Madhukesh G Associates Vs Commissioner Commercial Tax (Allahabad High Court)
The revision was filed against the Commercial Tax Tribunal’s order dated 13.07.2023 concerning assessment year 2017–18. The High Court admitted the revision on two questions: whether the Tribunal was correct in denying refund of ITC on capital goods under Rule 24(a) of the UP VAT Rules despite the transition to GST from 01.07.2017, and whether the Tribunal’s order remained sustainable in light of a cited Madras High Court judgment.
The revisionist argued that ITC on capital goods amounting to ₹3,84,730 was not allowed in the assessment order dated 28.06.2021. Although an application under Section 31 was partly allowed, the first appellate authority rejected the claim for refund of ₹4,89,260 relating to capital goods, reasoning that ITC could not be carried forward after GST implementation. The second appeal was dismissed. It was contended that Rule 24(a) permitted ITC on capital goods to be availed in three equal instalments in subsequent years, but because GST commenced on 01.07.2017, the accumulated ITC could no longer be availed, making refund the only remedy.
The State argued that the ITC scheme allowed utilisation in three instalments in later years and did not provide for refund of ITC on capital goods. It was submitted that the petitioner was not seeking to utilise ITC but seeking a refund, which was not contemplated under the VAT Act. Moreover, the petitioner failed to file TRAN-1 under GST transition provisions, and without doing so, ITC could not be carried forward.
