Confirmation by Supplier

[Siraj Shaikh]

I purchased some goods from a suuplier of Rs. 344551 (TAX rate 5%) in the year 2004-05 and made the payment by cheque. During the VAT assessment, Our Sales Tax Officer has received the confirmation from my supplier of Rs. 103,365. The STO is asking for the confimation of 100% amount or else he will raise the demand on us for the balance VAT.

We made several follow up with the Supplier to give the confirmation of the 100% payment.

We have got all the invoices and bank statement to prove that the payment has been made to the supplier.

Still,our consultant advised us the the STO is authorised to raise the demand on us for the differential amount.

Can someone throw some lights on the clairty of the law ????

AI Summary

Input tax credit entitlement may not be denied when purchaser paid VAT and holds payment evidence against supplier.
Purchaser paid for goods by cheque and retains invoices and bank statements. The STO, relying on a supplier confirmation showing a lesser amount, seeks full supplier confirmation or will demand the differential VAT. Advisers state that a purchaser who has paid VAT and holds payment evidence should not be barred from claiming input tax credit even if the supplier has not deposited tax; supplier cooperation and scrutiny of the statutory basis for the demand, including Section 23 of the MVAT Act, are advised.