UP VAT Act | Assessee Entitled To Claim Full Input Tax Credit On Exempted Goods Produced As By-Products Or Waste Products During Manufacturing Of Taxable Goods: Supreme Court
Case: Modi Naturals Ltd v The Commissioner of Commercial Tax UP
Coram: Chief Justice Dr. Dhananjaya Y. Chandrachud, Justice J.B. Pardiwala and Justice Manoj Misra
Case No.: CIVIL APPEAL NO(S). 5822-5823 OF 2023
Court Observation: “Section 13(3)(b), however, leaves a grey area with respect to cases where the process of manufacture (such as in the present case) results in the production of VAT goods and by-products or waste products. In such cases, the legislature has done well to take care of the grey area by providing for another legal fiction in the form of Explanation (iii) to Section 13 wherein it is provided that during the manufacture of any taxable goods, any exempt goods are produced as by-product or waste product, it shall be deemed that the purchased goods have been used in the manufacture of taxable goods.”
“Explanation (iii) to Section 13, therefore, forbids the Assessing Authority as well as the assessee from raising any dispute in regard to the allowability of the ITC in cases where exempted goods are being produced as a by-product or waste product during the process of manufacture.”
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Keywords
UP VAT Act, Taxable Goods, Supreme Court
