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.

ORDER

1. This revision petition under Section 84 of the Rajasthan Value Added Tax Act, 2003 (hereinafter referred to as 'the Act of 2003') is directed against the order dated 17.12.2021 passed by the Rajasthan Tax Board, Ajmer (hereinafter referred to as 'the Board') whereby petitioner's claim of input tax credit has not been accepted, affirming the order of the Assessing Officer.

2. The petitioner by this revision petition has assailed only that part of the order by which the input tax credit has not been allowed.

3. Learned counsel for the petitioner would argue that as far as claim of input tax credit is concerned, it is governed by provision contained in Section 18 of the Act of 2003 read with Rule 18 of the Rajasthan Value Added Tax Rules, 2006 (hereinafter referred to as 'the Rules of 2006'). Learned counsel for the petitioner would argue that as the input tax credit is available in respect of the event of purchase of any taxable goods from a registered dealer under Section 18 of the Act of 2003, such benefit could not be disallowed by taking recourse to the provision contained in Section 72 of the Act of 2003 read with Rule 38 of the Rules of 2006 as they are not applicable in respect of a purchaser but will apply only in case of a seller.

4. The Board has disallowed claim of input tax credit on the ground that the petitioner has not fully complied with the requirements of Sub-Rule (1) and Sub-Rule (2) of Rule 38 of the Rules of 2006.

5. Input Tax Credit is available to registered dealers, other than the dealers covered by Sub-Section (2) of Section 3 or Section 5 of the Act of 2003, in respect of purchase of any taxable goods made within the State from a registered dealer to the extent and in such manner as may be prescribed for the purposes exhaustively incorporated in the provision itself.

6. Rule 18 of the Rules of 2006 amongst various provisions provides computation of input tax credit and provides that the input tax credit shall be allowed on the basis of original VAT invoice and where such invoice has been lost or destroyed, on the basis of duplicate copy thereof issued to the registered dealer in accordance with Sub-Rule (4) of Rule 38. The Rule, further, provides for allowing claim of input tax credit of the additional tax deposited on the basis of VAT invoice which has been issued subsequently in compliance of the decision of any competent court or authority, showing the tax at a higher rate.

7. However, Section 72 casts obligation on the registered dealer to issue VAT invoice as below:-

'72. Registered dealers to issue Vat invoice.- (1) A registered dealer, other than who opts for payment of tax under sub-section (2) of section 3 or section 5 shall issue for each sale, except the sale of exempted goods, made by him, a VAT invoice in such manner as may be prescribed. (2) Where any dealer, contravenes the provisions of sub-section (1), the assessing authority or the officer authorised by the Commissioner may, after giving such dealer a reasonable opportunity of being heard, direct him to pay by way of penalty a sum equal to double the amount of tax leviable on the sale of goods in respect of which an invoice has not been issued.'

8. Sub-Rule (1) of Rule 38 of the Rules of 2006, framed to carry out the purposes of Section 72 of the Act of 2003, casts obligation on a registered dealer, other than registered dealer who opts for payment of tax under Sub-Section (2) of Section 3 or under Section 5, making a taxable sale to issue a VAT invoice marked as original to the purchaser for each such sale made by him and further obliges him to retain a copy thereof.

9. Sub-Rule (3) of Rule 38 of the Rules of 2006 clearly provides that no input tax credit shall be allowed unless the dealer makes full compliance of Sub-Rule (1) and Sub-Rule (2). Rule 38 of the Rules of 2006 is reproduced as below:-

'38. Issuance of an Invoice. - (1) A registered dealer, other than registered dealer who opts for payment of tax under sub-section (2) of sec