Case Law Details
Narendra Kumar Gupta Vs State of Kerala (Kerala High Court)
The points to be decided is whether the appellant had the right to avail input tax against the purchase items effected after a period of 90 days. The dealer had paid tax on the goods purchased from a registered dealer for sale within the State by paying tax at the rate of 12.5%. He had availed input tax claim on sales effected during the month of purchase, and returned the goods to the seller after a period of 90 days and have not reversed the tax due on such sales return.
Statutory provision is that input tax credit can be availed against output tax due. When the goods purchased are returned to the seller, there is no output tax due as such sales return. The KVAT Act prescribed certain time limit for returning the goods to the seller. If the goods purchased are returned to the seller within a period of 90 days from the date of delivery of such goods, the selling dealer will get a deduction from the taxable turnover to the extent to which the goods were returned. The seller will refund the cost of goods sold and the tax collected from the purchaser. If the goods were returned after a period of 90 days the selling dealer will not get the benefit of turnover exemption from payment of tax.
A dealer can avail the benefit of input tax claim against an output tax due. When the goods are returned there is no output tax liability against such a transaction. The tax paid at the point of purchase cannot be availed as input tax credit at the event of return of such goods. If it is returned within the prescribed period fixed by the KVAT Rules the dealer get the benefit of refund of cost and tax paid on such purchase. if it is made after the period of limitation the dealer is not entitled to claim any refund of tax paid on such purchase or avail the benefit of input tax credit on paid on such purchase return
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The petitioner is a dealer registered under the Kerala Value Added Tax Act, 2003 (for short, ‘the KVAT Act’) and doing business in automobile spare parts. The revision deals with the disputes arising in the return filed for the year 2011-12.
2. The controversy between the petitioner and the Department is in respect of the returned goods amounting to Rs.23,08,616.63 on which the tax implication is stated as Rs.2,88,577/-. As per the Scheme, the return of goods within 90 days alone is taken note of and adjustments are made in the tax payable by the seller or the dealer. In the case on hand, admittedly, the return was filed beyond 90 days. The case of the dealer is that the returns since are filed beyond 90 days, the seller may not be in a position to claim adjustment of tax already paid on the returned goods by him. The seller alone is disentitled from claiming the reversing of entry and the dealer being a purchaser should be allowed to claim the input credit on the said transaction. The question arising in the circumstances as noted above is dealt with by Section 11(7) of the KVAT Act read with Rule 15 of KVAT Rules. The revision in different ways raises the entitlement of dealer for tax credit paid on the returned goods by the seller. The questions raised in the revision read thus:
a) Whether on the facts and in the circumstances of the case, has not the appellate tribunal erred in rejecting the appeal filed by the petitioner?
b) Ought not the tribunal have found that the assessee is not supposed to reverse input tax credit against purchase return beyond the period prescribed under the KVAT Act and Rules.?
c) Has not the appellate tribunal erred in rejecting the appeal, after finding that “if the goods are returned after period of 90 days the selling dealer will not get the benefit of turnover exemption from payment of tax?
d) Ought not the tribunal have held that since the selling dealer has not returned the tax component to the petitioner, he is justified in availing input against such purchases?
3. We have heard the learned counsel and the very argument which was canvassed before the Tribunal is put forward and Mr. V.K Shamsudheen, relies on the consideration and findings recorded by the Tribunal. We are of the view that, by referring to the findings recorded by the Tribunal, questions raised can be considered:
“5. The points to be decided is whether the appellant had the right to avail input tax against the purchase items effected after a period of 90 days. The dealer had paid tax on the goods purchased from a registered dealer for sale within the State by paying tax at the rate of 12.5%. He had availed input tax claim on sales effected during the month of purchase, and returned the goods to the seller after a period of 90 days and have not reversed the tax due on such sales return.
6. Statutory provision is that input tax credit can be availed against output tax due. When the goods purchased are returned to the seller, there is no output tax due as such sales return. The KVAT Act prescribed certain time limit for returning the goods to the seller. If the goods purchased are returned to the seller within a period of 90 days from the date of delivery of such goods, the selling dealer will get a deduction from the taxable turnover to the extent to which the goods were returned. The seller will refund the cost of goods sold and the tax collected from the purchaser. If the goods were returned after a period of 90 days the selling dealer will not get the benefit of turnover exemption from payment of tax.
7. A dealer can avail the benefit of input tax claim against an output tax due. When the goods are returned there is no output tax liability against such a transaction. The tax paid at the point of purchase cannot be availed as input tax credit at the event of return of such goods. If it is returned within the prescribed period fixed by the KVAT Rules the dealer get the benefit of refund of cost and tax paid on such purchase. if it is made after the period of limitation the dealer is not entitled to claim any refund of tax paid on such purchase or avail the benefit of input tax credit on paid on such purchase return”.
Now the issue before us is, the questions now formulated do not point out the illegality or irregularity in the finding recorded by the Tribunal. We are in agreement with the finding of disallowing the claim of the dealer, and secondly, no exception is pointed out warranting interference of this Court under Section 63 of the Act. By confirming the findings of the Tribunal, the revision is dismissed.
