Jharkhand High Court rules ITC cannot be denied under VAT

Jharkhand High Court rules ITC cannot be denied under VAT

The assessee's appeal was earlier rejected by the Commercial Taxes Tribunal

The Jharkhand High Court has ruled that the Input Tax Credit (ITC) cannot be denied on Inter-State sale or transfer of stock under the Jharkhand Value Added Tax Act, 2005, since no manufacturing activity was undertaken by the assessee within the State.

The petitioner-assessee Exide Industries was assessed under the Jharkhand VAT. The Deputy Commissioner of Commercial Taxes had passed an assessment order disallowing ITC to the assessee under the Act. Later, the Joint Commissioner of Commercial Taxes (Appeal) confirmed the assessment order of the Deputy Commissioner.

The assessee filed a revision application against the order of the Joint Commissioner before the Commercial Taxes Tribunal, which dismissed his appeal on the pretext that since Jharkhand VAT Act was applicable to it, the ITC was disallowed.

The bench comprising Justice Aparesh Kumar Singh and Justice Deepak Roshan, however, held that in a taxing statute there was no room for intendment, therefore, it could not be stretched to cover the persons who were not manufacturers so as to deny them ITC.

Ruling in favor of the assessee, the court noted that the tribunal's order confirming the lower authority's order was wrong. It held that the language of the Act could not be stretched to deduce some non-existent intention to conclude that even if the dealer was not a manufacturer, the Act would still apply.