Input tax credit on exempt goods and the Tax Board's power to direct revision under the VAT law upheld.

Input tax credit under the Rajasthan Value Added Tax Act, 2003 is available only to the extent prescribed, and the Court noted that credit cannot be claimed on VAT-exempt goods. The Tax Board's appellate powers under Section 83, including its power to pass such order as it thinks fit, were read with the Commissioner's revisional power under Section 85, which may be exercised suo motu or otherwise after hearing the dealer. On that basis, the Court held that the Tax Board could direct the Commissioner to proceed in accordance with law, including under Section 85, and the direction was not beyond jurisdiction.

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Issues: Whether the Tax Board was justified in directing the Commissioner to exercise revisional powers under Section 85 of the Rajasthan Value Added Tax Act, 2003 in a matter involving disallowance of input tax credit on exempted goods.

Analysis: Section 18 of the Rajasthan Value Added Tax Act, 2003 permits input tax credit only in the manner and to the extent prescribed, and the Court noted that its earlier decision had already held that credit could not be allowed in respect of sale of VAT-exempt goods. Section 83 of the Act confers wide appellate powers on the Tax Board, and sub-section (10) empowers it to pass such order as it thinks fit. Section 85 further enables the Commissioner to act suo motu or otherwise and issue appropriate directions after hearing the dealer. On that basis, the Court held that the Tax Board could legitimately direct the Commissioner to proceed in accordance with law, including under Section 85, and such direction was not beyond jurisdiction.

Conclusion: The challenge to the Tax Board's direction failed, and the question was answered against the assessee and in favour of the revenue.

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