Reversal of Input Tax Credit – In GST / VAT era, emergence of by-product which is exempt during manufacturing process is not relevant, what is relevant is sale of goods.
The State of Karnataka Versus M/s. M.K. Agro Tech Pvt. Ltd. – 2017 (9) TMI 1308 – SUPREME COURT OF INDIA
VAT / Sales Tax
Case-Laws
Dated:- 25-9-2017
The State of Karnataka Versus M/s. M.K. Agro Tech Pvt. Ltd. – 2017 (9) TMI 1308 – SUPREME COURT OF INDIA
In an important decision though related to Karnataka Value Added Tax (VAT) but equally important in the GST era for reversal of Input Tax Credit on exempted by-products.
While interpreting the provisions of Section 17 of KVAT, hon'ble Supreme Court in the case of 2017 (9) TMI 1308 – SUPREME COURT OF IND
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, element of expenses incurred on raw material would be included. In this manner, when the final product is sold and the VAT paid, component of raw material would be included again. Keeping in view this objective, the Legislature has intended to give tax credit to some extent.
– However, how much tax credit is to be given and under what circumstances, is the domain of the Legislature and the courts are not to tinker with the same.
– Judgment in Godrej & Boyce Mfg. Co. Pvt. Ltd. & Ors. v. Commissioner of Sales Tax and Others [ 1992 (7) TMI 292 – SUPREME COURT OF INDIA] relied upon.
– To the same effect are the judgments in the case of Hotel Balaji & Ors. v. State of Andhra Pradesh & Ors. [ 1992 (10) TMI 240 – SUPREME COURT OF INDIA]
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