S/S P.C. Plastic vs. The Commissioner, Commercial Tax U.P

The present two revisions have been listed together and as the issue involved in both the revisions are interconnected, the same are being heard and decided by this common order.

The present revisions have been filed against the order dated 5.4.2019 passed by Commercial Tax Tribunal, Agra in Second Appeal Nos. 398 of 2018 and 446 of 2018 for the Assessment Year 2013-14. 3. The revision No. 239 of 2019 was admitted by this Court vide order dated 15.7.2019 on the following question of law:- "Whether the assessee was entitled to avail ITC arising on the purchase of defective/damaged plastic chairs against the sale of plastic chairs manufactured by the assessee (from such tax paid against damaged plastic chairs)?"

The revision No. 113 of 2020 was admitted by this Court vide order dated 23.11.2020 on the following questions of law:- "

Whether on the facts and circumstances of the case, the Commercial Tax Tribunal was legally justified in holding that Input Tax Credit is available only when the purchase goods have been sold in the same form and condition either within the State of U.P. or outside the State of U.P.?"

The only submission made by counsel for the revisionist is that the revisionist is working on a dual capacity one as purchase and sale of plastic chairs; and second as manufacturer of plastic chairs. During the year, the books of account as well as disclosed turn over have been accepted. The dispute is confined only to the claim of input tax credit made by the revisionist on purchase of plastic chairs which were not sold but used as scrap/raw material for manufacturing of new chairs. The authorities below have wrongly rejected the said claim on the basis of fact that the chairs so purchased, has not been sold in the same form and condition but have been turned into scrap. He submits that there is no such prohibition under Section 13 of the Act. He prays for allowing the revisions.

Per contra, learned Standing Counsel supports the order of the authority below and prays for dismissal of the revision. After hearing learned counsel for the parties, the Court has perused the record.

Admittedly, the revisionist is a registered dealer under the VAT Act. It is not in dispute that for manufacturing of plastic chairs, raw materials were used. Admittedly, the chair purchased by the revisionist were used as raw material after making the said chairs as scrap on which the tax were already paid. The authorities have made RITC on the ground that the purchased chair have not been sold in the same form and condition. The authoritie have lost sight of the fact that the 3 revisionist is manufacturer of plastic chair as well as trader also. It is not in dispute that the plastic chairs which were purchased after payment of tax have been used for manufacturing of plastic chair. Once this fact has not been disputed, the authorities were not justified in reversing the ITC of the revisionist.

Section 13 (1) (A) of the Act provides tables as under:- “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, 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

After perusal of the table of clause 2 of the above mentioned Section which specifically provides that if the purchased goods are used in manufacturing of any taxable goods except non VAT goods and thereafter if, such manufactured goods are sold either inside the State or in the course of interstate trade or commerce, the full amount of input tax has to be given.

Admittedly, respondents dealer after purchase of chair used the same in manufacturing of new chair, then as per the above mentioned provisions/serial no. 2 of the table entitles full input tax credit to it. The said claim of ITC has wrongly been denied.

Learned Standing Counsel could not show any such restrictions provided under the Act that on the activity of the revisionist there is such prohibition for reversal of input tax credit. In absence of such a provision being pointed out by learned Standing Counsel, the revisionist is entitled for claim of its input tax credit on the purchase of its use in the manufacturing of new chairs.

In view of the above, the revisions are allowed.

The order of the Tribunal is set aside.

The questions of law are answered accordingly. Order Date :- 13.4.2022 Shiraz Judicature at Allahabad