Input tax credit on changeover from presumptive tax requires strict compliance with statutory filing and verification requirements.

Input tax credit under the Kerala Value Added Tax Act is available to a dealer moving from presumptive tax to regular tax only on strict compliance with the prescribed transition procedure. A dealer covered by presumptive tax is excluded from credit, and on changeover must file Form No. 25A, stock inventory and purchase bill statements within time; the assessing authority may allow credit only after verification. Mere later assessment at schedule rate after detection of suppressed turnover does not create an automatic right to credit. On the facts stated, the credit claim was rightly rejected for non-compliance with the statutory requirements.

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Issues: Whether input tax credit under the Kerala Value Added Tax Act could be claimed by a dealer who had paid presumptive tax under Section 6(5), after suppression of turnover was detected and the assessment was completed at schedule rate, without complying with Rule 12(7) and Rule 12(8).

Analysis: Input tax credit under Section 11(1) is available to registered dealers paying tax under Section 6(1), while Section 11(4) excludes dealers who pay presumptive tax under Section 6(5). A dealer who changes over from Section 6(5) to Section 6(1) must comply with Rule 12(7) by filing Form No. 25A, stock inventory and purchase bill statements within the prescribed time, and the assessing authority may allow credit only after verification under Rule 12(8). The assessee did not disclose the date on which turnover crossed the statutory limit and did not file the required form or statements. Mere assessment at schedule rate after detection of suppression did not dispense with the prescribed procedure or create an automatic entitlement to credit.

Conclusion: The assessee was not entitled to input tax credit and the disallowance was ? Wait no. the claim was rightly rejected.

Ratio Decidendi: Entitlement to input tax credit on change over from presumptive tax to regular tax arises only upon strict compliance with the statutory procedure prescribed for claiming credit, and not merely because turnover is later assessed at the regular rate.

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