Under Section 13(1) of the Punjab Value Added Tax Act, 2005, from what point is input tax credit available after the amendment of the first proviso?

Prior to amendment the first proviso permitted availing of input tax credit in respect of goods which are for sale or are for use in manufacture. Post amendment, input tax would not be available as a credit unless the goods are sold within the State or are used in the manufacture, processing or packing of taxable goods. In other words, input tax credit would be available on and from the date of further sale or use in manufacture.

Punjab Value Added Tax Act, 2005 — s. 13(1) — s. 70 — Punjab VAT Rules, 2005 — r. 21(8) — Input tax credit — Delegated legislation without an enabling provision — Vested right — Punjab VAT Rules, 2005 — r. 21(8) — No enabling provision in the parent Act — Held: On 25.01.2014, when Rule 21(8) was notified, no provision in the Punjab VAT Act empowered the State to confine input tax credit already earned to the reduced rate of tax on the stock in trade. (¶35) Punjab VAT Act, 2005 — s. 13(1) — Statutory sanction required to reduce a benefit — Held further: The benefit of input tax credit is traceable to the statute; if it is to be reduced, which will have an adverse civil consequence upon the beneficiary, it must have the requisite statutory sanction. (¶41) Punjab VAT Act, 2005 — s. 13(1) — Right accrued on paying tax on the input — Held further: A right accrued to the assessee on the date when he paid the tax on the raw material continues until the facility available thereto gets worked out; a subsequent lowering of the rate cannot reduce that entitlement. (¶36, 37) Punjab VAT Rules, 2005 — r. 21(8) — Effective only from 01.04.2014 — Held further: The statutory sanction came only with the amendment of the first proviso to Section 13(1) on 01.04.2014, so Rule 21(8) cannot be given effect to transactions which already stood concluded prior thereto. Appeals dismissed. (¶36, 42)

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