Commissioner Commercial Tax Vs Ravi Prakash Rahul Prakash (Allahabad High Court)
Allahabad High Court has ruled that Goods and Services Tax (GST) input tax credit (ITC) cannot be claimed on closing stock originating from the Uttar Pradesh Value Added Tax (UPVAT) regime if the goods were not sold under UPVAT before the introduction of GST. This decision came in the case of Commissioner Commercial Tax Vs. Ravi Prakash Rahul Prakash, where the court overturned a Commercial Tax Tribunal order that had granted the benefit of ITC to the dealer.
The core of the dispute revolved around the transitional provisions from the UPVAT Act to the GST Act, specifically concerning the eligibility of ITC on closing stock. The revisionist, the Commissioner Commercial Tax, argued that the issue was directly covered by an earlier High Court decision in The Commissioner, Commercial Tax, UP Vs. S/S Janki Industries Nai Basti, Bareilly (Neutral Citation No. 2025:AHC:42271). In S/S Janki Industries, the court had ruled in favor of the revenue, stating that ITC could only be availed on goods that were re-sold as taxable sales under Section 13 of the VAT Act. If the purchased goods were not re-sold, ITC could not be accorded.
The opposite party, Ravi Prakash Rahul Prakash, contended that the S/S Janki Industries judgment required reconsideration. Their counsel argued that it was based on M/s Farooq Agencies Vs. Commissioner of Commercial Tax (Sales / Trade Tax Revision No. 397/2013 decided on 16.7.2013), a case they claimed was factually distinct and pertained to the Trade Tax Act regarding development cess, where the court allegedly imposed an additional condition not contemplated under Section 18 of the Trade Tax Act.
