Input tax credit and works contract deductions fail without timely revised return and separate tax disclosure in invoices

Under the KVAT scheme, input tax credit had to be claimed through a revised return filed within the prescribed time, including the outer limit under Section 35(4); a claim raised only after reassessment and without any timely revised return was not allowable. For works contract receipts, deduction of the tax element was unavailable where tax was not separately collected or reflected in the invoice, because the invoices showed only an inclusive price and did not permit bifurcation of the tax component. The Tribunal's view was therefore sustained on both issues, and no substantial question of law arose.

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Issues: (i) Whether input tax credit could be claimed when the assessee had not filed a revised return within the time contemplated under Section 35(4); (ii) Whether deduction of the tax element from works contract receipts was permissible when the tax was not separately collected or shown in the invoice.

Issue (i): Whether input tax credit could be claimed when the assessee had not filed a revised return within the time contemplated under Section 35(4).

Analysis: Section 35(4) permits a revised return to be filed within the prescribed time, including the outer limit of six months from the end of the relevant tax period, where omission or incorrect statement is discovered. The statutory scheme requires the claim for input tax credit to be made through the return mechanism within that time frame. The assessee had not filed any revised return within the prescribed period or thereafter, and the claim was raised only after reassessment was completed. In that situation, the earlier decision relied upon treated compliance with the return requirement and the time limit as mandatory for availing the benefit of input tax set-off.

Conclusion: The claim for input tax credit was not allowable and the finding was against the assessee.

Issue (ii): Whether deduction of the tax element from works contract receipts was permissible when the tax was not separately collected or shown in the invoice.

Analysis: The statutory provisions governing collection and accounting of tax require the registered dealer to collect tax separately and to reflect it in the tax invoice. Where the invoices show only an inclusive price and do not specify the rate or amount of tax separately, the tax component cannot be bifurcated and deducted for determining taxable turnover. The Court applied the settled rule that a taxing statute must be strictly construed and that deduction cannot be allowed merely because a penal provision exists for defective invoicing. The absence of separate disclosure in the invoices therefore defeated the claim.

Conclusion: Deduction of the tax element was not permissible and the finding was against the assessee.

Final Conclusion: No substantial question of law arose for interference, and the Tribunal's view was sustained on both issues.

Ratio Decidendi: Under the KVAT scheme, input tax credit can be claimed only in accordance with the return and revised return requirements within the prescribed time, and tax deduction is unavailable unless the tax is separately collected and reflected in the invoice.

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