TaxTMI 
TaxTMI 
2014 (6) TMI 761
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....State of Uttarakhand. Consequently, the notification issued under section 4A of the U.P. Trade Tax Act also became applicable in the State of Uttarakhand. In this regard, a Notification No. 50 dated December 26, 2000 was issued by the State of Uttaranchal, under section 5 of the U. P. Trade Tax Act for granting exemption from payment of tax in respect of the goods which was manufactured in a unit established in the State of Uttar Pradesh and who possessed an eligibility certificate issued under section 4A of the U.P. Trade Tax Act whose validity commenced prior to December 9, 2000. On October 1, 2005, the Uttaranchal Value Added Tax Act, 2005 (hereinafter referred to as, "the Act") was enacted repealing the Uttaranchal (U.P. Trade Tax Act, 1948) Adaptation and Modification Order, 2002. Under this Act, whatever tax was payable by a selling dealer holding an eligibility certificate whose unit was located either in Uttar Pradesh or in the State of Uttarakhand was exonerated from payment of tax and was not required to realize the tax from the purchasing dealer. This provision was provided so that the benefit of exemption under the eligibility certificate could reach the ultimate purch....
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....in lieu of exemption from tax, shall be eligible for the facility of moratorium to the extent of aggregate amount of hundred per cent of the amount of exemption from tax mentioned in the eligibility certificate and fifty per cent of the amount of fixed capital investment mentioned in the eligibility certificate less aggregate of such amount in respect of which facility of moratorium for payment of tax has been availed during the period before the commencement of this Act, for the period remaining on that date out of the maximum period mentioned in the order of moratorium. (b) the dealers who were enjoying exemption from tax for any period before the commencement of the Ordinance, may, either- (i) continue to do so for the period remaining on that date out of the maximum period mentioned in eligibility certificate, and to the extent of remaining balance amount (amount of exemption from tax mentioned in the eligibility certificate less the aggregate of amount of exemption from tax as has been availed before the date of commencement of this Ordinance); or (ii) opt, in the prescribed manner, for benefit of moratorium for payment of tax in lieu of exemption from tax and such units sh....
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....ice of the selling dealer and, for this purpose, the selling dealer is required to give a certificate in the sale invoice itself. The aforesaid provision indicates that even though a selling registered dealer who is holding an eligibility certificate and who is exempted from payment of tax and consequently, cannot charge the tax in the sale invoice, nonetheless, for the purpose of giving input-tax credit the purchaser has to provide a certificate indicating that he is entitled to exemption from tax to the extent of the amount of tax in respect of that particular invoice. In the light of the aforesaid provisions, the petitioner was purchasing iron and steel from M/s. Bhushan Steel, who was also a registered dealer in the State of Uttarakhand and who held an eligibility certificate under section 4A of the Act. The sale invoice issued by the selling dealer, namely, M/s. Bhushan Steel, was also providing a certificate in the sale invoice indicating that the dealer is holding an eligibility certificate which is valid and also indicated the amount of tax payable. On the basis of this sale invoice, the petitioner was getting the necessary set-off of the tax. It transpires that the Commi....
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.... dealer". What does the words "tax charged" mean? Under the Value Added Tax Act, the tax is payable at every point of sale on value addition. The Act also provides for the set-off of the tax if it has been paid or payable by the selling dealer. The said amount of tax can be adjusted or set off by way of input-tax credit from the tax which is payable by the purchasing dealer on its subsequent sale. Section 2(17) of the Act defines "input-tax credit", which means a tax paid or payable by a dealer to another registered dealer on the purchase of any taxable goods. Section 76(6)(c) provides for the grant of benefit of input-tax credit to the purchaser who was purchasing the goods from the exempted units. Section 76(6)(c) is in two folds, namely, the purchasing dealer is entitled to input-tax credit who has purchased the goods from the selling dealer holding an eligibility certificate of the tax charged on the invoices. (b) the input-tax credit of the amount of exemption from the tax as per the eligibility certificate. Section 76(6)(c) stipulates that the purchasing dealer would be entitled to input-tax credit of the amount of tax charged in the sale invoice of the selling dealer. Th....
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....tificate. In this way there is assessment of tax on the sale and purchase of the dealer and corresponding adjustment of the tax payable by him from the eligibility certificate. Accordingly, there is payment of tax in the books by way of adjustment without actual payment of tax." In Associated Cement Companies Ltd. v. State of Bihar [2004] 137 STC 389 (SC); [2004] UPTC 1226, the question was whether the assessee was liable to adjust the entry tax paid under the Entry Tax Act while computing the tax payable under the Act. The Supreme Court, after analyzing the provisions, held that the liability to pay the tax under the Bihar Finance Act would be reduced to the extent of entry tax paid under section 3 of the Bihar Tax on Entry of Goods Act and that the benefit of adjustment was available under the Bihar Finance Act even though no tax was payable because of the exemption under the Bihar Finance Act. The Supreme Court in the aforesaid judgment held that "exemption" is freedom from liability, tax or duty and that a liberal and a strict construction of an exemption provision is to be invoked at different stages. When the question is whether a subject falls in the notification or in the....