Input tax credit allowed based on VAT invoice despite lower dealer sale prices from discounts; invoice controls ITC entitlement

HC held that input tax credit claimed by respondent-assessee is allowable based on the VAT invoice despite goods being sold at prices lower than invoiced due to discounts/incentives from dealers. Relying on prior authority, the court found ITC entitlement is determined by the invoice and not the subsequent sale value. The petition challenging the allowance was dismissed and the decision affirmed in favor of the respondent-assessee.

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Issues:
Input Tax Credit (ITC) claimed based on VAT invoice when goods sold at a lower price due to discounts/incentives.

Analysis:
The judgment addresses the common question of Input Tax Credit (ITC) claimed by the assessee based on VAT invoices, despite selling goods at a lower price due to discounts or incentives received from dealers. The Assessing Officer initially disallowed the ITC, arguing that selling goods below the price on the VAT invoice while claiming ITC is not permissible. However, both Appellate Authorities found the assessee's claim to be valid and allowable. The Revenue challenged this decision, leading to the petitions being considered together due to the common issue raised.

The counsel for the assessee highlighted previous instances where the court had ruled in favor of allowing Input Tax Credit as per the VAT invoice, regardless of the actual sale value of the goods. Reference was made to a specific judgment in the case of Assistant Commissioner Vs. M/s. Bhagwati Building Material Store and others. The Revenue's counsel failed to differentiate the current case from the precedent cited by the assessee.

Considering the consistent stance of the court on similar matters, as evidenced by past judgments such as CTO Vs. M/s. Sharda Agencies and CTO Vs. Narendra Kumar Govind Prasad, where the court upheld the allowance of ITC based on VAT invoices despite lower sale prices, the court found the issue to be settled law. Consequently, all petitions lacking merit were dismissed based on the established legal position.

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