ORAL JUDGMENT

(PER : HONOURABLE MR.JUSTICE M.R. SHAH)

1.00. Feeling aggrieved and dissatisfied with the impugned judgement and order dated 4/2/2013 passed by the Gujarat Value Added Tax Tribunal (hereinafter referred to as “the Tribunal”) in Second Appeal No.364 of 2010, by which, the learned appellate tribunal has allowed the said appeal and holding that the respondent – dealer is entitled to Input Tax Credit on the goods destroyed in flood, State of Gujarat has preferred the present appeal with the following proposed substantial questions of law :-

“(A) Whether on the facts and in the circumstances of the case, the Tribunal has rightly interpreted section 11(3), 11(5) and 11(8) of the Gujarat Value Added Tax Act, 2003?

(B) Whether the respondent is eligible for Input Tax Credit on goods, which destroyed in flood, for which compensation of the same is awarded by Insurance Company and no Out Put Tax liability is created for the same goods?”

2.00. Facts leading to the present appeal in nutshell are as under :-

2.01. That the respondent – dealer is engaged in the business of trading of safety match box and Pan Masala and a registered dealer under the Gujarat Value Added Tax Act, 2003 (hereinafter referred to as “the VAT Act”). That on 7/8/2006 unprecedented flood entered into Surat which affected business premises of the respondent – dealer and the flood water remained in the business premises of the respondent –

dealer for the period from 7/8/2006 to 11/8/2006. During that period water level remained upto 8 to 9 feet. in the business premises and their entire goods were damaged and ultimately the same was destroyed. The respondent – dealer also lodged its claim on 12/8/2006 before the Insurance Company. It also appears that the dealer also issued an advertisement in the news paper on 6/9/2006 with respect to damage caused to the goods and destruction of Books and Accounts and other documents. That the claim for reimbursement of the loss due to flood registered with the Insurance Company was settled on 24/2/2007 by an amount of Rs.4,29,000/-. The respondent – dealer also made entry in the Books of Accounts for the loss of claim amounting to Rs.2,12,600/-. That the Assistant Commissioner of Commercial Tax, Division-I, Surat carried out audit assessment under section 34(2) of the Gujarat VAT Act, 2003 and disallowed the input tax credit in respect of the goods destroyed by flood.

2.02. Feeling aggrieved and dissatisfied with the said order of assessment, respondent – dealer preferred an appeal before the Deputy Commissioner of Commercial Tax, Range-5, Surat which came to be dismissed.

2.03. Feeling aggrieved and dissatisfied with the order passed by the first appellate tribunal dismissing the appeal, respondent – dealer preferred Second Appeal before the learned tribunal and by the impugned judgement and order and relying upon the decision of this Court in the case of Rolcon Engineering Co.Ltd. Versus State of Gujarat and others, reported in [2009] 21 VST 118 (Gujarat), learned tribunal has allowed the said appeal and held that the respondent – dealer shall be entitled to input tax credit on the goods destroyed in flood.

2.04. Feeling aggrieved and dissatisfied with the judgement and order passed by the learned tribunal in allowing the said appeal preferred by the respondent herein – dealer and holding that the respondent – dealer shall be entitled to input tax credit on the goods destroyed in flood, State of Gujarat has preferred the present appeal with the aforesaid proposed substantial questions of law.

3.00. Mr.Jaimin Gandhi, learned Assistant Government Pleader appearing on behalf of the appellant – State of Gujarat has vehemently submitted that the learned tribunal has materially erred in holding that the respondent – dealer shall be entitled to input tax credit on the goods destroyed in flood. It is vehemently submitted by Mr.Gandhi, learned Assistant Government Pleader that unless and until conditions stipulated / mentioned in sect