2020 (1) TMI 414

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.... 2. As both these writ applications are connected matters, they have been heard together and are being disposed of by this common Judgement. 3. In W.P.T. 773 of 2018, the petitioner is aggrieved by order dated 20.11.2017, as contained in Annexure-5 to the writ application, passed by the respondent Assistant Commissioner of Commercial Taxes, Urban Circle, Jamshedpur, whereby the claim of Input Tax Credit (herein after referred to as 'ITC'), of the petitioner firm has been rejected and interest has been imposed upon the petitioner firm, as provided under Section 30 of the Jharkhand Value Added Tax Act, 2005, (herein after referred to as the 'JVAT Act'). The petitioner has also challenged the demand notice, issued pursuant thereto, as contained in Annexure-6 to the writ application. 4. In W.P.(T) No. 5978 of 2018, the petitioner has challenged the garnishee orders issued by the Sales Tax Officer, Jamshedpur Circle, whereby the Banks, in which the petitioner firm is having their accounts, were asked by the respondent authority to recover the amount of Rs. 20,21,801/- from the account of the petitioner and deposit the same in the Government Treasury. In course of h....

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....ted the amount in the Government Treasury. As such, the Assessing Authority disallowed the claim of ITC of Rs. 11,89,744.13, made by the petitioner firm, and interest was imposed upon the petitioner. 7. The said claim of the petitioner was disallowed, in view of sub-clause (xvii) brought in Section 18(8) of the JVAT Act, by Jharkhand Value Added Tax (Amendment) Act, 2015, which reads as under:- "18. Input Tax Credit. - (1) -----------------. (8) No input tax credit under sub-Section (1) shall be claimed or be allowed to a registered dealer - (xvii) In case the amount of Input Tax Credit on any purchase of goods shall exceed the amount of tax in respect of the same goods actually paid, if any, under this Act into Government Treasury." 8. At this stage, it may be stated that though this provision is not very happily worded, but the intent of the Legislature was clearly that the ITC was to be claimed or allowed on any purchase of goods, only to the extent the amount of tax was actually paid with respect to the said goods in the Government Treasury. In the present case, in view of the fact that no tax was actually paid in the Government Treasury by the ....

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....ts, it is absolutely clear that the petitioner firm was not at all at fault while making the purchases and also in paying the amount of VAT to the seller. The purchaser also got tax invoices from the seller and accordingly, claimed the ITC in its return, which was disallowed solely due to default on the part of the seller, as the ITC claim of the petitioner mismatched due to non-filing of return by the seller and not depositing the VAT amount in the Government Treasury. Learned senior counsel has challenged the vires of Section 18(8)(vii) of the JVAT Act, and has also taken additional point that the notice issued to the petitioner was barred by limitation, as provided in Rule-18 of the Jharkhand Value Added Tax Rules, 2006, which prescribes that no scrutiny of the return could be made after the expiry of 30 days from receiving the returns, and in the present case, the returns were received by the concerned authorities on 03.01.2017, whereas the notice was issued on 21.08.2017, which was after the expiry of the period of 30 days. Yet another point has been taken by learned senior counsel for the petitioner that the interest has been imposed upon the petitioner-firm without issuing a....

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....firm had actually paid the amount of VAT to the seller and to that extent, it cannot be said that the petitioner was at any fault, particularly when the seller did not file the return. It is the stand of leaned counsel for the State that under the provisions of the Act, action could be taken against both the purchaser and the seller, and the action has been taken against the seller as well. 13. Having heard learned counsels for both the sides and upon going through the peculiar facts of this case, we find that the petitioner firm had acted absolutely in a bona fide manner, as is also apparent from the impugned order dated 20.11.2017, as contained in Annexure-5 to the writ application, and had discharged its tax liability by paying the VAT amount to the selling dealer and had filed its return within time, claiming the applicable ITC, but it was solely due to the laches on the part of the selling dealer, that the return had not been filed by the selling dealer, and the tax amount was not deposited in the Government Treasury. As such, it is apparent that the amount of tax and interest has been saddled upon the petitioner firm and has also been realised by way of garnishee order, wh....