The Jharkhand High Court has held that Input Tax Credit ( ITC ) cannot be denied for the petitioner who had discharged all the tax liabilities and not petitioners fault if selling dealer had made defaults in depositing tax in treasury.
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 (VAT) Act, 2005. In reply to the notice, the petitioner produced all the necessary documents, including tax invoices supplied to it by the selling dealer, in order to satisfy the Assessing Authority.
While making the purchases, the petitioner had discharged all the tax liabilities, and it was the selling dealer, who had not deposited the tax in the Government Treasury, for which the petitioner firm was not at all at fault
The Assistant Commissioner Commercial Taxes came to the conclusion that the petitioner firm had made the purchases from M/s Sanatan Enterprises for the amount showed in this return and had also paid the amount of VAT to the selling dealer, and it was in fact the selling dealer, who had not filed its return and deposited 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.
Judgement was rendered by division bench constituting of Justices H.C Roshan and Deepak Roshan.
While quashing the order passed by the Assistant Commissioner, Commercial Taxes, the Court observed that, “denying ITC to the petitioner and imposing the interest, and also the demand notice, as contained in Annexures-5 and 6 to the writ application, and further direct that the total amount of Rs.20,21,801/- realized from the petitioner by way of garnishee order, be refunded to the petitioner within a period of three months from the date of production/communication of this order”.
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