In a recent decision the Calcutta High Court observed that the benefit of input tax credit ( ITC ) not available on payment to third party and not to the selling dealer under the West Bengal Value Added Tax Act, 2003 ( WB VAT Act ).
The main aspect of the matter which was argued by the counsel for the petitioner is that the Input Tax Credit could not have been denied to the petitioner on account of payment made to third party on behalf of the selling dealer.
A Division Bench comprising Chief Justice TS Sivagnanam and Justice Supratim Bhattacharya observed that “ It is a well settled legal principle that Input Tax Credit is a form of concession provided by the legislator and it is available only if the conditions stipulated are fulfilled. Sub-rule(8) of rule 19 makes it clear that the payment has to be made to the selling dealer by means cheque or demand draft or by means of electronic mode.”
The Court noted that the writ petitioner is precluded from adding words to a stature to state that he will be entitled to the benefit of Input Tax Credit though he is not paid the amount to the selling dealer but to a third party based on certain instructions.
“ The concession can always comes with conditions and if the conditions are not fulfilled the concession is not available. Therefore, the conclusion arrived at by the tribunal in this regard deserves to be confirmed” the Bench concluded.
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