- (1.) This writ petition has been filed seeking declaration of the provisions of Section 14 of the Punjab Value Added Tax Act, 2005 (for short, "the PVAT Act") to be ultra vires to the provisions of Section 15(c) of the Central Sales Tax Act, 1956 (for short, "the Central Act") on the ground that credit of tax paid on paddy is not being allowed as input tax credit (ITC) while calculating the tax payable on rice procured out of it.
(2.) The case of the petitioner is that it had purchased rice extracted out of the paddy, on which, purchase tax had already been paid. Credit of tax paid on paddy is admissible on tax payable on sale of rice. Though vide letter dated August 23, 2005 (annexure P5), the department clarified that if paddy from which rice is prepared has suffered tax, ITC will be available on sale of such rice, but the said letter was subsequently withdrawn on August 29, 2005 (annexure P6). The claim of the petitioner for ITC on the sale of rice was disallowed. This stand is contrary to the provisions of Article 286 of the Constitution of India read with Section 15(c) of the Central Act, which is as under: 15. Restrictions and conditions in regard to tax on sale or purchase of declared goods within a State.-Every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions, namely: (a) ... (b) ... (c) where a tax has been levied under that law in respect of the sale or purchase inside the State of any paddy referred to in Sub-clause (i) of Clause (ii) of Section 14, the tax leviable on rice procured out of such paddy shall be reduced by the amount of tax levied on such paddy.
(3.) Learned Counsel for the petitioner submits that the provisions of Section 15(c) of the Central Act override the State law in view of the provisions of Article 286 of the Constitution and language of Section 15 of the Central Act itself.;