w Rule 18 as it does not permit such adjustment. (C) Whether the Tribunal is right in permitting adjustment of tax due on assessment against carried forward input tax credit?" In Tax Appeal No.1282/2014, the following substantial questions of law arise. "1. Whether the Tribunal has erred in holding that the input tax carried forward is required to be adjusted against the liability of GST? 2. Whether even if the Tribunal permitted adjustment of the credit of input tax against the liability of CST of the current year which tax credit the assessee had carried forward, the Tribunal was not required to give a specific direction for rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble High Court may kindly be framed." 2. From the record, it emerges that the Revenue contests the deletion of interest and penalty by the Tribunal in case of the respondent - assessee. The Tribunal in the impugned judgment also held as under: "The appellant has paid the amount of tax fully therefore, we are not disturbing the amount of carried forward ITC. The appellant is entitled to claim said ITC for next tax period. As stated above, the appellant is not liable to pay interest on tax demand as the ITC was first required to adjust against the current year liability as per the provision of rule 18 of the Rule. The appellant had sufficient balance of ITC to adjust against the additional tax liability, which aroused due to disallowance of ITC. We therefore, remove entire interest and penalty. We pass following order." 3. From the observation of the Tribunal, it appears that though the assessing officer had raised additional tax demand of Rs. 76,010/and imposed interest and penalty on such basis, the Tribunal was of the opinion that the assessee had sufficient Input Tax Credit and those tax credits could have been adjusted against the assessee's additional assessed tax liability. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led to adjustment of Input Tax Credit towards output tax liability in the assessment year in question, though in the return submitted by the assessee such Input Tax Credit was carried forward to the return of the next tax period of the subsequent year?" For the sake of convenience the facts in Tax Appeal No.857/2013 are considered as in all other Tax Appeals the learned Gujarat Value Added Tax Tribunal, Ahmedabad (hereinafter referred to as "Tribunal") has relied upon its earlier decision which is the subject matter of Tax Appeal No.857/2013 i.e. in the case of M/s. Cosmos International Limited and except the figure / amount involved, there is no change in the facts. 4.0 That the opponent herein assessee / dealer is carrying on business of Cumin Seeds, Silver etc. in the name and style of M/s. Cosmos International Limited having its registration certificate No.24030502371 under the Gujarat Sales Tax Act, 1969. It appears that in the month of November 2005, the assessee/dealer applied for registration under the Gujarat Sales Tax Act, 1969 as well as the Central Sales Tax Act and the registration came to be granted with effect from 12.11.2005 only. That the assessee claimed Input T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... echnical breach of provisions of Section 12 of the VAT Act inasmuch as the goods which were in stock as on 31.03.2006, the dealer/assessee was not a registered dealer under the Gujarat Sales Tax Act. Therefore, in assessment proceedings it was held that in view of section 12 read with Section 11(5)(dd) of the VAT Act, the assessee was not entitled to Input Tax Credit of the goods in stock as on 31.03.2006. As the Input Tax Credit on the opening stock of goods claimed under Section 12 of the VAT Act was disallowed in the assessment, the Assessing Officer allowed the Input Tax Credit amounting to Rs. 4,55,483/of the tax paid on purchases made during the year under Section 11 of the VAT Act since these purchases were made after effective date of registration. 4.2 However, instead of adjusting the Input Tax Credit against output tax liability of the assessee during the year, the Assessing Officer carried forward the admissible Input Tax Credit of Rs. 4,55,483/to the next year simply because the assessee had carried forward the Input Tax Credit of Rs. 5,24,669/in the return submitted by it. Thus, the Assessing Officer carried forward the admissible Input Tax Credit of Rs. 4,55,483/to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The learned Tribunal also set aside the order imposing the penalty under Section 12(7) of the VAT Act as well as section 34(12) of the VAT Act. 4.5 Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Tribunal insofar as holding that the assessee is entitled to adjustment of admissible Input Tax Credit towards its output liability of the current year, irrespective of the fact that in the return submitted by the assessee, such Input Tax Credit was carried forward to the return of the next tax period of the subsequent year, the appellant State of Gujarat Revenue has preferred the present Tax Appeals raising the aforesaid substantial question of law. 5.0 Shri Chintan Dave, learned AGP appearing on behalf of the Revenue has vehemently submitted that the learned Tribunal has materially erred in allowing the appeal and quashing and setting aside the order passed by the Assessing Officer as well as the first Appellate Authority. It is submitted that the learned Tribunal has materially erred in holding that the assessee/dealer is entitled to set off admissible Input Tax Credit against the output tax liability under the VAT Act, during the curr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Input Tax Credit under Section 11 of the VAT Act against the output tax credit for the period in the same year, the same was not required to be interfered with by the learned Tribunal. Making above submissions, it is requested to allow the present Tax Appeals and quash and set aside the impugned orders passed by the learned Tribunal holding that the assessee/dealer is entitled to set off admissible Input Tax Credit against the output tax liability with respect to the current year under consideration and consequently to restore the order passed by the Assessing Officer. 6.0 All these Tax Appeals are opposed by Shri Uchit Sheth, Shri Manish Kaji and Ms. Vaibhavi Parikh, learned advocates appearing on behalf of respective opponents - dealers/assessees. Learned advocates appearing on behalf of respective dealers/assessees have vehemently submitted that the impugned decision/s of the learned Tribunal holding that the dealer is entitled to adjust the Input Tax Credit against its output liability of output tax credit under the VAT Act in the current year under consideration is absolutely just and proper and in consonance with the provisions of the VAT Act and the Rules, 2006 mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n interpretation of sections 11, 12 of the VAT Act and Rule 18 of the Rules, 2006 has rightly held and declared that the assessee is entitled to the Input Tax Credit adjusted against its output tax liability under the VAT Act under the current year in consideration. It is submitted that therefore there is no error committed by the learned Tribunal and therefore, the impugned judgment and order/s are not required to be interfered with by this Court. It is, therefore, requested to dismiss the present Tax Appeals and hold the issue/question in favour of the assessees/dealers and against the Revenue. 7.0 Heard learned advocates appearing on behalf of respective parties at length. A short question of law which is posed before this Court to be considered in the present Tax Appeals is whether the learned Tribunal has committed any error in declaring and holding that an assessee/dealer is entitled to the Input Tax Credit adjustment against its output tax liability under the VAT Act under the current year under consideration and whether the learned Tribunal has committed any error in quashing and setting aside the order passed by the Assessing Officer as well as the first Appellate Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity, if any, under the Central Sales Tax Act (hereinafter called "central sales tax liability") for the said tax paid and the remaining amount of central sales tax shall be payable : or (b) if there is no Central Sales Tax liability or if the central sales tax liability for the said tax period is less than the said negative amount, then no tax under the Act as well as under the Central Act will be payable and the net amount, after adjusting the Central Sales tax liability, shall be carried forward to the next tax period of the same year or, as the case may be, the subsequent year." Section 11 of the VAT Act provides for an Input Tax Credit admissible and Rule 18 of the Rules, 2006 provides for calculation of the Input Tax Credit. It cannot be disputed that for the purpose of claiming Input Tax Credit, an assessee/dealer is required to submit its claim in the required format i.e. in Form No.108 and on that the assessment order is required to be passed and on assessment the Input Tax Credit admissible to an assessee/dealer is determined. Once on assessment it is found that dealer is entitled to a particular Input Tax Credit, in that case, Rule 18 of the Rules, 2006 which provides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er permitting to adjust such Input Tax Credit against its output tax liability of the VAT Act of the current year under consideration, the assessee/dealer is liable to pay the interest on such balance due amount of output tax liability and on such amount the assessee/dealer is liable to pay the interest as provided under the VAT Act and the Rules, 2006. Under the circumstances, while declaring / holding that the appellant is entitled to adjustment of admissible Input Tax Credit towards its output tax liability of the current year under consideration, the learned Tribunal has rightly observed and held that the assessee is liable to pay interest only on the dues rising on assessment after adjusting the admissible Input Tax Credit towards its output tax liability. 7.2 So far as the submission by Shri Dave, learned AGP appearing on behalf of the State/Revenue that while submitting the Form No.108, the assessee with malafide intention claimed more/excess Input Tax Credit than it was entitled to and/or admissible under the VAT Act and the Rules, 2006 and therefore, the assessee is not entitled to adjust such Input Tax Credit against its output tax liability of the current year under con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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