08 December 2012
Please clarify the consequences of Input VAT claimed on account of Purchases from a Registered Dealer whose registration has been cancelled subsequently. e.g. Suppose we purchased goods from a Registered Dealer, ABC & Co. on 01.12.2011 for Rs. 10,00,000/-and availed Input VAT of Rs.40,000/-for the Q.E.Dec'11 in West Bengal. The registration of ABC & Co.has been cancelled in January'12. Further,due to poor quality of goods we have refunded goods worth Rs.4,00,000/- on Feb'12 and reverse the Input VAT by Rs.16,000/-against Input VAT of Rs. 40,000/- claimed earlier. Now,please let me know whether the Sales Tax Dept. can issue notice for a demand of full Input Tax which we have claimed earlier.Please reply with details.
10 December 2012
9. Hon’ble High court of Punjab and Haryana High has held in the case of M/s. Gheru Lal Bal Chand Vs. State of Haryana and another on 23.09.2011 that “no liability can be fastened on the purchasing registered dealer on account of non-payment of tax by the selling registered dealer in the treasury unless it is fraudulent, or collusion or connivance with the selling registered dealer or their predecessor with the purchasing registered is established”. The input tax credit claimed is in order and lawful and supported by a valid tax invoice and hence is to be allowed. Further a dealer cannot be held liable and asked to pay the same tax twice. The same was held by Hon’ble High Court of Madras in the case of a. Althaf Shoes Private Limited Vs. Asst. Commissioner of Commercial taxes, Valluvarkottam asst. Circle, Chennai (2012) 50 VSt 179 (Mad). b. M/s.Centum Industries Private Limited V. State of Karnataka 2011(71) Karnataka Law Journal 341 (Tri) (DB) c. M/s.Texport Overseas Pvt. Ltd V. State, in STA No.1831 of 2008, dated 22.09.2010 10. The said judgment also makes it abundantly clear that the selling registered dealer collects tax as an agent of the Government and if he makes any default to deposit the same with the treasury then the innocent purchasing dealer cannot be disallowed the claim of such tax as input tax credit.
11. Also as held in the case of K.Sadikali CTO, (2010) 28 VST 82 (Ker), it was held that where the registered dealer has produced bills and also copies of demand drafts reflecting the payment for the purpose of claim of input tax / refund, he cannot be expected to produce further evidence in this behalf.
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