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
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