Tax share of service recipient

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SummaryQueries on taxation and service tax liabilities, addressed by Vivek Sharma & Manav Saneja of Ernst & Young

liability. However, recently, we have been asked by the VAT department to reverse the input tax credit availed of, since the local vendor has not been depositing VAT with the department for the last three years. Please advise whether we need to reverse the input tax credit so availed of due to non-payment of VAT by the local vendors?

As per the Delhi VAT Act, 2004, a registered dealer can avail of input VAT credit against a tax invoice issued by the vendor in accordance with the provisions of the Delhi VAT law. Therefore, you need not reverse the input tax credit availed of in case the credit so taken is on the basis of a valid tax invoices issued as per the Delhi VAT laws.

Further, non-payment of output VAT by the vendor would constitute a default on its account and shall not impact the eligibility of your company to avail of and utilise the input VAT credit.

The replies do not constitute professional advice. Neither Ernst & Young nor FE is liable for any action taken on the basis of these replies. Readers may mail their queries to

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