High Court of GUJARAT
Reversal of Input tax Credit (2%), if the goods are sold in course of inter-state trade or commerce- Sustained
The Court held-
Reversal of Input tax Credit (2%), if the goods are sold in course of inter-state trade or commerce- Sustained
KADWANI FORGE LTD. & OTHERS
Vs.
STATE OF GUJARAT & OTHERS
Date: 22nd July 2014
The Court held-
"It appears that the impugned notifications are issued reducing the input tax credit to the extent of 2% on the goods supplied outside State of Gujarat in the larger public interest and to ensure adequate funds in the development programme of the State. Reduction of the rate of central sales tax from 4% to 3% with effect from 01.04.2007 and from 3% to 2% with effect from 01.06.2008 and the failure on the part of the Central Government to compensate the State for the losses on account of the aforesaid reduction can be said to be
one of the cause and/or reason. It appears that as the State has suffered loss of thousands of crores of revenue due to the said reduction and the Central Government failed to compensate the said losses and it has been found that the tax revenue of the State has been adversely affected, when the impugned notifications are issued it can neither be said to be arbitrary nor illegal and/or unconstitutional."
one of the cause and/or reason. It appears that as the State has suffered loss of thousands of crores of revenue due to the said reduction and the Central Government failed to compensate the said losses and it has been found that the tax revenue of the State has been adversely affected, when the impugned notifications are issued it can neither be said to be arbitrary nor illegal and/or unconstitutional."
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