TaxTMI 
TaxTMI 
2014 (12) TMI 1144
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....ngwith trading account, and submitted that he has not sold the product on subsidized price. 3. The petitioner was subjected to assessment for the year 2014-15, in which the Assessing Officer, by his order dated 17.6.2014, levied penalty under Section 61 of the VAT Act, 2003 to the tune of Rs. 4,73,520/-. 4. By this writ petition, the petitioner has prayed for declaring sub-section (3A) of Section 18 of the Rajasthan VAT Act, 2003, inserted by Section 7(iii) of the Finance Act, 2011 with effect from 9.3.2011, as arbitrary, illegal and violative of Articles 14, 19(1)(g) and 300A of the Constitution of India. The petitioner has also prayed for a declaration that the sales made by him at lesser rates do not amount to sale at 'subsidized rates', falling foul to Section 18(3A) of the VAT Act, 2003, and also to set aside the assessment order dated 17.6.2014. 5. The assessment order is subject to appeal under the VAT Act, 2003, and thus, we do not propose to interfere with the assessment made by the Assessing Officer under the VAT Act, 2003. 6. Learned counsel appearing for the petitioner submits that since the authorities constituted under the Act, namely, the Assessin....
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....for the purposes specified in this sub-section and partly as otherwise, input tax credit shall be allowed proportionate to the extent they are used for the purposes specified in this sub-section. (2) The claim of input tax credit shall be allowed on the tax deposited on the basis of original VAT invoice within three months from the date of issuance of such invoice. However, claim of input tax credit of the additional tax deposited may be allowed on the basis of VAT invoice which has been issued subsequently in compliance with the decision of any competent court or authority, showing the tax at higher rate. If the first original VAT invoice is lost, input tax credit may be allowed on the basis of a duplicate copy thereof, subject to such conditions as may be prescribed. (3) Notwithstanding anything contained in this Act, no input tax credit shall be allowed on the purchases. (i) from a registered dealer who is liable to pay tax under sub-section (2) of section 3 or who has opted to pay tax under section 5 of this Act; or (ii) of goods made in the course of import from outside the State; or &nb....
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....icable VAT thereupon. The dealer, distributor or seller, being conscious of the marketing or incentive scheme floated by the manufacturer, takes a decision to sell the goods at competitive price, and even at lesser price than the purchase price in anticipation of getting quantity discount or sales incentive, on achieving a particular sale figure or reaching the target. Such reduction in price can, by no stretch of imagination, be treated to be a sale at subsidized price. 10. It is submitted that the subsidized price itself suggests that it is indicative of an incidence, when the seller decides to sell his goods at a substantial lower price, bearing a loss or share the cost, or burden from his own pocket. Where however, dealer sells the goods at competitive price, keeping in view the ultimate quantity discount or sales incentive, such sale cannot be termed, or alleged as sale at subsidized price, attracting Section 18(3A) of the VAT Act, 2003. 11. It is submitted that Section 18(3A) would lead to disastrous results. Many times, price of a commodity goes down, on account of market conditions, economic conditions, or perishable nature of the product. A dealer may be required to ....
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.... Excise, Pune VS. Dai Ichi Karkaria Ltd., 1999 (112) E.L.T. 353 (S.C.), in support of his submission that the input credit tax is an indefeasible right, which cannot be denied or reversed on the ground that the selling price of the goods is less than the purchase price, on which the tax has been paid. 16. The petitioner is a trader, engaged in the business of purchase and sale of cement. For the assessment year 2014-15, it was found that his contention, that he does not sell the goods at price lesser than the purchase price, is not correct, inasmuch as from his trading account, it was found from the value of the opening stock, and from the value of closing stock that his average price of purchase of cement is Rs. 227.89 per bag, whereas he sold the cement at an average price of Rs. 226.354 per bag. He had shown his ITC on 1.4.2012 of Rs. 25046.64, which shows that prior to 1.4.2012, he had adjusted his ITC by issuing bills of sale at a higher price, which had affect on the subsequent years. Though he had purchased goods from the registered dealers, and had claimed ITC, his aggregate sale price, being less than the purchase price, he is entitled to the input tax credit in accorda....
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.... arguments, put forward by learned counsel appearing for the petitioner that he has not made sales at a price lower than the purchase price, has been advanced without looking into the reply filed by the petitioner on 17.6.2014 to the show cause notice dated 6.6.2014 given by the Commercial Taxes Officer (Anti Evasion), Bikaner, in which it was pleaded and argued that the goods were sold at a lesser price than the purchase price, in anticipation of getting quantity discount, or sales incentive, on achieving a particular sale figure or reaching the target, which cannot be treated as subsidized price. In the reply filed by the petitioner, it is stated that the assessee has not sold the goods at a price below the purchase price. The net amount of trading account has been arrived at, after making adjustments of discount, purchase returns and other direct expenses. 19. In any case, since the argument has been raised regarding the validity of Section 18(3A) on the anvil of Articles 14, 19(1)(g) and 300A of the Constitution of India, we propose to consider the question and observe as follows:- 20. The Value Added Tax is modern and progressive tax system now adopted in over 130 countr....
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....x structure, there is in several States also a multiplicity of taxes, such as turnover tax, surcharge on sales tax, additional surcharge, etc. With introduction of VAT, these other taxes will be abolished. In addition, Central sales tax is also going to be phased out. As a result, overall tax burden will be rationalized, and prices in general will also fall. Moreover, VAT will replace the existing system of inspection by a system of built-in selfassessment by the dealers and auditing. The tax structure will become simple and more transparent. That will improve tax compliance and also augment revenue growth. Thus, to repeat, with the introduction of VAT, benefits will be as follows: a set-off will be given for input tax as well as tax paid on previous purchases other taxes, such as turnover tax, surcharge, additional surcharge, etc., will be abolished. overall tax burden will be rationalized. prices will be self-assessment by dealers transparency will increase there will be higher revenue growth 22. There is distinction between the scheme of tax on sale of goods both under the VAT regime a....
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.... the price to the consumers besides adversely affecting the trade. It is for this reason that the aforesaid Rules enable the manufacturing dealer to claim set-off of the tax paid by him on the purchase of raw materials from out of the tax payable by him on the sale of goods manufactured from out of the said raw material. 9. ......... In law (apart from Rules 41 and 41-A) the appellant has no legal right to claim set-off of the purchase tax paid by him on his purchases within the State from out of the sales tax payable by him on the sale of the goods manufactured by him. It is only by virtue of the said Rules which, as stated above, are conceived mainly in the interest of public that he is entitled to such set-off. It is really a concession and an indulgence. More particularly, where the manufactured goods are not sold within the State of Maharashtra but are despatched to out-State branches and agents and sold there, no sales tax can be or is levied by the State of Maharashtra. The State of Maharashtra gets nothing in respect of such sales effected outside the State. In respect of such sales, the rule-making authority could well have denied the benefit of set-o....
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....ession of ITC is granted by the State Government so that the beneficiaries of the concession are not required to pay the tax or duty which they are otherwise liable to pay under Rajasthan VAT Act. In extending the concession, it is open to the Legislature to impose conditions. Section 18 is one such condition imposed making it mandatory for the registered dealer to claim ITC within 90 days under sub-section (2), from the date of issuance of invoice, and no ITC will be allowed on certain purchases under sub-section (3). The entitlement to claim Input Tax Credit is created by Rajasthan VAT Act and the terms on which Input Tax Credit can be claimed must be strictly observed. 28. The expression "in the manner as may be prescribed" is used in Section 18. The usage of the expression "in the manner as may be prescribed" occurring, is referable only to the manner prescribed in Section 18. The modalities and the time frame in Section 18, as regards availment or enjoyment of Input Tax Credit, is a pre-condition and not merely procedural. 29. A person claiming benefit of exemption must show that he satisfies the eligibility criteria and for that purpose the provision must be strictly co....
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....8. 33. When there is a challenge to the constitutional validity of the provisions of a Statute, the Court exercising power of judicial review must be conscious of the limitation of judicial intervention, particularly, in matters relating to the legitimacy of the economic or fiscal legislation. While enacting fiscal legislation, the Legislature is entitled to a great deal of latitude. The Court would interfere only where a clear infraction of a constitutional provision is established. The burden is on the person, who attacks the constitutional validity of a statute, to establish clear transgression of constitutional principle. 34. When vires of a Statute is challenged, Courts must make every effort to uphold the constitutional validity of a statute. In Government of Andhra Pradesh v. P. Lakshmi Devi, (2008) 4 SCC 720, the Hon'ble Supreme Court has observed as under: The Court must, therefore, make every effort to uphold the constitutional validity of a statute, even if that requires giving the statutory provision a strained meaning, or narrower or wider meaning, than what appears on the face of it. It is only when all efforts to do so fail should the ....