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Consult Construction

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Uttar Pradesh Value Added Tax Act, 2008 - Input Tax Credit is to be restricted to tax paid or actually payable - Whether the Input Tax Credit claimed by the assessee could be rejected by treating the same to be excess tax paid in comparison to the tax actually payable.

 HELD - for the purpose of claiming Input Tax Credit, it is not relevant what was the exact rate of tax payable as per the scheduled rates on the goods purchased by the dealer but under the value added scheme of taxation, it would remain relevant what amount of tax had actually been paid by the assessee on purchase of goods - In absence of any statutory injunction to restrict the claim of Input Tax Credit to the tax actually payable, allowing the revenue to restrict that claim, would be wholly contrary to law - To confine the word 'paid' to the amount that would be payable under the schedule would be to allow violation of the Act by ignoring the word 'or' appearing with the word 'paid' and 'payable' under Section 2(p) of the Act.

Then, Section 13 of the Act clearly allows full amount of input tax to be eligible for input tax credit - Merely because the selling dealer may have acted with abundant caution in realizing the higher amount to avoid any litigation with the State authorities and in absence of any allegation of the assessee had passed on the liability of higher tax paid, the question of law is answered in favour of the assessee and against the revenue.

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Haryana Value Added Tax Act, 2003 - Whether the Tribunal is justified in upholding the levy of tax on chemicals used as consumables in the process of job work of dyeing of fabric by assuming that property in the goods has passed on to the principals and ignoring the quantity of dyes, which were not transferred to the principals 

HELD - the chemicals used in the job work are taxable, however, the pertinent question to be answered would be as to how much of dyes/colours are taxable which is transferred to the fabric when the whole quantity of consumable is not transferred - while determining the actual loss of chemicals, dyes and colours where the fabric or textile undergoes various processes depends upon factual aspect which can be considered only by the Assessing Officer - what is taxable under the HVAT and CST Acts is the value of the goods which get transferred to the customer in the execution of works contract either as goods or in any other form and not the value of goods used or consumed in the execution of works contract if such user or consumption does not result in transfer of property in those goods in any form to the customer.

The tax on the entire value of chemicals consumed during the process of dyeing and job work are not to be included for the purpose of levy of VAT as substantial portion of the same is not transferred to the principal eventually - the impugned orders passed by the Tribunal in all the three appeals are set aside and the matter is remanded to the Assessing Officer to decide the matter afresh

 

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M/s A.P. PROCESSORS Vs STATE OF HARYANA

Haryana Value Added Tax Act, 2003 – Levy of tax on transfer of property in goods involved in the process of Job Work - Whether the Tribunal was justified in upholding the levy of tax on chemicals/consumables and entire value of dyes in the process of job work of dyeing of fabric by treating that property in the goods has passed on to the principals – validity of Tribunal ruling that property in the goods i.e. dyes and chemicals is transferred to be principals in the job work of dyeing the fabric - Works Contract - quantity of goods on which tax is to be levied.

HELD - what is taxable under the HVAT and CST Act is the value of the goods which get transferred to the customer in the execution of works contract either as goods or in any other form and not the value of goods used or consumed in the execution of the works contract - The tax on the entire value of chemicals consumed during the process of dyeing and job work are not to be included for the purpose of levy of VAT as substantial portion of the same is not transferred to the principal eventually as they are washed out and do not remain embedded on the textile or fabric - it would be essential to determine the value of consumables transferred in the goods on which tax is leviable.

While determining the actual loss of chemicals, dyes and colours where the fabric or textile undergoes various processes depends upon factual aspect which can be considered only by the Assessing Officer where parties can produce evidence in respect of their respective claims - The matter is remanded to the Assessing Officer to work out the details of quantity of chemicals, dyes and colours that would get washed out in the process of dyeing and printing of fabrics undertaken by the appellant -

the Assessing Officer would be at liberty to proceed in the matter for adding the percentage of chemicals, dyes and colours in the value of the turnover which are retained or embedded on the textile or fabrics, as the case may be - the appeals are disposed of.

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Posted by on in VAT

TS-304-HC-2018(DEL)-VAT

HC allows refund claim of assessee, engaged in execution of works-contract, of excess credit which was inadvertently reflected as ‘carry forward’ in next tax period return instead of ‘refund’ for subsequent period under Delhi Value Tax Act (Act);

States that, despite this Court’s order on a previous occasion to refund the amount in a time bound manner, Revenue’s action of issuing order to deny claims on ground of inadequate/unsatisfactory material is untenable;

Referring to ruling in Shaila Enterprises, accepts assessee’s plea that the default assessment became final since period of limitation for making assessment on merits expired, and hence there exists “no scope to legally scrutinize the refund claim”;

Remarks, “The pattern and structure of the DVAT Act is such that if an assessment order is not passed, the returns acquire the status of a default assessment; if any unadjusted credit exists, the assessse’s right to refund crystallizes” while finding Revenue’s argument that refund is impermissible because the period for revising returns has passed as “utterly frivolous and baseless”;

Holds that, fact that excess credit amount was wrongly shown does not preclude assessee's basic refund claim, on which it maintained a consistent stand, while elucidating further that, "revenue cannot hold on to the monies which do not bear the character of a valid levy; they have to be refunded” .

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Posted by on in VAT

2018-VIL-192-KAR

M/s PUNJ LLOYD LIMITED Vs THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES

Karnataka VAT Act – works contract – Books of Account - denial of deduction of labour and like charges - Prescribed Authority concluded the reassessment allowing the deduction of 30% of the works contract in terms of Rule 3(2)(m) rejecting the claim of the petitioner of the deduction of labour and like charges under Section 3(2)(l) of the KVAT Rules 2005 - whether respondent is justified in concluding the reassessment proceedings rejecting the claim of the petitioner to deduct the labour and other like charges under Section 3(2)(l) of the KVAT Rules –

HELD - the assessee has maintained proper books of accounts and it is only due to the copious size of the books of accounts, it would be practically difficult to produce the entire books of accounts, had requested the Prescribed Authority to examine the books of accounts at the business premises of the petitioner or else to insist for the specific expenses incurred, relating to which the books of accounts can be produced. A cartload of books of accounts requires to be examined by the Prescribed Authority to ascertain the genuineness of the claim made by the petitioner - It is the contention of the petitioner that notwithstanding the voluminous size of the books of accounts maintained by the petitioner, they are willing to place the same before Prescribed Authority -

In the circumstances, it cannot be held that the petitioner has not maintained the books of accounts or not willing to produce the books of accounts - for the limited purpose of providing an opportunity to the petitioner to produce the books of accounts before the Prescribed Authority to avail the deduction under Section-3(2)(l) of the KVAT Rules as claimed, the Court deems it proper to set-aside the order impugned herein and remit the matter to the Prescribed Authority to examine the books of accounts and arrive at a decision - the impugned orders are set-aside. The matter is remanded to the respondent to reconsider the matter afresh after providing an opportunity to the petitioner to produce the books of accounts – answered in favour of assessee

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