Input Credit against Inter State Sale-J&K VAT

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This query is : Resolved

CA.Virender K Maini (Querist)

16 January 2009 The local authroties are denying Input Credit to registered dealer(Trader) on purchases made from local manufacuring units(Registered Dealers)and sold in the course of Inter State Trade or Commerce against Form "C" by referring to section 21(4)(c)read with first proviso of Jammu & Kashmir VAT, 2005. For the sake of clarity the relevant section and proviso are reproduced hereunder:
21.Input tax credit.- (1). Subject to the provisions of the Act, for the
purpose of calculating the net tax payable by a registered dealer for any tax
period after being registered, an input tax credit as determined under this section
shall be allowed to such registered dealer for the tax paid or payable in respect
of all taxable sales other than the sales as may be prescribed, or purchases under
section 14 during that period.
(2) The input tax credit to which the registered dealer is entitled to shall
be the amount of tax paid by the registered dealer to the seller, on his turnover of
purchases made during the tax period, intended to be used for the purposes and
subject to the conditions as specified in sub- section (3), sub- section (4) and
sub-section (5) and calculated in such manner as may be prescribed.
(3) Subject to such conditions and restrictions as may be prescribed,
partial input tax credit may be allowed in such cases as may be notified by the
Government.
(4) Input Tax credit shall be allowed for purchase of goods made within
the State from a registered dealer holding a valid certificate of registration and
which are intended for the purpose of -
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(a) sale or resale by him in the State ;
(b) use as raw material or as capital goods in the manufacturing
and processing of goods other than those exempt from tax under
the Act intended for sale in the State ;
(c) sale in the course of inter-state trade and commerce;
( d) sale in the course of export out of the territory of India; or
(e) for use as containers for packing of goods other than those
exempt from tax under the Act for sale or resale in the State:
Provided that in respect of transactions falling under clause (c) input tax
credit may be allowed on the tax paid in excess of 4% on the raw materials
used directly in the manufacture of the finished products:

Kindly advice

Vishnu Saboo

Vishnu Saboo (Expert)

02 June 2009 (4) Input Tax credit shall be allowed for purchase of goods made within
the State from a registered dealer holding a valid certificate of registration and
which are intended for the purpose of
(c) sale in the course of inter-state trade and commerce;

as per act credit "SHALL BE ALLOWED" on such transaction.

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