Input tax credit on petroleum evaporation loss cannot be denied by importing conditions from another schedule entry.

Input tax credit under the Haryana Value Added Tax Act, 2003 was examined in relation to evaporation loss of petroleum products. The statutory scheme in Section 2(1)(w), Section 8, Schedule E and Rule 40 was read to mean that credit is denied only where the specific goods and circumstances attached to the relevant schedule entry are met. Entry 1 of Schedule E covers petroleum products and natural gas, and its conditions do not import the "otherwise than by sale" circumstance from Entry 5. The exclusion for input tax credit therefore cannot be widened by applying a condition from another entry, and credit remains available on evaporation loss of petroleum products.

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Issues: Whether input tax credit is available on evaporation or handling loss of petroleum products under the Haryana Value Added Tax Act, 2003.

Analysis: Input tax under Section 2(1)(w) is credit of tax paid to the State on goods sold to a VAT dealer, and Section 8 excludes tax paid on goods mentioned in Schedule E only when such goods are used or disposed of in the circumstances mentioned against those goods. Entry 1 of Schedule E specifically covers petroleum products and natural gas, and the conditions attached to that entry do not incorporate the circumstance stated in Entry 5 that goods are disposed of otherwise than by sale. Rule 40 also links input tax computation to the exclusions in Schedule E. The earlier decision upheld the deeming fiction regarding sale price, but the question of reversal of ITC on evaporation loss was not decided there. The statutory language was held to be clear, and there was no basis to extend Entry 5 to petroleum products covered by Entry 1.

Conclusion: The assessee is entitled to input tax credit on evaporation loss of petroleum products.

Ratio Decidendi: Where a statute specifically excludes input tax credit only for goods and circumstances expressly attached to the relevant schedule entry, that exclusion cannot be expanded by importing a different condition from another entry.

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