In a recent case, the Kerala High Court has held that credit cannot be denied solely on non-registration of the Travancore Devawsom board Under the Kerala Value Added Tax ( KVAT ) Act, 2003.
Mythree Associates, the petitioner assessee is a registered dealer under the KVAT Act, 2003. The business of the petitioner involves the purchase and sale of scrap materials. During the period from September 20, 2013 to January 30, 2014, the petitioner purchased certain scrap materials from the Travancore Devaswom Board. The Board had sold these scrap materials after obtaining permission from this Court in DBA No. 54/2012 and had also collected 5% as tax under the KVAT Act on the amounts remitted by the petitioner towards the auction amount.
The petitioner claims that since the Travancore Devaswom Board was not a registered dealer, the credit of the amounts paid by the petitioner as tax has not been given to him while completing the assessment for the years 2013–2014. The amount of tax collected from the petitioner has been remitted to the State Exchequer by the Travancore Devaswom Board. It is clear from a reading of the modified order of assessment that the denial of credit to the petitioner was on the basis that the Travancore Devaswom Board was not a registered dealer, and therefore the petitioner is not entitled to input tax credit under Section 11 of the KVAT Act.
It was observed that the provisions of Section 3(2)(c) of the KVAT Act indicate that the Commissioner shall have superintendence over all officers and persons employed in the execution of the Act, and the Commissioner may issue such orders, instructions, and directions to such officers and persons as he may deem fit for the proper administration.
The single bench of Justice Gopinath P. has observed that the definition of ‘casual trader’ under Section 2(xi) of the KVAT Act will also indicate that the Travancore Devaswom Board may not even fall within the definition of a casual trader for the purposes of the KVAT Act.
The court directed that if the petitioner makes a suitable representation before the officer presently exercising the jurisdiction of Commissioner under the provisions of the KVAT Act, the officer shall, having regard to the observations contained in the judgment, pass necessary orders giving instructions to the appropriate officer to provide credit of the amount paid by the petitioner as tax on the purchase of materials from the Travancore Devaswom Board to the extent tax has been credited to the State Exchequer.
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