# The Commissioner, Commercial Tax, Up Lucknow Revisionist v. S/S Janki Industries Nai Basti, Bareilly Opp. Party

- **Citation:** (2025) 3 ILRA 314
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-03-24
- **Case number:** Sales/Trade Tax Revision No. 10 of 2025
- **Bench:** Piyush Agrawal
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/the-commissioner-commercial-tax-up-lucknow-revisionist-v-s-s-janki-industries-53065
- **Pages:** 11

## Headnote

Civil Law - The Value Added Tax Act,2003
- Section 13 & 15-Opposite party has not 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-
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-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.

Revision allowed. (E-9)

List of Cases cited:

## Text

314 INDIAN LAW REPORTS ALLAHABAD SERIES
----------
(2025) 3 ILRA 314
REVISIONAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 24.03.2025

BEFORE

THE HON'BLE PIYUSH AGRAWAL, J.

Sales/Trade Tax Revision No. 10 of 2025
With other connected cases

The Commissioner, Commercial Tax, Up
Lucknow ...Revisionist
Versus
S/S Janki Industries Nai Basti, Bareilly
 ...Opp. Party

Counsel for the Revisionist:
Bipin Kumar Pandey, ACSC

Counsel for the Opp. Party:
Rishi Raj Kapoor

Civil Law - The Value Added Tax Act,2003
- Section 13 & 15-Opposite party has not 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-
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-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.

Revision allowed. (E-9)

List of Cases cited:

1. M/s Sooraj Kirana Comp. Vs Commissioner
Commercial Tax [Sales/Trade Tax Revision No.
767 of 2013, decided on 28.10.2013]

2. Tractor & Farm Equipment's Ltd. Vs CCE,
Madurai [2015 (320) ELT 357
(Mad.)]

3. Shree Navneet Cotton Co. Vs St. of Guj.
[(2024) 22 CENTAX 51 Guj.],

4. Magma Fincorp Ltd. Vs St. of Telangana
[(2019) 26 GSTL 7 Telangana]

5. Easwaran Brothers India Pvt. Ltd. Vs
Assistant Commissioner (ST) (FAC) Coimbatore
[(2023) 4 Centax 135 (Mad.)]

6. Collector of Central Excise, Pune & ors. Vs
Daichi Karkaria Ltd. & ors.[(1999) 7 SCC 448].

7. Eicher Motors Ltd. & anr. Vs U.O.I.& ors.[AIR
1999 SC 892]

8. Tractor & Farm Equipment Ltd. Vs the
Commissioner of Central Excise [(2014) 11 MAD
CK 103]

9.M/s Magma Fincorp Ltd. Vs St. of Telangana
[AIR Online 2019 TEL 103].

10. Babu Parasu Kaikadi (Dead) through L.R.'s
Vs Babu (Dead) through L.R.'s [(2004) 1 SCC
681]

11. M/s Farooq Agencies Vs Commissioner of
Commercial Tax [Sales/Trade Tax Revision No.
397/2013, decided on 16.07.2013];

12. Filco Trade Centre Pvt. Ltd. Vs U.O.I.[2018
(17)GSTL3 (Guj.)]

13. U.O.I.& Another Vs Filco Trade Centre Pvt.
Ltd. & anr. [(2023) 1 SCC 562]

14. Ratek Pheon Friction Technologies Pvt. Ltd.
Vs Principal Commissioner [2022 (59) GSTL 6
(All.)]

(Delivered by Hon'ble Piyush Agrawal, J.)
3 All. The Commissioner, Commercial Tax, Up Lucknow Vs. S/S Janki Industries Nai Basti,
 Bareilly
315

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 foodgrains, 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
316 INDIAN LAW REPORTS ALLAHABAD SERIES
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
3 All. The Commissioner, Commercial Tax, Up Lucknow Vs. S/S Janki Industries Nai Basti,
 Bareilly
317
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
318 INDIAN LAW REPORTS ALLAHABAD SERIES
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 foodgrains 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 subsections 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,
3 All. The Commissioner, Commercial Tax, Up Lucknow Vs. S/S Janki Industries Nai Basti,
 Bareilly
319
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
Full amount of
input tax.

goods are sold in
the course of the
export
of
the
goods out of the
territory of India;
or

(ii)
any
taxable
goods except nonvat
goods
and
where
such
manufactured
goods
are
sold
either inside the
State or in the
course
of
interstate
trade
or
commerce.

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
320 INDIAN LAW REPORTS ALLAHABAD SERIES
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 subsection (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,
3 All. The Commissioner, Commercial Tax, Up Lucknow Vs. S/S Janki Industries Nai Basti,
 Bareilly
321
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 dutybound 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),
322 INDIAN LAW REPORTS ALLAHABAD SERIES
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
3 All. The Commissioner, Commercial Tax, Up Lucknow Vs. S/S Janki Industries Nai Basti,
 Bareilly
323
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.
----------
324 INDIAN LAW REPORTS ALLAHABAD SERIES
(2025) 3 ILRA 324
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 24.03.2025

BEFORE

THE HON'BLE PIYUSH AGRAWAL, J.

Writ - Tax No. 1287 of 2024
With other connected cases

M/S Solvi Enterprises ...Petitioner
Versus
Additional Commissioner Grade 2 & Anr.
 ...Respondents

Counsel for the Petitioner:
Aditya Pandey

Counsel for the Respondents:
C.S.C.

At the time of transaction- the purchaser i.e. the
petitioner and the seller both were registered-
registration of the selling dealer was not
cancelled from its inception -the transaction was
registered - the transaction in question is fully
covered by the statutory documents prescribed
under the Act- same supplier has filed its
returns i.e. GSTR- 01 and GSTR-3B - once the
seller was registered at the time of the
transaction- no adverse inference can be drawn
against the petitioner-impugned order quashed.

W.P. allowed. (E-9)

List of Cases cited:

1. St. of Karan. Vs Ecom Gill Coffee Trading Pvt.
Ltd., 2023 LiveLaw (SC) 187

2. M/s Rajshi Processors Raebareli Thru. Its
Partner Ashok Kumar Lakhotia Vs St. of U.P.
Thru. Prin. Secy. Deptt. Of St. Tax, Lko & ors.-
Writ Tax No. 128 of 2024

3. M/s Shiv Trading Vs St. of U.P. & ors.-Writ
Tax No.1421 of 2022 4.M/S Rama Brick Field Vs
Additional Commissioner Grade-2 & ors.-Writ
Tax No. 909 of 2022
(Delivered by Hon'ble Piyush Agrawal, J.)

1. Since the similar issues are involved
in aforesaid writ petitions, the same are
being decided together by this common
judgment.

2. For convenience, the facts of the
Writ Tax No.1287 of 2024 is being
delineated here-in-below:

3. Heard Sri Aditya Pandey, learned
counsel for the petitioner, and Sri RS.
Pandey, learned Additional Chief Standing
Counsel for the State-respondents as well
as Sri Manish Trivedi, learned counsel
appearing for the respondent-Bank.

4. By means of this writ petition, the
following prayer has been made:-

"I. Issue a suitable writ, order or
direction in the nature of certiorari
quashing
the
impugned
order
dated
20.10.2023 passed by the respondent no.1
in
Appeal
No.GST
-
AD091222030324L/2022
F.Y.
2018-19,
under the provisions of Section 74 of the
U.P.G.S.T./C.G.S.T. Act (Annexure No.1 to
the writ petition).

II. Issue a suitable writ, order or
direction in the nature of certiorari
quashing
the
impugned
order
dated
12.09.2022
passed/issued
by
the
respondent no.2 (Annexure no.4 to the writ
petition).

III. ...........

IV. ............"

5. Learned counsel for the petitioner
submits that the petitioner is a registered
dealer, which is engaged in the business of
sale and purchase of scraps etc., against
which, proceedings under Section 74 of the
UPGST
Act
were
initiated
by
the