Vat Input Disallowed

pankaj Kumar (Querist) 02 July 2010 This query is : Resolved
Dear All

Suppose X Co. purchase from Y Co where he pay 100(Cost) + 5 (Vat) = 105, and Sell to A Co. and avail the Vat Input Credit but in the time of assesment X co. come to know that Y Co. has not paid vat amount to tax authortiy then in this situtaion vat input disallowed to X co.? plz give your valuable information with section and case.

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AMIT BAJAJ ADVOCATE (Expert) 05 July 2010
Ussualy the authorities donot allow the ITC to the purchaser if the VAT has not been deposited by the seller.

Similar is the case in Income Tax Deptt where if the TDS is not deposited by the deductor the deductee dont get the credit/refund for the same. In such case the deductee suffers for no fault of his.

soumitra basu (Expert) 05 August 2010
There is no provision in VAT Act that for non-payment of VAT by Y Co, X Co. shall suffer for the same. Disallowance of ITC is not permissible. It is not the onus of the X Co. to prove the payment by the Y Co. X Co. has only to submit the Tax Invoice.

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