Input tax credit and special rebate cannot be denied solely for missing separate accounts when factual entitlement is undisputed.

Input tax credit and special rebate cannot be denied merely for failure to maintain a separate manufacturing account where the appellate authorities have accepted, on records and stock data, that the raw materials were used in manufacturing final products cleared locally on payment of tax. The Tribunal accepted those undisputed factual findings, and the High Court stated that no substantial question of law arose from that acceptance. On the facts found, the denial of credit and rebate was not sustainable, and the revision petitions were to be rejected.

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Issues: Whether input tax credit and special rebate could be denied solely for non-maintenance of a separate manufacturing account, when the appellate fact-finding authorities recorded that the raw materials for which credit and rebate were claimed were used for local taxable sales and the revenue did not dispute the factual basis before the Tribunal.

Analysis: The First Appellate Authority accepted, on the basis of the records and stock data produced, that the raw materials in respect of which input tax credit and special rebate were claimed had been consumed for the manufacture of final products cleared locally on payment of tax. The Tribunal noted that the State had not disputed the factual veracity of the material relied on before it and found no reason to differ from the first appellate findings. On that basis, the Tribunal treated the denial of the claims as unwarranted. The High Court held that, where the Tribunal merely accepted undisputed factual findings and no substantial question of law arose, interference was not justified.

Conclusion: The denial of input tax credit and special rebate was not sustainable on the facts found, and the revision petitions were liable to be rejected.

Ratio Decidendi: When the factual basis for entitlement to input tax credit or rebate is accepted by the appellate authorities and remains undisputed before the Tribunal, no substantial question of law arises merely because a separate account required by the rules was not maintained.

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