2015 (5) TMI 29 - HC - VAT and Sales Tax

Dealer entitled to claim input tax credit despite discounts; Revenue's appeal dismissed

The court upheld the decision of the Tax Board, confirming the dealer's entitlement to claim input tax credit based on VAT invoices despite selling goods ... Denial of Input tax credit - Sale of goods at the rate lower than the price shown in VAT invoice keeping in view the discount/incentive received - Held that:- Assessee-respondent received discount/incentives from the wholesaler/ manufacturer on account of turnover by way of credit notes etc. which was separately shown by the assessee and it is not in conflict under the VAT Act. The assessee managed his affairs in such a manner that he sold goods lower than the value as shown in VAT invoice obviously keeping in mind that discount/commission. The Tax Board after going into the material on record came to a factual finding that the input tax credit was rightly claimed by the assessee and there was no basis for deviation with the same. Act does not prohibit selling of goods lower than purchase value as per VAT invoice but ITC is to be allowed on the basis of VAT invoice. - both the appellate authorities have found that the claim of ITC was correct on the basis of VAT invoice and Tax Board has decided the controversy on the basis of factual finding - Decided against Revenue. Issues:Appeal against order of Rajasthan Tax Board dismissing Revenue's appeals for assessment years 2007-08 & 2008-09 regarding input tax credit based on VAT invoice showing higher price than goods sold at a discount.Analysis:The petitioner, a dealer of cement, claimed input tax credit based on VAT invoice despite selling goods at a lower rate due to discounts/incentives received. The Assessing Officer disallowed the credit, adding the discount/incentive to the taxable amount. The DC(A) allowed the appeals, stating the assessee was entitled to the claim. On further appeal, the Tax Board upheld the decision, leading to the Revenue's revision petitions.The Revenue argued that the discount/commission should be part of the trading account, and the input tax credit claimed was excessive and legally impermissible. They contended that the Tax Board erred in its decision, raising questions of law for the court's consideration. However, the court found that the assessee received discounts/incentives separately from the wholesaler/manufacturer, not conflicting with the VAT Act. The assessee sold goods below the invoice value, factoring in the discount/commission. The Tax Board, after reviewing the evidence, concluded that the input tax credit was rightfully claimed, with no grounds for deviation.Citing a previous case, the court highlighted that the Tax Board's decision was based on factual findings, similar to the current case. Both appellate authorities confirmed the correctness of the ITC claim based on the VAT invoice. As no legal questions were at issue, and the Tax Board's decision was factually sound, the court dismissed the revision petitions for lack of merit. No legal flaws or irregularities were found in the Tax Board's order warranting the court's interference.