Input tax credit must be claimed through statutory returns; an audit statement alone cannot substitute the prescribed method.

A registered dealer under the Karnataka VAT regime could not claim input tax credit solely on the basis of Form VAT 240 when the credit was not claimed in the monthly returns. The statutory scheme linked input tax credit to returns furnished under the Act, and Form VAT 240 was only an audited statement that did not replace the return or create an independent entitlement. Strict compliance with the prescribed method of claiming credit was required, so permitting credit through the audit statement alone would make the return-filing scheme redundant. The issue was answered against the assessee and the writ petitions failed.

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Issues: Whether a registered dealer under the Karnataka Value Added Tax Act, 2003 can claim input tax credit on the basis of audited statement in Form VAT 240 without making such claim in the monthly returns.

Analysis: The statutory scheme required registered dealers to furnish returns under Section 35 and enabled assessment on the basis of such returns under Section 38. Section 10(3) had to be read with Section 10(4), which required the input tax to be deductible in the period concerned and linked the deduction to the return furnished. Form VAT 240 was only an audited statement submitted under Section 31(4) and Rule 34 of the Karnataka Value Added Tax Rules, 2005, and it did not substitute the return or create an independent entitlement to input tax credit. The Court distinguished decisions where credit had been claimed in returns, and held that allowing credit solely on the basis of Form VAT 240 would render the return-filing scheme redundant. The principle of strict compliance with the statutory method of claiming credit was applied.

Conclusion: No input tax credit could be availed independently of a claim in the returns merely by filing Form VAT 240, and the issue was answered against the assessee.

Final Conclusion: The writ petitions failed because the audited statement could not replace the statutory return as the basis for claiming input tax credit under the VAT scheme.

Ratio Decidendi: Where the tax statute prescribes a specific method for claiming input tax credit through returns, the credit cannot be claimed through an audit statement alone unless the statute expressly permits such substitution.

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