In the present case the goods were detained by the officers of Mobile Wing Fazilka and penalty was imposed for non generation of e-ICC. The appellant in the appeal contended that the server of the department was non functioning properly and in the given circumstances the appellant was left with no alternative then to send the goods without generation of e-ICC.
Section 13 of the PVAT Act, 2005 provides for the entitlement of Input Tax Credit on the purchases made by a Taxable Person subject to such Conditions as may be prescribed. However when a person uses taxable goods for the production of both taxable and tax free goods Section 13(5) & Rules 23 & 24 of the PVAT Rules, 2005 comes into play.
On 01-04-2005 Government of Punjab introduced Punjab Value Added Tax Act, 2005 (in PVAT Act, 2005) by abolishing the Punjab General Sales Tax Act, 1948. As the name suggests it’s a tax charged on portion of Value Addition at each stage. At each stage, tax calculated on sales (Outputs) and vendors are able to claim tax credits to recover the tax paid on their purchases (Inputs).
Now a day’s cooking of foods products by the Hotel Industry/ Restaurants are mostly done with the help of Liquefied Petroleum Gas. Liquefied Petroleum Gas is the major ingredient used for converting raw food into final product. However the Excise & Taxation Department is disallowing Input Tax Credit on the purchase of Liquefied Petroleum Gas on the basis of Section 13 (5) of the Act while ignoring 1st Proviso to Section 13(1). This had led to many controversies all over the State.
