Changes in the VAT law of Himachal Pradesh
Maya Arora
(Querist) 19 August 2008
This query is : Resolved
One of the amendement made in Himachal Pradesh VAT. Where Section 11 as amended vide Amendment Act No.12 of 2007 published in H. P. Rajpatra Extn. On 16th May, 2007. According to STO's interpretation of the Act, we should claim input tax credit only with respect to such goods as have been sold by us during the tax period and the balance to be carried forward.
According to us, if you go through Section 11 as a whole, the interpretation is totally different. According to Sub-Sec. 1 of Sec. 11 –
The input tax credit may be claimed in respect of taxable sales made during the tax period by a purchasing dealer shall be –
(i) the amount of input tax paid or payable by such purchasing dealer to the selling registered dealer, on the turnover of purchases of such goods as have been sold by him during the tax period; and
(ii) calculated and allowed as provided in this section, and subject to such other conditions as may be prescribed.
The calculation of input tax credit is given in Sub-Section 13. Which is given as below:
According to Sub-Section 13 of Sec. 11 –
“ The amount of input tax credit, which may be availed of by a purchasing dealer, shall be determined on the basis of the following formula, namely:-
NET INPUT TAX CREDIT = A+B-C
Explanation:-
(i) ‘A’ represents the amount of input tax credit which the purchasing dealer may be allowed under this section in respect of taxable sales made by him during the tax period.
(ii) ‘B’ represents outstanding input tax credit brought forward from the previous tax period; and
(iii) ‘C’ represents reverse input tax credit as determined under sub-section (10).”
If we calculate input tax credit as per Sec.11(13), then we should consider opening balance of input tax credit in every tax period. So please clarify Clause (ii) of Sub-Sec. (1) and Explanation (ii) of Sub-Sec. (13) of Section 11. According to our interpretation of Sec. 11, we can claim the whole input tax credit against the vat payable on sale during the tax period and this was the motive while constituting this VAT LAW all over India. When we are paying tax on purchase then why we should not get the benefit within time. But the STO is adamant and he say that he would not allow benefit of input tax credit on unsold stock against vat payable. So please suggest what should be the correct interpretation of law with reference to Sec. 11 of VAT at Himachal Pradesh
VASANTH D JAGANATH
(Expert) 23 August 2008
Dear Madam
the contension of the officer that, no credit on unsold stock is not acceptable such a law is not sustainable. Credit should be given on purchase of goods having valid tax invoice subject restrictions under law
It is open to the assessee to challnge before a court against such law.
