The main legal point established in the judgment is that the dealers are entitled to Input Tax Credit on evaporation/handling losses of the petroleum products under the provisions of the Haryana Value Added Tax Act, 2003.

JUDGMENT

Avneesh Jhingan, J. - Excise and Taxation Commissioner, Haryana has filed these appeals against the orders of Haryana Tax Tribunal, Chandigarh [hereinafter referred to as 'Tribunal']. Tribunal accepted the appeals and held that dealers were entitled to Input Tax Credit [for brevity 'ITC'] on evaporation loss of Petrol and High Speed Diesel [for brevity 'HSD']. The issue canvassed in appeals is based on the decision of Division Bench of this Court in All Haryana Petroleum Dealers Association, Bhiwani Versus The State of Haryana and others, 2014(42) R.C.R. (Civil) 811. While dealing with present appeals, considering that in the decision relied upon by appellant Entry 1 of Schedule E of Haryana Value Added Tax Act, 2003 [for short 'the Act'] was not dealt with and ITC was taken as liability instead of credit, the Division Bench referred the matter to the larger Bench by framing following question :-

'Whether in the facts and circumstances of the case the assessee is entitled to ITC under the provisions of the Act on evaporation/handling losses of the petroleum products?'

2. For the sake of convenience, the facts from VATAP-242-2018 are being extracted. Respondent No. 1 is the dealer running a petrol pump and engaged in purchase and sale of petroleum products. For the assessment year 2010-11 [for short 'A.Y.'], assessment was finalized by Excise and Taxation Officer-cum-Assessing Authority, Bhiwani on 23rd December, 2013 allowing the claim of ITC. Revisional Authority revised the assessment vide order dated 19th August, 2016. ITC for evaporation losses was reversed. The Tribunal accepted the contention of the dealer and allowed the appeal on 3rd July, 2017. It was held that Assessing Authority rightly allowed the claim of ITC on evaporation. The review application filed by the State was dismissed by the Tribunal on 4th May, 2018.

3. Mr. Samarth Sagar, Additional Advocate General, Haryana appearing for the State/Appellant argued that disposal of evaporated Petrol and HSD was otherwise than by way of sale hence the dealer was not entitled to ITC as per Entry 5 of Schedule E of the Act. It is contended that issue is covered in favour of appellant by the decision of Division Bench of this Court in All Haryana Petroleum Dealers Association's case (supra).

4. Mr. Sandeep Goyal, Advocate appearing for the dealers defended the order of the Tribunal. He contended that Entry 5 of Schedule E does not deal with petroleum products. It is argued that reversal of ITC for evaporated petrol and HSD was not the issue before the High Court in All Haryana Petroleum Dealers Association's case (supra). He raised an argument that considering the nature of the goods involved, it cannot be held that goods were disposed of otherwise than by way of sale.

5. For convenience, Section 2(1)(w), Section 2(1)(zg), explanation (v) to Section 2(1)(zg), Section 8 and Schedule E of the Act during relevant A.Y. and Rule 40 of the Haryana Value Added Tax Rules, 2003 are reproduced:-

. Section 2(1)(w) of the Act :

'Input tax' means the amount of tax paid to the State in respect of goods sold to a VAT dealer, which such dealer is allowed to take credit of as payment of tax by him, calculated in accordance with the provisions of section 8;

. Section 2 (1)(zg) of the Act :

'sale price' means the amount payable to a dealer as consideration for the sale of any goods, less any sum allowed at the time of sale as cash or trade discount according to the practice, normally prevailing in the trade, but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof and the expression 'purchase price' shall be construed accordingly;

. Explanation (v) to Section 2(1)(zg) of the Act:

The amount received or receivable by oil companies for the sale of diesel or petrol to the retail outlet in the state shall be deemed to be equivalent to the price on which the retail outlets sell these commodities to the consumers.

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