M/S.V.K.Cement And Steels vs. State Of Kerala

Held

The Court held that the benefit conferred under the proviso to Section 16(2) of the Kerala Value Added Tax Act, 2003, as substituted in 2009, is limited to the payment of tax under Section 6(5) and exercising an option for payment of tax under Section 8. The Court found that this proviso does not extend to the benefit of input tax credit. The Court approved the finding of a learned Single Judge in K.K.Abraham & Company, which held that input tax credit is only available to a registered dealer, and the amended proviso did not grant retrospective registration for claiming input tax credit. Therefore, the revision petition filed by the dealer was rejected, answering the question in favour of the Department and against the assessee. Parties were left to bear their respective costs.

Facts

The petitioner, M/s.V.K.Cement and Steels, is a dealer under the Kerala Value Added Tax Act, 2003, for the assessment year 2005-06. The petitioner claimed input tax credit for the period between February 2, 2006, the alleged date of commencement of business, and February 8, 2006, the date of registration. The petitioner filed an application for registration on February 28, 2006, and the registration certificate was issued showing the date of registration as February 8, 2006, which was related back to the commencement of business. The Assistant Commissioner passed an order on September 19, 2009, and the Kerala Value Added Tax Additional Appellate Tribunal passed an order on March 29, 2014, which is under challenge.

Key Issues

1. Whether the Tribunal was justified in denying the benefit of the first proviso to Section 16(2) of the Kerala Value Added Tax Act, 2003, for claiming input tax credit from the date of commencement of business, and ought the Tribunal to have granted the benefit as held in Sales Tax Officer v. Kerala Curry House [2010(3) KLT 26(SN)]? Petitioner's argument: The petitioner contended that the registration should be deemed to have commenced from the date of business commencement, February 2, 2006, and therefore, input tax credit should be allowed for the period between February 2, 2006, and February 8, 2006. They relied on the precedent in Sales Tax Officer v. Kerala Curry House. Revenue's argument: The State argued, relying on K.K.Abraham & Company v. Sales Tax Officer and Others [(2013) 64 VST 122 (Ker)], that the benefit of relating back the registration to the commencement of business, as per the substituted proviso to Section 16(2) by the Kerala Finance Act, 2009, was only for the purposes of paying tax under sub-section (5) of Section 6 and opting for payment of tax under Section 8, and not for input tax credit.