Ensure benefits of input tax to dealers, Andhra Pradesh government told

Hyderabad: The Hyderabad High Court has directed the Andhra Pradesh government to ensure that benefit of input tax credit is extended to dealers of second-hand vehicles in case they produce proof that the old vehicles had paid tax in undivided AP.

A division bench comprising Justice V. Ramasubramanian and Justice J. Uma Devi was dealing with a petition by a dealer under the Andhra Pradesh Value Added Tax Act, 2005, aggrieved by the denial of input tax credit on the purchase value of second-hand vehicles.

The petitioner informed the court that he was denied the benefit of inclusion of input tax credit in the purchase of second-hand vehicles, on the ground that the used vehicles were purchased in undivided Andhra Pradesh before June 2, 2014 and that therefore, they cannot be deemed to have suffered input tax in the same state to be eligible for input tax credit.

While citing the ruling of a division bench of this court in the Prathul Automobiles Pvt. Ltd. case, the bench said: “In the absence of any specific Rule made under the VAT Act in this regard, the evidence to be produced before the assessing authority must be such as to show that the vehicles purchased by the dealer, had been subjected to VAT at the time of its initial registration, under the Motor Vehicles Act, 1988, either within the erstwhile composite State of Andhra Pradesh or the State of Telangana.”