TaxTMI 
TaxTMI 
2015 (3) TMI 176
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....on sale invoices. They also issued tax deduction certificates. By the impugned order, an additional demand of Rs. 45,49,483 has been raised against the petitioner. 5. The main dispute is that the petitioner has not been granted the benefit of set-off as provided under the provisions of sections 14(1) (a), (2) and 26A(7) of the VATAct. The petitioner purchased the goods, i.e., soya seeds, mustard seeds and crude oil. This goods have been consumed in manufacture of soya oil and DOC. The aforesaid product is a by-product. It is tax-free in accordance with entry No. 3 of Schedule I of the VATAct. However, the edible oil and other by-products, such as, sludge and waste of sludge are taxable goods under entry No. 31 of Schedule II of the VAT Act. The taxing authority has opined that the petitioner used soya seeds in the manufacture of edible oil and DOC. The DOC, a by-product, is not taxable, hence, the petitioner is not entitled the benefit of set-off as provided under sections 14(1)(a), (2) and 26A(7) of the VATAct and the petitioner is liable to pay tax at four per cent in accordance with the provisions of section 26A(5) of the VATAct. 6. The question for consideration is that wheth....
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.... be notified by the State Government for sale or consumption from another registered dealer, shall deduct input tax from the amount payable by him to the selling registered dealer (the seller) for such purchase. (2) On deduction of the amount under sub-section (1), the purchaser shall issue a certificate of deduction of tax to the seller in such form and manner as may be prescribed. (3) The certificate of deduction of tax shall constitute a good and sufficient discharge of the liability of the seller to pay tax in respect of such transaction and the amount so deducted shall be adjusted by him in such manner as may be prescribed, and this certificate shall not be used for discharge of the liability of any other transaction. (4) No input-tax rebate shall be claimed or be allowed in respect of the goods notified under sub-section (1). (5) The purchaser shall deposit the amount deducted under subsection (1) which is over and above the amount of input-tax rebate notionally admissible under section 14 on such purchases. (6) The provisions of sections 18, 20, 21, 24, 25 and 39 shall mutatis mutandis apply to the amount payable under sub-section (5). (7) The purchaser shall retain as....
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.... are situations in which the taxable element is serverable. Under the rules presently under consideration also, situations are conceivable where such severance is implicit. For instance, suppose the cotton purchased is utilised partly for manufacture of cloth that is taxable and partly for manufacture of cloth that is not taxable or partly for the manufacture of yarn which is taxable and is sold and partly for manufacture of cloth which is not taxable. In these instances, it is clear that only some of the cotton is utilised for the first purpose and some for the second purpose and so only the purchase tax paid in respect of the quantity utilised for the first purpose will be eligible for set-off. But the type of user with which we are concerned is a composite one in which it is not possible to correlate any part of the purchased goods as having gone in for the purpose of manufacture of taxable goods. The position is picturesquely brought out in the case of Bharat Petroleum. The entire sulphuric acid purchased has no doubt been used in the manufacture of kerosene though perhaps not a drop of acid clings to the kerosene manufactured. Equally, the entire sulphuric acid has gone into t....
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....t been sold by him (and not given away as samples or otherwise) or which have been exported by him or used by him in the packing of goods so manufactured grant him a drawback, set-off or, as the case may be, a refund of the aggregate of the following sums, that is to say: (a) a sum recovered from the manufacturing dealer by other registered dealers by way of sales tax, or general sales tax, as the case may be, both, on the purchase by him from such registered dealers, when the manufacturing dealer did not hold a recognition or when he held a recognition but effected the purchase otherwise than against a certificate under section 11 of the Act. . ." 13. From the aforesaid finding of the honourable Supreme Court, it is clear that manufacturer is eligible the benefit of set-off on the entire amount of tax paid on purchase of raw material and principle of apportionment could not be invoked. In the facts and circumstances of the present case, the judgment of the honourable Supreme Court is applicable because the DOC, a by-product is tax-free and another by-product sludge and main product oil are taxable. Hence, the authority cannot apportion the tax liability after deducting the perce....
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....] 122 STC 594 (SC); [2001] 10 SCC 740 considered the availability of alternative remedy in the matter of sales tax and held as under (page 597 in 122 STC): "3. As we see it, the point in issue is no longer res integra. This court in Gujarat Agro Industries Co. Ltd. v. Municipal Corporation of the City of Ahmedabad [1999] 4 SCC 468 dealing with an analogous provision, where discretion to waive pre-deposit was limited only to the extent of 25 per cent. of the tax, was upheld by this court. To the same effect is the decision of this court in Shyam Kishore v. Municipal Corporation of Delhi [1993] 1 SCC 22. 4. For the reasons contained in the said decisions, we hold that the impugned provisions are valid. It is, of course, clear that if gross injustice is done and it can be shown that for good reason the court should interfere, then notwithstanding the alternative remedy which may be available by way of an appeal under section 20 or revision under section 21, a writ court can in an appropriate case exercise its jurisdiction to do substantive justice. Normally of course the provisions of the Act would have to be complied with, but the availability of the writ jurisdiction should dispel....