Allahabad High Court
The Commissioner, Commercial Tax, Up ... vs S/S Janki Industries Nai on 24 March, 2025
Author: Piyush Agrawal
Bench: Piyush Agrawal
HIGH COURT OF JUDICATURE AT ALLAHABAD A.F.R. Neutral Citation No. - 2025:AHC:42271 Reserved On: 12.03.2025 Delivered On:24.03.2025 Court No. - 10 (1) Case :- SALES/TRADE TAX REVISION No. - 10 of 2025 Revisionist :- The Commissioner, Commercial Tax, Up Lucknow Opposite Party :- S/S Janki Industries Nai Basti, Bareilly Counsel for Revisionist :- Bipin Kumar Pandey, ACSC Counsel for Opposite Party :- Rishi Raj Kapoor WITH (2) Case :- SALES/TRADE TAX REVISION No. - 142 of 2024 Revisionist :- The Commissioner Commercial Tax Up Lucknow Opposite Party :- S/S Shiv Shakti Rice Mill Gram Bithri Vijamau Road Nawabganj Bareilly Counsel for Revisionist :- Bipin Kumar Pandey, ACSC Counsel for Opposite Party :- Suyash Agarwal (3) Case :- SALES/TRADE TAX REVISION No. - 143 of 2024 Revisionist :- The Commissioner, Commercial Tax, Up Lucknow Opposite Party :- S/S Huma Industries Dandi Hameer, P.T. Road Richa, Baheri, Bareilly Counsel for Revisionist :- Bipin Kumar Pandey,AC.S.C. Counsel for Opposite Party :- Tanisha Jahangir Monir (4) Case :- SALES/TRADE TAX REVISION No. - 144 of 2024 Revisionist :- The Commissioner, Commercial, Tax Up Lucknow Opposite Party :- S/S H K Rice Industries Gargaiya Pilibhit Road Bareilly Counsel for Revisionist :- Bipin Kumar Pandey,AC.S.C. Counsel for Opposite Party :- Suyash Agarwal (5) Case :- SALES/TRADE TAX REVISION No. - 145 of 2024 Revisionist :- The Commissioner, Commercial Tax, U.P. Lucknow Opposite Party :- S/S Rajdhani Rice Mill Richa, Baheri, Bareilly Counsel for Revisionist :- Bipin Kumar Pandey, ACSC Counsel for Opposite Party :- Tanisha Jahangir Monir (6) Case :- SALES/TRADE TAX REVISION No. - 146 of 2024 Revisionist :- The Commissioner, Commercial Tax, Up Lucknow Opposite Party :- S/S Shahenshah Industries Richa, Baheri, Bareilly Counsel for Revisionist :- Bipin Kumar Pandey,A.C.S.C. Counsel for Opposite Party :- Tanisha Jahangir Monir (7) Case :- SALES/TRADE TAX REVISION No. - 147 of 2024 Revisionist :- The Commissioner, Commercial Tax, Up Lucknow Opposite Party :- S/S Azad Rice Mill Counsel for Revisionist :- Bipin Kumar Pandey,A.C.S.C. Counsel for Opposite Party :- Tanisha Jahangir Monir (8) Case :- SALES/TRADE TAX REVISION No. - 149 of 2024 Revisionist :- The Commissioner, Commercial Tax, Up Lucknow Opposite Party :- S/S Royal Industries Gram Damkhoda, Richa, Pilibhit Road Bareilly Counsel for Revisionist :- Bipin Kumar Pandey (9) Case :- SALES/TRADE TAX REVISION No. - 2 of 2025 Revisionist :- The Commissioner, Commercial Tax, Up Lucknow Opposite Party :- S/S Hina Rice Mills Richa Baheri Counsel for Revisionist :- Bipin Kumar Pandey,A.C.S.C. Counsel for Opposite Party :- Tanisha Jahangir Monir (10) Case :- SALES/TRADE TAX REVISION No. - 9 of 2025 Revisionist :- The Commissioner, Commercial Tax, U.P. Lucknow Opposite Party :- S/S Sri Luxmi Dal Mill Nai Basti Bareilly, Bareilly Counsel for Revisionist :- Bipin Kumar Pandey,A.C.S.C. AND (11) Case :- SALES/TRADE TAX REVISION No. - 92 of 2024 Revisionist :- The Commissioner Commercial Tax Opposite Party :- Ss Madhuban Bihari And Company Counsel for Revisionist :- Bipin Kumar Pandey, ACSC Counsel for Opposite Party :- Pramod Kumar Sahani HON'BLE PIYUSH AGRAWAL,J.
1. Heard Shri Bipin Kumar Pandey, learned Additional Chief Standing Counsel for the State, Shri Rishi Raj Kapoor, Shri Suyash Agarwal and Ms. Tanisha Jahangir Monir, learned counsel for the opposite party.
2. Since the issues involved in these connected revisions are similar, therefore, the same are being decided by the common order with the consent of the learned counsel for the parties. Sales/Trade Tax Revision No. 10 of 2025 is taken as a leading case for deciding the controversy involved in these revisions.
SALES/TRADE TAX REVISION No. - 10 of 2025:
3. The present revision has been filed against the judgement & order dated 27.11.2024 passed by the Commercial Tax Tribunal, Bareilly Division, Bareilly in Second Appeal No. 211 of 2022 for the Assessment Year 2017-18 under section 28(2)(ii) of the VAT Act.
4. The aforesaid revision was admitted by this Court vide order dated 27.01.2025 on the following questions of law:-
"1. Whether on the facts and circumstances of the case the Commercial Tax Tribunal was legally justified in holding that the dealer is entitled for the benefit of I.T.C. As claimed under the provisions of U.P. Value Added Tax Act read with the corresponding provisions of Section 16 as well as Section 140(1) of the GST Act read with Rule 21(1)(y) of the Value Added Tax Rules?
2. Whether on the facts and circumstances of the case the Commercial Tax Tribunal was legally justified in allowing the benefit of I.T.C. to the dealer when the business has been discontinued by the dealer on 30.06.2017?"
5. Learned ACSC submits that the opposite party is a dealer carrying on the business of purchase and sale of food-grains, pulses, oil-seeds, etc. In the assessment year in dispute, i.e., 2017-18, the opposite party had declared the closing stock on 30.06.2017 and ITC of Rs. 4,65,822/- was claimed. The Assessing Authority, vide order dated 11.02.2021, reversed the Input Tax Credit (in short, 'ITC'). Feeling aggrieved by the order dated 11.02.2021, the opposite party preferred an appeal before the first appellate authority, which was rejected vide order dated 12.09.2022. Still feeling aggrieved, the opposite party preferred second appeal before the Commercial Tax Tribunal, which has been allowed vide impugned judgement & order dated 27.11.2024. Hence, this revision.
6. He further submits that new the Uttar Pradesh Goods & Service Tax Act, 2017 (hereinafter referred to as, 'the GST Act') came into force on 01.07.2017. Since the Uttar Pradesh Value Added Tax Act, 2008 (hereinafter referred to as, 'the VAT Act') had the life upto 30.06.2017, any registered dealers, who was having registration under the erstwhile VAT Act come to end with effect from 30.06.2017. In order words, all the registered dealers discontinued their business under the VAT Act on 30.06.2017. Once the registered dealer under the VAT Act discontinued its business by implication of law, the dealer was required to debit ITC in terms of section 13(6) of the VAT Act.
7. He further submits that the dealers, who were registered under the VAT Act, can claim ITC only in terms of condition provided in section 13(1)(a) of the VAT Act, if the purchased goods are resold inside the State or as a condition therein. It is admitted case of the respondents that the purchased goods were not resold either in the State of U.P. or in course of inter-State trade of commerce or in course of export of goods outside the territory of India.
8. He further submits that rule 21(1)(y) of the Rules framed under the VAT Act also prescribes the same. He further submits that the Assessing Authority, on verification of account, found that the dealer has not complied with section 13(6) of the VAT Act and therefore, has rightly debited/reversed the ITC. He further submits that once the dealer has failed to complied with the provision of the VAT Act, the proceedings cannot be said to be illegal. On the contrary, the Tribunal has mis-directed itself and without any verification of books of account in a general way has referred sections 13 & 14 of the VAT Act as well as Rule 21 of the Rules and made a passing remark stating therein that the provisions of the Act are not applicable.
9. He further submits that the State authority has specifically pointed out the judgement of this Court in the case of M/s Farooq Agencies Vs. Commissioner of Commercial Tax [Sales/Trade Tax Revision No. 397/2013, decided on 16.07.2013]; wherein, this Court held that since, by implication of Trade Tax Act having come to end by introduction of VAT Act and it will presume that the dealer has discontinued its business under the erstwhile Act. Similar, analogy will be applicable to the case in hand where the dealer's business is discontinued on the date when the new tax regime, i.e., GST Act, was introduced on 01.07.2017, but the Tribunal has not given due weightage to it. The Tribunal has erred in allowing the appeals of the opposite party.
10. Per contra, learned counsel for the opposite party, Shri Rishi Raj Kapoor, supports the impugned order and submits that even assuming without admitting that if the business of the opposite party is treated to be discontinued, then in view of section 15(5) of the VAT Act, the excess amount of admissible ITC during which the business has been continued should have been refunded. He further submits that the opposite party has not discontinued the business and therefore, the order passed by the Assessing Authority, which has been confirmed by the first appellate court, has rightly been set aside by the Tribunal by the impugned order. In support of his submission, he has placed reliance on the judgement of this Court in M/s Sooraj Kirana Company Vs. Commissioner Commercial Tax [Sales/Trade Tax Revision No. 767 of 2013, decided on 28.10.2013].
11. Shri Suyash Agarwal, learned counsel for the opposite party submits that the opposite party was duly registered dealer and granted valid registration, which entitles for claiming ITC as contemplated under section 13 of the VAT Act. The opposite party has never discontinued its business. On implementation, the GST Act empowers the registration of dealer to migrate from VAT Act to GST Act. He further submits that section 140 of the GST Act empowers transitional arrangement for ITC. Once the new GST Act empowers the existing registered dealer (VAT Act) to migrate for new GST Act as well as transitional arrangements for ITC to be used as per section 140 of the GST Act, the proceedings initiated under the VAT Act reversing the ITC are bad in law. He further submits that the Assessing Authority has no power to reverse the balance ITC as the same was not availed by misappropriation or fraud and the same is not the case of the Revenue. In support of his submissions, he has placed reliance on the judgement of the Madras High Court in Tractor & Farm Equipment's Limited Vs. CCE, Madurai [2015 (320) ELT 357 (Mad.)]. He further submits that unutilized ITC available under the VAT Act can be utilized for the new GST Act by filling the same GST TRANS - 1 form and the benefit cannot be denied legally. In support of his submission, he has placed reliance on the judgements Shree Navneet Cotton Co. Vs. State of Gujarat [(2024) 22 CENTAX 51 Guj.], Magma Fincorp Limited Vs. State of Telangana [(2019) 26 GSTL 7 Telangana] and Easwaran Brothers India Private Limited Vs. Assistant Commissioner (ST) (FAC) Coimbatore [(2023) 4 Centax 135 (Mad.)].
12. He further submits that under the Excise Act, a claim of Modvat was rejected and the same was allowed by the appellate court, against which an appeal was preferred by the Revenue before the Apex Court, which was dismissed by the Apex Court in the case of Collector of Central Excise, Pune & Others Vs. Daichi Karkaria Limited & Others [(1999) 7 SCC 448].
13. He further submits that the closing stock on a pointed date, the ITC of the same can be utilized and the opposite party cannot be deprived of its legitimate ITC merely on the ground that the item is exempted under the new regime, i.e., GST Act. In support of his submissions, he has placed relied on the judgement in Filco Trade Centre Private Limited Vs. Union of India [2018 (17) GSTL 3 (Guj.)], against which the Revenue went in appeal before the Apex Court in Union of India & Another Vs. Filco Trade Centre Private Limited & Another [(2023) 1 SCC 562], which was disposed of. He further submits that this Court in Ratek Pheon Friction Technologies Private Limited Vs. Principal Commissioner [2022 (59) GSTL 6 (All.)] has an occasion to consider with regard to ITC earned under the pre-existing law, which can be utilized by submitting TRANS - 1 form, which could not be uploaded due to technical glitch, where this Court observed in favour of the registered dealers. He further submits that the Tribunal, being the last Court of fact & law, has rightly allowed the appeal.
14. Ms. Tanisha Jahangir Monir, learned counsel for the opposite party submits that the Tribunal has rightly allowed the appeal. The ITC, which accumulated during the period to which the respondent was entitled to avail, even in the new tax regime, was wrongly reversed by the Assessing Authority. She further submits that after implementation of the new tax regime, i.e., GST Act, the registered dealer is entitled to claim benefit of unutilized/unclaimed ITC under the new tax regime. She further submits that section 140 of the GST Act prescribes/entitles the registered dealer to take credit of ITC, which was unutilized/ accumulated in the erstwhile Act, i.e., VAT Act. She further submits that it is not in dispute that the respondent earned legitimate ITC during the VAT Act, which was wrongly reversed by the Assessing Authority. In support of her submission, relied upon the judgement of the Apex Court in Eicher Motors Limited & Another Vs. Union of India & Others [AIR 1999 SC 892], judgement of the Madras High Court in Tractor & Farm Equipment Limited Vs. the Commissioner of Central Excise [(2014) 11 MAD CK 103] as well as the judgement of Telangana High Court in M/s Magma Fincorp Limited Vs. State of Telangana [AIR Online 2019 TEL 103].
15. She further submits that the ITC earned was never utilized upto 30.06.2017 and the legitimate claim of ITC cannot be denied. She further submits that no provision under the VAT Act prohibits for availing earned ITC under the new tax regime, i.e., GST Act.
16. Per contra, learned ACSC rebuts the arguments advanced by Ms. Monir and refers the order dated 27.01.2023 passed by the first appellate authority (Annexure No. 2) and submits that a clear finding of fact has been recorded by the first appellate authority against the respondent. He further submits that the respondent utilized the ITC on its purchases as per the closing stock. The said finding of fact against the respondent has not been specifically reversed by the Tribunal in the impugned order, while allowing the appeal of the respondent. Therefore, the impugned order passed by the Tribunal is bad and liable to be set aside.
17. Learned ACSC further submits that the aforesaid judgements relied upon by the counsels for the opposite party have no application to the facts of the case in hand and as such, the judgements cited will be of no help to the opposite party.
18. He further submits that the other judgement relied upon is also of no aid to the opposite party as on an identical set of facts, the jurisdiction of the High Court in the case of M/s Farooq Agencies (supra) has categorically held that the registered dealer discontinued its business by implication of law. In other words, if a new Act is being introduced from a particular date, then the business of the registered dealer under the erstwhile Act deemed to be discontinued. He further submits that judgement in M/s Sooraj Kirana Company (supra) is of latter date, which has not considered the judgement of this Court in M/s Farooq Agencies (supra) and therefore, the same is also of no aid to the opposite party.
19. After hearing learned counsel for the parties, the Court has perused the records.
20. The issue involved in these cases are as to whether after introduction of new GST Act from 01.07.2017, the registered dealers were entitled for the benefit of unutilized ITC accrued under the UP VAT Act though having closing stock.
21. Under the VAT Act, the food-grains were exempted on its purchase, subject to certain conditions and the same were liable to be taxed on its sale. The benefit of ITC can only be availed on fulfillment of certain conditions as contemplated under section 13(1)(a) of the VAT Act. The unutilized ITC has to be debited or carried forward as per the sub-sections of section 13 of the VAT Act. Similar view has been expressed under rule 21(1) of the Rules. For better appreciation, certain provisions of section 13 of the VAT Act are quoted below:-
"Section 13: Input Tax Credit:-
(1) Subject to provisions of this Act, dealers referred to in the following clauses and holding valid registration certificate under this Act, shall, in respect of taxable goods purchased from within the State and mentioned in such clauses, subject to conditions given therein and such other conditions and restrictions as may be prescribed, be allowed credit of an amount, as input tax credit, to the extent provided by or under the relevant clause:
(a) Subject to conditions given in column 2, every dealer liable to pay tax, shall, in respect of all taxable goods except non-vat goods, capital goods and captive power plant, where such taxable goods are purchased on or after the date of commencement of this Act, be allowed credit of the amount, as input tax credit, to the extent provided in column 3 of the table below:
Sl. No. Conditions Extent of amount of Input Tax Credit (1) (2) (3)
1.
If purchased goods are re-sold-
(i) inside the State, or
(ii) in the course of inter-state trade or commence; or
(iii) in the course of the export of the goods out of the territory of India..
Full amount of input tax.
2. If purchased goods are used in manufacture of -
(i) any goods except non-vat goods and where such manufactured goods are sold in the course of the export of the goods out of the territory of India; or
(ii) any taxable goods except non-vat goods and where such manufactured goods are sold either inside the State or in the course of inter-state trade or commerce.
Full amount of input tax.
3. If purchased goods are -
(i) transferred or consigned outside the State otherwise than as a result of a sale; or
(ii) used in manufacture of any taxable goods except non-vat goods and such manufactured goods are transferred or consigned outside the State otherwise than as a result of a sale.
Partial amount of input tax, which is in excess of rate prescribed under sub-section(1) of section 8 of the Central Sales Tax Act,1956 of the purchase price on which the dealer has paid tax either to the registered selling dealer or to the State Government..
****** (6) In the circumstances referred to in sub-section (5), the amount of difference of full amount of input tax and admissible amount of input tax credit, shall be debited by the dealer into the account of input tax credit maintained by him on the day on which:
(i) goods, in respect of which credit of full amount of input tax was claimed; or
(ii) goods, manufactured by using goods in respect of which credit of full amount of input tax was claimed; or
(iii) where goods, in respect of which credit of full amount of input tax was claimed, are used or consumed in packing of any goods, such packed goods, are consigned outside the State; or disposed of or dispossessed by the dealer in a manner for which facility of input tax credit is not admissible or such facility is admissible for partial amount of input tax:
Provided that where the dealer discontinues his business, full amount of input tax, which was claimed under sub-section (4), in respect of-
(i) goods held by the dealer in the same form and condition in which those were purchased; or
(ii) goods which have been used in manufacture of any goods held by the dealer, (whether in semi-manufactured or manufactured state);
(iii) goods which have been used or consumed in packing of any goods held by the dealer, in closing stock on the day on which he has discontinued business, shall, before end of the tax period prescribed for submission of the tax return for the tax period in which business is discontinued, shall be debited by the dealer into the account of input tax credit maintained by him."
22. Perusal of section 13(1)(a) of the VAT Act clearly demonstrates that the earned ITC can be utilized on the sale, subject to the conditions as mentioned in the table. The ITC can only be claimed on fulfillment of certain conditions as contemplated herein-above. Section 13(6) of the VAT Act and rule 21(1)(y) of the UP VAT Rules contemplate that in the event ITC is unutilized and the registered dealer discontinued its business and the closing stock is there, then the dealer has to debit the unutilized ITC. The registered dealer cannot be permitted to utilize earned ITC for the said period.
23. Section 15(5) of the VAT Act is also quoted below:-
"Section 15. Net amount of tax payable and treatment of input tax credit exceeding tax liability:
(5) Notwithstanding anything contained in sub-section (4) where a dealer discontinues business, refund of any excess amount of admissible input tax credit relating to last tax period of the assessment year during which business has been discontinued shall be allowed within Ninety days after the date of passing of assessment order for such assessment year."
24. The aforesaid section contemplates for refund of excess amount of admissible ITC, if it exceeds tax liability relating to last tax period of the assessment year during which the business has been discontinued.
25. The case in hand, it is admitted between the parties that the opposite party has not sold the purchased goods and there was closing stock. Until & unless the last tax period of the assessemnt year during which business has been discontinued after adjustment of the tax liability by-passing the assessment order for such assessment year, if any excess amount of ITC is left, then only section 15(5) of the VAT Act will come into play and not otherwise.
26. By plain reading of section 15 of the VAT Act, it is clear that the available ITC can only be refunded after passing of the assessment order for that assessment period in which the business was discontinued after adjustment of tax liability. As such, the argument raised by Mr. Rishi Raj Kapoor has no legs to stand on the ground of section 15 for refund of unutilized ITC. Therefore, the same is rejected.
27. The other argument has been advanced on behalf of the opposite party that the Assessing Authority has reversed the ITC only on the pretext that the commodity in question has been exempted under the new regime GST Act and therefore, the ITC has been reversed wrongly. The said argument has no legs to stand on. As on the date of introduction of the new tax law, i.e., GST, the registered dealer under the VAT Act, by implication of the Act, has discontinued its business as held by this Court in the case of M/s Farooq Agencies (supra). Once a registered dealer under the erstwhile VAT Act discontinued its business, they were duty-bound to debit the unutilized ITC as per section 13(6) of the VAT Act.
28. This Court in M/s Farooq Agencies (supra) had an occasion to consider as to whether the registered dealer under the Trade Tax Act will be treated as discontinued its business on introduction of new UP VAT Act and held that after introduction of VAT Act, the registered dealer of the erstwhile Act stood discontinued its business by operation of law.
29. The relevant paragraph of the judgement in M/s Farooq Agencies (supra) is quoted below:-
"It is not in dispute that the assessee had carried on his business under the Trade Tax Act for a period of 9 months only i.e. between 01st April, 2007 to 31st December, 2007. On 31st December, 2007 the Trade Tax Act itself ceased to be applicable in view of enforcement of the VAT w.e.f. 01.01.2008.
In my opinion the business by the assessee therefore stood discontinued under the U.P. Trade Tax Act after expiry of 9 months of the assessment year by operation of law. Therefore, provisions of Section 18 stood attracted in the facts of the case for the purposes of determination of the average turnover. Applying the principle as enumerated under Section 18, tax authorities have found that the aggregate determined turnover of the assessee was more than Rs. 37.50 lacs for a period of 9 months and have accordingly raised the demand of development tax at the rate of 1% under Section 3-H of the Trade Tax Act.
It is no doubt true that the assessee has not discontinued his business. It is also true that because of the Trade Tax Act itself having been rescinded, the business carried on within the ambit of the said Act therefore came to an end on 31st December, 2007. The discontinuation of the business under the Trade Tax Act after 31.12.2007 was by operation of law. It is also not in dispute that for the period 01.01.2008 to 31.03.2008 the assessee has been assessed under the Value Added Tax and his liability for payment of tax has been determined under the said Act itself. The provision of the U.P. Trade Tax Act had not been applied in respect of the said period commencing from 01.01.2008."
30. The counsel for the opposite party have heavily relied upon the judgement in M/s Sooraj Kirana Company (supra), which also considered the similar issue, observed as under:-
"It is not disputed that the assessee revisionist has not discontinued its business after 31.12.07 and as such Section 18 of the Act would have no application."
31. The said judgement in the case of M/s Sooraj Kirana Company (supra) was delivered on 28.10.2013 and the same has not considered/notices the earlier detailed judgement dated 16.07.2013 in M/s Farooq Agencies (supra) rendered per incuriam. Therefore, the aforesaid judgement M/s Sooraj Kirana Company (supra) is of no aid to the opposite party.
32. The Apex Court, in the case of Babu Parasu Kaikadi (Dead) through L.R.'s Vs. Babu (Dead) through L.R.'s [(2004) 1 SCC 681] has held that if earlier precedent of the co-ordinate Bench having not considered, then it would render per incuriam. The relevant paragraphs are quoted as under:-
"14. Having given our anxious thought, we are of the opinion that for the reasons stated; hereinbefore, the decision of this Court in Dhondiram Totoba Kadam (supra), haying not noticed the earlier: binding, precedent of the co-ordinate Bench, and. haying not considered the mandatory provisions as contained in Section 15 & 29 .of the Act had been rendered per incuriam. It, therefore, does not constitute a binding precedent.
15. In Halsbury 'Laws of England, 4th Edition Volume 26 it is stated;
'"A decision is given per in curiam when the court has acted in ignorance of a previous decision of its own or of a court of coordinate jurisdiction which covered the case before it, in which case it must decide which case to follow or when if has acted in ignorance of a Horse of Lords decisions, in which case it must follow that decision; or when the decision is given in ignorance of the terms of a statute or rule having statutory force."
18. Furthermore, this Court, while rendering judgment in Dhondiram Totoba Kadam (supra), was bound by its earlier decision of Co-ordinate Bench in Ramchandra Keshav Adke (supra). We are bound to follow the earlier judgment which is precisely on the point in preference to the later judgment which has been rendered without adequate argument at the bar and also without reference to the mandatory provisions of the Act."
33. This Court in M/s Farooq Agencies (supra) has specifically held that by operation of law, the business of the registered dealer stood discontinued and therefore, similar analogy will be applicable in the case in hand. The opposite parties (registered dealers) discontinued its business under the VAT Act after 30.06.2017 by operation of law.
34. But the Tribunal in the impugned order, in its wisdom, has allowed the appeals of the opposite party by referring that the judgement cited by the revisionist, i.e., M/s Farooq Agencies (supra), is not applicable to the fact of the case.
35. The Tribunal miserably failed in not following the legal binding precedent given by this Court in the case of M/s Farooq Agencies (supra). The Tribunal, further erred in observing that section 13 of the VAT Act and rule 21 of the Rules are also not applicable in the issue under consideration. Section 13 of the VAT Act & Rule 21 of the VAT Rules, referred to herein-above, clearly contemplate the situation to deal with the closing stock and unutilized ITC of the registered dealers stood discontinued its business, as held herein-above.
36. Further, the opposite party has not brought on record any evidence upto the Tribunal that they have filled TRANS - 1. Once TRANS - 1 form was not filled, the proceedings initiated by the Assessing Authority cannot be said to be bad in law. Once the business under the VAT Act was discontinued on 30.06.2017 by operatin of law, it becomes the dealer's duty to reverse/debit the ITC as per section 13 (6) of the VAT Act.
37. Some judgements, relied upon by the counsel for the opposite parties, were in relation to the period when the TRANS - 1 was unable to be uploaded due to technical glitch, where the Court passed orders and some observation was given, which cannot be treated as precedent.
38. The other judgements, which have been cited by the counsels for the opposite parties, pertain to Central Excise Act/MODVAT credit to be availed, but the counsels could not show any provision under the Central Excise Act that are similar to VAT Act. Section 13(6) of the VAT Act, read with rule 21 specifically provides that when the closing stock on the date of discontinuation of business is available, what treatment has given to unutilized/accumulated ITC.
39. A specific provision has been provided under the VAT Act, which is, admittedly, not complied with by the opposite party - registered dealer, nor the Tribunal, being the last court of fact & law, discussed a word about the same while allowing the appeal in favour of the opposite party - registered dealer.
40. Further, section 13(6) of the VAT Act contemplates debiting of ITC earned/unutilized on the date of discontinuation of the business, but the opposite party utterly failed to adhere to the said section. In absence of any compliance by the opposite party as contemplated under section 13(6) of the VAT Act, the judgements cited herein-above in paragraph nos. 11 to 14, by the counsel for the opposite party are not of any help to them.
41. Once the opposite party - registered dealers, by operation of law, discontinued its business, it was the duty cast upon the opposite party dealer to debit their ITC as contemplated under section 13(6) of the VAT Act. The Tribunal has failed in its duty while allowing the appeal of the opposite party by overlooking the provision of section 13(6) of the VAT Act.
42. In view of the aforesaid facts & circumstances of the case as well as the law laid down by this Court, the impugned judgements & orders passed by Commercial Tax Tribunal in these revisions cannot be sustained in the eyes of law.
43. Accordingly, all the revisions are allowed.
44. The impugned judgements & orders in these revisions passed by the Commercial Tax Tribunal, Bareilly Division, Bareilly are hereby set aside.
45. The questions of law are answered in favour of the Revenue and against the opposite party.
Order Date :-24/03/2025 Amit Mishra (Piyush Agrawal,J.)