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TMI Blog2025 (3) TMI 1240X X X X Extracts X X X X X X X X Extracts X X X X ..... ditional 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 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication 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 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 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 furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding 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 par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommerce. 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 subsection(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, suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot sold the purchased goods and there was closing stock. Until & unless the last tax period of the assessment 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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