Credit Available On Advance Tax Paid For Stock-Transferred: Kerala High Court

The Kerala High Court ruled that the petitioner is entitled to credit for the entire amount paid under Circular No. 50/2006 for goods stock-transferred to its Pollachi branch. Justice Gopinath P. observed that tax paid under the circular doesn't qualify as input tax under Section 2(xxiii) of the KVAT Act, and cannot restrict credit eligibility. The circular imposed advance tax on evasion-prone items under Kerala's VAT Act. The petitioner, dealing in imported timber, transferred stock to Pollachi from Feroke, disputing a KVAT assessment limiting credit to amounts over 4% of taxes paid. The court held that since no taxable sale occurred and goods were merely transferred, denial of full credit was unjustified under Section 13. It quashed the order restricting credit, affirming circular tax wasn't a sale tax