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2018 (9) TMI 1642 - HC - GSTFacility of deferment of payment of the Value Added Tax denied - Sick Industrial Unit - Impact of migration from VAT regime to GST regime - modified Rehabilitation Scheme sanctioned by BIFR on 24.09.2013 - Held that - It appears that while passing the impugned order dated 09.05.2018 whereby the Government Order dated 10.02.2014 has virtually been declared to be inoperative, the authority concerned does not appear to have taken into account the effect of the repeal and saving clause contained in section 174 of U.P. Goods and Services Tax Act, specially sub section 2(c) of section 174 of the said Act. The impugned order dated 09.05.2018 only states that under section 71 of the then prevalent U.P. Value Added Tax Act, the powers were vested in the State Government to defer the liability of payment of Value Added Tax in case of the sick units declared as such under the Act - What is, thus, noticeable here is that the authority concerned while passing the said order dated 09.05.2018 has clearly ignored the provisions of section 174(2)(c) of U.P. Goods and Services Tax Act. The impugned order dated 09.05.2018, as is contained in annexure-1 to the writ petition, is hereby quashed - Petition allowed.
Issues:
Challenge to order declaring deferment of Value Added Tax not available for a sick industrial unit under the Sick Industrial Companies (Special Provisions) Act, 1985 due to repeal of U.P. Value Added Tax Act and enforcement of U.P. Goods and Services Tax Act. Analysis: 1. Background of the Case: The petitioner, a producer of Vanaspati Ghee, was declared a sick unit under the Sick Industrial Companies (Special Provisions) Act, 1985. The Board of Industrial and Financial Reconstruction (BIFR) formulated a Rehabilitation Scheme for the petitioner, deferring Value Added Tax dues for five years starting from 24.09.2013. 2. Repeal of U.P. Value Added Tax Act: The U.P. Value Added Tax Act was repealed on 01.07.2017 upon the enforcement of the U.P. Goods and Services Tax Act. Section 174 of the U.P. Goods and Services Tax Act contains a saving clause preserving rights, privileges, obligations, or liabilities acquired under the repealed Acts. 3. Impugned Order and Ignored Provisions: The impugned order dated 09.05.2018 declared the deferment of Value Added Tax unavailable for the petitioner due to the repeal of the U.P. Value Added Tax Act. However, the order failed to consider the saving clause in section 174(2)(c) of the U.P. Goods and Services Tax Act, which protects rights acquired under the repealed Acts. 4. Court's Decision: The High Court allowed the writ petition, quashing the impugned order dated 09.05.2018. The State Government was directed to reconsider the matter promptly, within six weeks from the date of the court's order. Additionally, the court ordered a stay on recoveries against the petitioner for Value Added Tax dues until a fresh decision is made by the State Government. In conclusion, the High Court's judgment emphasized the importance of considering saving clauses when dealing with the impact of repealed legislation on existing rights and obligations. The court's decision provided relief to the petitioner, ensuring a fair reconsideration of the deferment of Value Added Tax dues in light of the legal provisions.
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