ITC can’t be denied to buyer due to non-payment of VAT by seller: Rajasthan HC

  • Blog|News|GST & Customs|
  • 2 Min Read
  • By Taxmann
  • |
  • Last Updated on 19 February, 2022

Recent Posts

Blog, News, Insolvency and Bankruptcy Code

Interim Moratorium Barred Continuation of Proceedings u/s 138 of NI Act Against Petitioner Due to IBC’s Overriding Effect | HC

Blog, News, FEMA & Banking

Borrower’s Right to Redeem Secured Asset Ends on Publication of Notice u/s 9(1) of SI Rules, Not After Sale Completion | SC

Latest from Taxmann

Value Added Tax (VAT) - Input tax credit

Case Details: Assistant Commissioner, Commercial Taxes, Jaipur v. Asha Oil Traders A-11, Rajasthan - [2022] 135 taxmann.com 183 (Rajasthan)

Judiciary and Counsel Details

    • Manindra Mohan Shrivastava and Birendra Kumar, JJ.
    • Ayush Singh and Punit Singhvi, Advs. for the Petitioner. 
    • V.K. Gogra for the Respondent.

Facts of the Case

The demand notice was issued to assessee on the ground that input tax credit under Rajasthan VAT was claimed based on false/forged invoices issued by dealer who failed to deposit tax. The department argued that in cases where the registered seller is found to have obtained a forged registration as dealer and it is found that such person has not paid any tax to the department, recovery could always be made from the buyer. But the Rajasthan Tax Board deleted the Tax, Interest and penalty on assessee. The department filed petition against the same as it would amount to double jeopardy to the State as the selling dealer has not deposited the tax whereas subsequent dealer has claimed benefit of Input Tax Credit.

High Court Held

The Honorable High Court observed that a purchasing dealer is entitled by law to rely upon the certificate of registration of the selling dealer and to act upon it. The retrospective cancellation of registration of selling dealer can have no effect upon any person who has acted upon the strength of a registration certificate. The question of law raised by department had already been settled in various judgments holding that it would be impossible for receiving dealer to prove tax was paid by selling dealer. Therefore, it was held that no substantial question of law arises for consideration and petition has to be dismissed.

Case Review

    • Arise India Ltd. v. Commissioner of Trade & Taxes [W.P.(C) No. 2106 OF 2015, dated 26-10-2017] (para 6)
    • Assistant Commissioner, Commercial Tax, v. Trilokchand Bharat Kumar, Bhamashah Mandi, [S.B. Sales Tax Revision Petition No. 115 of 2011, dated 29-9-2016] followed (para 12).

List of Cases Referred to

    • R.S. Infra-Transmission Ltd. v. State of Rajasthan [D.B. Civil Writ Petition No. 12445 of 2016, dated 11-4-2018] (para 5)
    • Arise India Ltd. v. Commissioner of Trade & Taxes [W.P.(C) No. 2106 OF 2015, dated 26-10-2017] (para 6)
    • Assistant Commissioner, Commercial Tax, v. Trilokchand Bharat Kumar, Bhamashah Mandi, [S.B. Sales Tax Revision Petition No. 115 of 2011, dated 29-9-2016] (para 7).

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Leave a Reply

Your email address will not be published. Required fields are marked *

«
»

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on Taxmann.com

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied