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IN THE HIGH COURT OF KERALA AT ERNAKULAM
DEVAN RAMACHANDRAN, GOPINATH P., MOHAMMED NIAS C.P.
S.P.Faizal – Appellant
Versus
State Of Kerala – Respondent
| Table of Content |
|---|
| 1. input tax credit eligibility in vat cases. (Para 1 , 2 , 3 , 4) |
| 2. bona fide purchasers cannot be denied itc. (Para 5 , 6 , 7 , 8) |
| 3. state's fiscal responsibility vs. itc entitlement. (Para 9 , 10) |
| 4. interpretation of kvat provisions. (Para 11 , 12 , 13 , 14) |
| 5. arguments against seller's tax remittance conditions. (Para 15 , 16) |
| 6. equity and constitutional considerations in itc denial. (Para 17 , 18 , 19) |
| 7. final ruling on itc availability. (Para 20) |
ORDER :
Mohammed Nias C.P., J.
The substantial question of law referred to the Full Bench is whether a purchasing dealer, who has otherwise complied with all statutory requirements, can legitimately be denied the benefit of input tax credit solely on the ground that the selling dealer failed to remit the tax collected.
2. W.P(C) No.6733/2019 was filed against the assessment order of the Sales Tax Officer denying ITC to the petitioner on the ground that the seller had not remitted the requisite tax as under the Kerala Value Added Tax Act, 2003 (hereinafter referred to as “KVAT”). A learned Single judge, after considering the view of the Division Bench of this Court in C.P. Rasheed v. State of Kerala [OT Rev. No. 104/2015,
Input tax credit can be claimed by purchasing dealers under the Kerala Value Added Tax Act, even if selling dealers fail to remit tax, provided purchasing dealers meet statutory requirements.
Purchasing dealers claiming ITC must prove genuine transactions and actual physical movement beyond invoices or payment details under Section 70 of KVAT Act, 2003.
Input tax credit – No facility for input tax credit shall be allowed to a dealer with respect to purchase of any goods where sale of such goods by dealer is exempt from tax under Section 7(c) of Utta....
Non-compliance with Rule 38 of the Rules of 2006 can lead to the disallowance of input tax credit under Section 18 of the Act of 2003.
Input tax credit claims require proof of actual tax payment by the supplier; failure to demonstrate this results in denial of credit.
Legislative provisions imposing conditions on Input Tax Credit eligibility based on supplier compliance are found iniquitous; bona fide purchasers must not be unduly penalized for supplier defaults.
Strict compliance with statutory conditions for availing concessions and benefits under the Act.
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