A division bench of the Punjab and Haryana High Court has held that Input Tax Credit (ITC) available on evaporation of petroleum products under the Haryana Value Added Tax Act, 2003.
Earlier, the Tribunal accepted the appeals and held that dealers were entitled to Input Tax Credit on evaporation loss of Petrol and High-Speed Diesel. The issue canvassed in appeals is based on the decision of Division Bench of this Court in All Haryana Petroleum Dealers Association, Bhiwani Versus The State of Haryana and others, 2014(42) R.C.R. (Civil) 811.
Mr. Sandeep Goyal, Advocate appearing for the dealers defended the order of the Tribunal. He contended that Entry 5 of Schedule E does not deal with petroleum products. It is argued that reversal of ITC for evaporated petrol and HSD was not the issue before the High Court in All Haryana Petroleum Dealers Association’s case (supra). He raised an argument that considering the nature of the goods involved, it cannot be held that goods were disposed of otherwise than by way of sale.
A three-judge bench of the High Court comprising Justice Avneesh Jhingan, Justice Ajay Tewari, and Justice Pankaj Jain held that as per provisions of Act, the tax paid to the State by the oil companies on the goods sold, would be ITC available to the purchasing dealers.
Allowing the contentions of the assessee, the High Court held that “There would be no ITC for tax paid on the goods specified in Schedule E when used or disposed of in the circumstances mentioned against those goods. The circumstances mentioned in Schedule E against petroleum products and natural gas are that when used as fuel or exported out of the State. Entry 5 of schedule E is not dealing with the items mentioned at Entries 1 and 2. In other words, circumstances mentioned against Entry 5 are not applicable to petroleum products and natural gas.”
Excise and Taxation Commissioner, Haryana Versus M/s Gupta Brother, Bhiwani and another
CITATION: 2022 TAXSCAN (HC) 175
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