2024 (2) TMI 71 - HC - VAT and Sales Tax

Granting benefit of ITC as claimed and in deleting the amount of demand raised by the assessing authority - case of the State is that the ITC benefit is available to the assessee only with regard to goods that has been purchased in the State of Uttar Pradesh and which are the goods on which VAT is paid - HELD THAT - The Tribunal has examined the provisions of the Act and come to a finding that the assessee claimed ITC of Rs. 1,43,83,587/- in the relevant year against which tax of Rs. 13,27,46,784/- has been deposited on the sale of manufactured urea, which is many times more than the claimed ITC. Accordingly, Tribunal held that Section 13(1)(f) would not be applicable to the assessee, and accordingly, upheld the order of the Appellate Authority. Upon perusal of the documents, the finding of the Tribunal seems to be crystal clear and leaves no room for doubt. The assessee has paid far more tax than the ITC claimed, and accordingly, the rigours of Section 13(1)(f) of the Act would not be applicable to the assessee. There does not appear any need for interference in the order passed by the Tribunal. This writ petition is dismissed.

Summary

Issues:
The issues involved in the judgment are the legality of granting input tax credit (ITC) and the deletion of the demand raised by the assessing authority.

Summary:

Issue 1: Legality of Granting ITC
The respondent, a registered trader engaged in manufacturing and selling Urea fertilizer, faced a show cause notice due to deficiencies found during investigation for the assessment year 2014-15. The assessing authority reversed ITC amounting to Rs. 1,14,67,143.00 under Section 13(1)(f) of the Uttar Pradesh Value Added Tax Act, 2008. The First Appellate Authority canceled a portion of the disputed amount, which was further upheld by the Tribunal. The State argued that ITC benefit is limited to goods purchased in Uttar Pradesh on which VAT is paid. The Tribunal found that the assessee paid more tax than the claimed ITC, making Section 13(1)(f) inapplicable, and upheld the Appellate Authority's decision.

Issue 2: Deletion of Demand
The Tribunal's decision was based on the finding that the assessee paid significantly more tax than the claimed ITC. This led to the conclusion that Section 13(1)(f) did not apply to the assessee. The Tribunal's decision was deemed clear upon document review, with no need for interference in the order passed. Consequently, the revision petition was dismissed by the High Court.

This judgment clarifies the application of ITC provisions under the Uttar Pradesh Value Added Tax Act, emphasizing the importance of tax payments in determining the eligibility for ITC benefits.