Commissioner Vs S/S Vasu Steels (Allahabad High Court)
The revisions before the Allahabad High Court arose from a common judgment of the Commercial Tax Tribunal, Bench–II, Ghaziabad, which had allowed Input Tax Credit (ITC) to the dealer. Sales/Trade Tax Revision No. 118 of 2024 was treated as the lead case, relating to the Assessment Year 2006–07 under the Central Sales Tax Act. The High Court admitted the revisions on questions of law concerning whether ITC could be allowed when the selling dealer’s registration stood cancelled and when no details of transportation of goods were produced.
The Department contended that the Assessing Authority had rejected the ITC claim on clear findings that the transactions were merely paper transactions without actual movement of goods. It was further recorded that payments made by the purchasing dealer were returned by the evening of the next day, indicating circular movement of funds and absence of genuine trade. On these grounds, the Assessing Authority disallowed ITC. Although a first appeal was filed by the dealer, the appellate authority allowed the appeal without reversing the core factual findings recorded in the assessment order. The Department’s second appeal before the Tribunal was dismissed by the impugned order.
The High Court noted that the Tribunal allowed ITC solely on the basis that the transactions were made with a registered dealer. At the same time, the Assessing Authority had recorded findings that the selling dealers’ registrations were cancelled prior to the transactions and that payments were returned on the same day, demonstrating non-genuine transactions. These findings of fact were never reversed by the first appellate authority. Despite this, the Tribunal dismissed the Department’s appeal without addressing the material evidence on record.
