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2023-TIOL-158-SC-VAT-LB
Modi Naturals Ltd Vs CCT
VAT - Deputy Commissioner took the view that in terms of Section 13(1)(f), the assessee could have availed the ITC on the inputs only vis-à-vis the taxable sales, as the sale price of the final goods was lesser than the manufacturing cost of the purchased goods; that the term "goods" in Section 13(1)(f) of the UP VAT Act means only the taxable goods - High Court formulated the following substantial question of law for its consideration: "Whether under the facts and circumstances of the case, the Commercial Tax Tribunal was legally justified in granting the benefit of ITC of Rs. 1,90,88,763.00 which was reversed by the Assessing Authority?" and by relying on the decision of this Court in the case of State of Karnataka v. M.K. Agro Tech Private Limited , reported in - 2017-TIOL-359-SC-VAT took the view that a dealer has no vested right to seek the benefit of ITC as the same is just a concession by virtue of the provisions of the Act; that the assessee is not entitled to claim full ITC on the inputs and accordingly allowed both the revision applications filed by the revenue - Therefore, the present appeals by the assessee.
Held : The legislative intent was never to limit or circumscribe the scope of "goods" as outlined in Section 13(1)(f) to only "taxable goods" - The mischief that was sought to be addressed by virtue of introducing Section 13(1)(f) to the scheme of the UP VAT Act was one where the goods (including taxable, exempt goods, by-products or waste products) manufactured were being sold at a price lower than the cost price - Had the legislative intent of the 2010 Amendment been to limit the scope and ambit of "goods" under Section 13(1)(f) solely to "taxable goods", there was nothing that could have prevented the Legislature from expressly using the phrase "taxable goods" in Section 13(1)(f) of the UP VAT Act - It is well accepted that a statute must be construed in accordance with the intention of the Legislature and the courts should act upon the true intention of the Legislation while applying law and while interpreting law - Applying the principles of interpretation, Bench finds it difficult to accept the case put up by the revenue as doing so would permit the assessing authority to do something indirectly what he cannot do directly i.e., get around the mandate of the exception carved out by Section 13(3)(b) read with Explanation (iii) by invoking Section 13(1)(f) of the UP VAT Act - High Court committed an error in passing the impugned judgment relying on the decision of this Court rendered in M.K. Agro Tech ( 2017-TIOL-359-SC-VAT ) - Both the appeals succeed and are hereby allowed - The impugned common judgment and order passed by the High Court of Allahabad is hereby set aside and the orders passed by the Commercial Tax Tribunal dated 04.05.2016 and 05.07.2017 are hereby restored: Supreme Court Larger Bench [para 27, 32, 36, 44, 69, 70, 71]
- Appeals allowed: SUPREME COURT OF INDIA
2023-TIOL-1487-HC-AHM-GST
KRBL Ltd Vs State of Gujarat
GST - Section 7 of the Insolvency and Bankruptcy Code, 2016 - By the impugned order dated 05.01.2022, the respondent no.3 has demanded an amount of Rs.56,01,79,095/- towards outstanding GST dues and mutated entry no.6295, inter-alia, recording a charge on the property, of the SGST Department. Hence, the petition.
Held : After a unanimous vote of the Committee of Creditors to liquidate the company, the NCLT Mumbai, on 12.02.2021 passed an order liquidating M/ s.Gran Electronics Private Limited - A public announcement was made on 19.02.2021 under Regulation 12 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016 - The petitioner on 26.10.2021 offered to bid for the land and building and made a deposit of EMD - On 29.10.2021, the petitioner was declared as a successful bidder and the balance amount was credited in the liquidator's account - A sale deed was executed on 17.12.2021 and a sale certificate was issued by the liquidator of GEPL - There was a clear stipulation thereunder that the purchaser i.e. the petitioner will not be responsible to pay any due amount to the government since the same would fall under the waterfall mechanism and will be dealt with in the manner specified in Section 53(1) of IBC, 2016 - The Supreme Court in the case of Ghanshayam Mishra and Sons Private Limited [ (2021) 9 SCC 657 ], after an extensive review of the IBC and various decisions rendered thereunder, observed that once the resolution plan is approved, it becomes binding on the stakeholders including creditors - Since the revenue record showed a charge of the State Tax Department, the Liquidator addressed a letter on 22.04.2022 to the office of the Deputy Commissioner (SGST) - This letter was addressed in pursuance of a letter dated 05.01.2022 of the office of the Deputy Commissioner (SGST) demanding a sum of Rs.56,01,79,095.00 and mutating entry 6295 recording a charge – What, therefore, emerges is that on the facts of the present case the CIRP was undertaken - Claims were invited and the State during the process failed to substantiate it and at the stage of liquidation did not lodge its claim - In light of the judicial pronouncement, the debt, therefore, did not form a part of the resolution plan and, therefore, stood extinguished - In the facts of the present case having failed to assert its claim, the State as an operational creditor/stakeholder/secured creditor would have to fall in line as per the "waterfall mechanism" under Section 53 of the IBC -Once having relinquished its interest under Section 52, the State cannot continue the insistence of maintaining the charge in the revenue records and its claim will have to stand in priority - The argument of the State that since the asset was sold on a condition of "AS IS WHERE IS BASIS", the charge of the State was rightly recorded is misconceived as the deed already records that the purchaser shall not be liable for payment of any outstanding dues of the government - In light of the decision in the case of Ghanshayam Mishra and Sons Private Limited (supra), the petitioner was entitled to a clean slate - Even otherwise, as per Section 100 of the Transfer of Property Act, a charge cannot be enforced against any property in the hands of a person to whom such property has been transferred for consideration and without notice of such charge - The State moved in to get a charge registered on 15.12.2022 much later - For the aforesaid reasons, petition is allowed - The order dated 05.01.2022 is set aside and so also is the consequential entry no.6295 mutated in the revenue record - The respondents are directed to certify entry No.4454 in the revenue records pursuant to the sale of land in question by registered sale deed dated 17.12.2021: High Court [para 5.4, 5.5, 5.6, 5.7, 5.8, 5.13, 5.14, 5.16, 5.18, 5.19, 5.20, 6]
- Petition allowed: GUJARAT HIGH COURT |
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