The Allahabad High Court Upholds ITC reversal on lubricants for traders under the Uttar Pradesh Value Added Tax Act ( UP VAT ), 2008.
The revision petition was filed by the petitioner, SBW Udoyg Ltd. against the impugned order passed by the Commercial Tax Tribunal, Allahabad, for the Assessment Year 2013-14 under Section 28 ( 2 ) of the Uttar Pradesh Value Added Tax Act ( UP VAT ), 2008.
It was submitted by the revisionist’s counsel that the revisionist was engaged in manufacturing and selling various goods, including lubricants. The dispute concerns the reversal of input tax credit ( ITC ) on lubricants. Due to a notification dated 10-01-2024, which classified the lubricants as VAT goods in the hands of the manufacturer or importer, the department claimed ITC reversal of lubricants and directed the applicant to deposit Rs. 29.81 lakhs. Later on, the assessment order was passed on 30.01.2016, reversing the amount of Rs. 29,81,445 from the total ITC earned.
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Although the applicant had appealed before the Commercial Tax Tribunal, it was dismissed.
The applicant’s counsel submitted that the revisionist had rightly claimed the ITC reversal, as when the lubricant was purchased, it was a VATable good as it was purchased before the notification, which stated that lubricants are non-VAT goods for traders.
The department’s counsel submitted that by virtue of Section 13( 1 )( a ) of the VAT Act, the revisionist has wrongly availed ITC on goods that have become non-VAT.
The High Court, after referring precedents, held that once the lubricant became a taxable item at the hands of the manufacturer and importer, it became non-VATable good for the trader.
The bench also observed that the revisionist has not challenged the validity of the circular dated 17.01.2014 before any competent court, and under the revisional jurisdiction, the validity of the circular cannot be tested.
Justice Piyush Agarwal dismissed the revision petition.
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