(1.) The challenge in these cases is to Section 13(4) of the Andhra Pradesh Value Added Tax Act, 2005 (the VAT Act) and Rule 20(2)(h) of the Andhra Pradesh Value Added Tax Rules, 2005 (VAT Rules). The impugned rule was introduced by an amendment issued under Section 78(1) of the VAT Act by a Government notification vide G.O. Ms. No. 2201, Revenue (CT-II), dated 29.12.2005. The effect of this rule is that all the Petitioners, who are VAT dealers and availing Input Tax Credit (i.t.c.) in respect of coal, naphtha or natural gas under Section 13(1) of the VAT Act, have now been denied i.t.c. retrospectively with effect from 01.4.2005. This is the grievance and grudge that forced the Petitioners to approach this Court.
(2.) We may notice the relevant facts and allegations from writ petition No. 5080 of 2006. M/s. Vishnu Cement Limited a manufacturer of cement, is a registered dealer under the VAT Act. Limestone, coal, iron ore and gypsum are their main raw materials. In quantitative terms, coal constitutes 13% of the raw material and on clinker production 19%. Under the provisions of the VAT Act, the tax paid on intrastate purchase of raw materials is given credit against the output tax payable on cement. The rate of VAT on coal is 4% and 12.5% on cement on which i.t.c. is allowed in respect of purchases of coal and other raw materials. The rate of sales tax under the Andhra Pradesh General Sales Tax Act, 1957 (APGST Act) on cement was 4% (with Form G). But the rate of VAT is higher at 12.5%. Due to i.t.c. allowance the company could withstand and absorb the increase in the tax rate.
(3.) Under Section 13(1) of the VAT Act, i.t.c. was allowed to VAT dealers except in respect of the goods specified in Schedule VI. No i.t.c. is allowed even on certain deemed sales enumerated in Clauses (a) to (h) of Section 13(5) of the VAT Act. Section 13(4) of the VAT Act empowers the Government to prescribe purchases in respect of which i.t.c. shall not be allowed. In exercise of the powers under Section 78 of the VAT Act, VAT Rules were promulgated. Rule 20(2) of the VAT Rules prescribes, in Clauses (a) to (q), various items/goods which are not eligible for i.t.c. Rule 20(2)(h) has been substituted by the impugned amended Rule. Now, natural gas, naphtha and coal are also included in the negative list, unless the dealer is in the business of these goods. Thus the Petitioner was not allowed to claim i.t.c. on the coal used as raw material. After the impugned amendment of Rule 20(2)(h) of the VAT Rules, the second Respondent, namely, the Assistant Commissioner, issued notice dated 27.1.2006 proposing to disallow i.t.c. already claimed on the tax paid on coal purchases for the tax periods from April, 2005 to December, 2005. Ignoring Petitioners' objections, the Assistant Commissioner, by an order dated 28.2.2006, confirmed the VAT proposals.
ABOUT US "REGENT COMPUTRONICS PVT. LTD." is a Company incorporated in 1991 under the provisions of the Companies Act, 1956. Since its inception to 1995, the Company was busy in carrying out the activities related to various Banks' Job Work..
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