I wanted to know that in case after purchase of taxable goods and after the dealer claims the credit of MVAT, if the goods are destroyed and he writes off the same , then whether he has to reverse the credit availed at the time of purchase ?
8 Replies
C.A. Sandeep Wawhal
(CA, PGDFM, BCom)
(1831 Points)
Replied 22 October 2011
It is not required to reversed the vat credit available for set-off because we already have purchased that taxable goods and payment for the same have been made or will paid to the party including vat amount such vat amount we have to claim from government whether it is distroyed or not.
CA Sonia Ahuja
(Chartered Accountant)
(269 Points)
Replied 22 October 2011
Right..and we also claim set off against the MVAT liability.
Inspite of this fact is the reversal not required ? Can u provide any reference to the provision, if at all the same is mentioned in the law ?
Pinky Agarwal
(Chartered Accountant)
(426 Points)
Replied 22 October 2011
As per section 22(7) of Value added Tax Act, 2003, you are required to reverse the input tax credit taken by you on goods detroyed because on destroyed goods govt is not getting any revenue as these are not sold in the market.. Subsequently you cannot take the credit of these goods and the same is required to be reversed..
CA Sonia Ahuja
(Chartered Accountant)
(269 Points)
Replied 22 October 2011
Ok but there is no such provision under Maharashtra VAT , i believe. So i think the query remains
Pinky Agarwal
(Chartered Accountant)
(426 Points)
Replied 22 October 2011
Yes i m talking about W.B. Vat Act...
C.A. Sandeep Wawhal
(CA, PGDFM, BCom)
(1831 Points)
Replied 22 October 2011
It is not required to sell every goods in market, example is - "Office equipment purchase" it is capital asset not for sale and we can claim set off on that purchase after reduction of set off @ 3%.
I thing it is better example which will cleared your doubt.
C.A. Sandeep Wawhal
(CA, PGDFM, BCom)
(1831 Points)
Replied 22 October 2011
My question to pinky - If goods are parchased for sale and such goods are destroyed in factory after set-off claimed then where is the mistake.
Simply ------------
We can claim Vat which is eligible for set - off
CA Sonia Ahuja
(Chartered Accountant)
(269 Points)
Replied 22 October 2011
But in case of capt goods thr is Retention. But in this case we do get full credit . So do u think the situation still remains the same.
Do u hv any case law to support ure view point.
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