Input Tax Credit

[RAMASWAMY KRISHNAIYER]

Under the state VAT Act, for availing input tax credit (ITC), the sale should be from one registered dealer to another registered dealer.

By virtue of specific explanation in the definition of dealer a financing company selling pledged ornaments is a deemed to be a dealer, hence such a sale is taxable.

In the past RBI permitted self purchase of such pledged ornaments by the financing company themselves. Even this is accepted in the decision of Hon'be Supreme Court in Karnataka Pawn Brokers Association.

Subsequent to the purchase this gold is sold and tax is collected.

In this background kindly advise whether Input tax credit is available to such financing company.

[YAGAY andSUN]

Sale to self is no sale. Under VAT regime Input Tax credit would not be available. The Judgment you referred pertains to Sales Tax Regime.

AI Summary

Input tax credit denied where a financing company's sale-to-self is treated as no sale under VAT. The VAT position is that a sale-to-self by a financing company does not constitute a sale for VAT purposes, so input tax credit is not available; the cited judicial authority pertains to the sales tax regime and does not change the VAT consequence.