Carried forward input tax credit cannot be adjusted after eligibility certificate rejection, and tax for that period remains payable.

On rejection or non-renewal of an eligibility certificate under the West Bengal VAT framework, a dealer cannot retrospectively adjust carried forward input tax credit against the output tax liability for that period unless the statute expressly permits it. The Calcutta HC held that, in the absence of such a provision, the tax liability for the ineligible period remained payable in accordance with the governing rules and within the prescribed time. The demand raised by the authorities was therefore upheld and the challenge failed.

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Issues: Whether, on rejection of renewal of the eligibility certificate, the dealer could adjust the carried forward input tax credit against the output tax demand for the relevant period, and whether the liability for that period was payable within the prescribed time.

Analysis: The dispute concerned the period during which the eligibility certificate stood rejected or was not renewed. The authorities and the Tribunal held that once the dealer became ineligible for the benefit, the output tax liability for that period had to be discharged under the West Bengal Value Added Tax framework. The Court found that the statute did not contain any provision permitting input tax credit already carried forward to a subsequent period to be brought back and adjusted against output tax. The Court also accepted that the liability for the rejected period was required to be paid within the time specified in the rules.

Conclusion: The dealer was not entitled to adjust carried forward input tax credit against the output tax demand for the rejected period, and the demand raised by the authorities was justified.

Final Conclusion: The writ petition was devoid of merit and the challenge to the tax demand failed.

Ratio Decidendi: In the absence of an express provision, carried forward input tax credit cannot be retrospectively adjusted against output tax liability after rejection of the eligibility certificate, and the tax due for the relevant period remains payable in terms of the governing rules.

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