Law: Sales Tax Act, 1990

Section: 7,8(1)(a),13

SALES TAX ACT, 1990 (VII of 1990) Sections: 7, 8(1)(a) & 13 - Tax credit not allowed - Determination of tax liability - Exemption - Refund of input tax - Refusal to accept petitioner's claim by Department - Scope - The petitioner is engaged in the activity of producing 'ghee', which before its marketing is canned in tin containers also manufactured by the petitioner. For the purpose of manufacturing tin containers, the petitioner purchases tin plates. On the purchase of tin plates, sales tax is payable whereas the petitioner mill at the relevant time was exempted from the payment of sales tax on its taxable supplies under SRO 580(I)/91 dated 27.06.1991. For the period during which the petitioner was enjoying tax exemption on its supplies, the petitioner sought refund of the sales tax paid on the purchase of tin plates that were used in the sales tax paid on the purchase of tin plates that were used in the manufacture of tin containers. The reasoning behind such claim was that as its tin containers are exempt from the payment of sales tax under the said SRO No. 580(I)/91 dated 27.06.1991, the sales tax paid on tin plates may be refunded. Taking into consideration the legal position that the sales tax paid on goods that are used in the manufacture of 'exempt supplies' cannot be refunded under Section 8(1)(a) of the Sales Tax Act, 1990, the Sales Tax Department refused to accept the petitioner's claim - Validity - (A) We have considered the contention of the petitioner mill's Managing Director. Section 7 of the Sales Tax Act provides that for the purposes of determining tax liability in respect of taxable supplies', a registered person shall be entitled to deduct input tax paid during the tax period. Such concession is clearly available only when a registered person makes 'taxable supplies' and is not available where the supplies are totally exempt from the sales tax liability. This mandate of the law is further affirmed in Section 8(1)(a) of the Act, which provides that notwithstanding anything contained in any other provision of the Act, a registered person shall not be entitled to claim input tax paid on goods that are used in the making of supplies which…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492