THE COMMISSIONER COMMERCIAL TAX LKO.versusS/S KANOHAR ELECTRICALS LTD.

                                                         Reserved on : 03.09.2026
                                                         Delivered on :15.09.2026




           HIGH COURT OF JUDICATURE AT ALLAHABAD
        SALES/TRADE TAX REVISION No. - 73 of 2015
The Commissioner Commercial Tax Lko.
                                           …..Revisionist(s)

                                     Versus

S/S Kanohar Electricals Ltd.
                                                             …..Opposite Party(s)

Counsel for Revisionist(s)             : S.C., S.c..
Counsel for Opposite Party(s)          : Suyash Agarwal

Court No. - 7

              HON'BLE PIYUSH AGRAWAL, J.

1. Heard Sri Bipin Kumar Pandey, learned Chief Standing Counsel for
the revisionist and Sri Rakesh Ranjan Agarwal, learned Senior Advocate
assisted by Sri Suyash Agarwal, learned counsel for opposite party.

2. The present revision has been filed against the order dated 30.08.2014
passed by the Commercial Tax Tribunal, Meerut in Second Appeal No.
207 of 2013 for Assessment Year 2009-10 arising out of proceedings
initiated under U.P. V.A.T. Act. The present revision was admitted by
this Court vide order dated 10.03.2015 on the following question of law:

“(I) Whether under the facts and circumstances of the case, the Commercial Tax
Tribunal was legally justified in allowing the exemption non the amount of credit as
claimed by the dealer whereas the sale invoice did not disclose any credit amount
rather the same was received after completion of the sale transaction?”

3. Learned counsel for the revisionist submits that the respondent is
carrying on the business of manufacture and sale of transformers and its
parts. While framing the assessment order, the claim of exemption in
respect of the credit note was rejected by the Assessing Authority,
against which a first appeal was filed, which was dismissed. Thereafter,
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the respondent filed a second appeal, which has been allowed contrary
to the provisions of the Act.

4. Learned Additional Chief Standing Counsel submits that the Tribunal,
being the last court of fact, without verifying or reversing the findings of
fact recorded by the Assessing Authority and confirmed by the first
appellate authority, has allowed the appeal. He further submits that, as
per Section 21 read with sub-Rules 14 and 15, the respondent, after
issuing a credit note to the purchasing dealer, was required to obtain a
debit note from the purchaser and the same ought to have been shown in
the next quarterly or monthly return, as the case may be. However, the
Tribunal, without recording any finding in this regard, has allowed the
revision.

5. Per contra, Shri Rakesh Ranjan, learned Senior Counsel for the
respondent supports the impugned order and submits that the benefit of
credit note has rightly been allowed. If the same is not allowed, the
amounts to double levied which is never intent of the provision of the
UP VAT Act. He further submits that the Tribunal being a last court of
fact and law has recorded a finding of fact in the favor of respondent
holding that the rate was fixed by the Indian Technical and Industrial
Manufacture Association fixes the rate which is fixed letter after the
issuance of invoice.

6. In support of his submission, he relies upon the judgment of this
Court in the case of M/s Parishudh Machines (P) Ltd. Ghaziabad v.
Commissioner of Trade Tax, U.P., Lucknow, 2007 NTN (Vol. 34)– 276;
Commissioner, Commercial Tax, U.P. Lko., v. Kesho Ram and Sons,
Ahmad Bagh, Saharanpur, 2015 NTN (Vol. 58)-355; and The
Commissioner Commercial Tax v. M/S Ashish Traders v. M/S Ashish
Traders, passed in Sales/Trade Tax Revision Defective No.127 of 2014
decided on 08.12.2014 and further, he relies upon the circular dated
16.07.2012 issued by Commissioner of Commercial Tax and submits
that no RITC can be done where the rate note has been issued. He
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further submits that the circular of binding upon the department
authorities, he praised for dismissal of the revision.

7. Rebutting the said submission, learned Additional Chief Standing
Counsel submits that the present case does not pertain to RITC and,
therefore, the benefit of the circular cannot be extended to the
respondent.

8. After hearing the learned counsel for parties, Court has perused the
record.

9. The record shows that, while framing the assessment order, the
Assessing Authority specifically recorded a finding that, after issuance
of the credit note, no debit note had been obtained from the purchasing
dealer as required under Section 21 read with sub-Rules 14 and 15 nor
was the same reflected in the subsequent monthly or quarterly returns.
Therefore, the benefit of the credit note was not accorded to the
respondent.

10. The said finding was affirmed by the first appellate authority. In the
second appeal, however, the Tribunal, for the first time, accepted the
version of the respondent-dealer, holding that “व्यापारी द्वारा के ताओं से बिकी के
सम्बन्ध में जो संविदायें की गयी है उनपर विचार करने पर यह पाया गया कि बिकी हेतु निर्धारित शर्तों मे
एक शर्त यह थी कि माल की कीमत इं डियन इलैक्ट्रिक एवं इलेक्ट्रोनिक मैन्युफै क्चरिंग एसोशियशन द्वारा
निर्धारित मानक / फार्मूले के अनुसार होगा। इस प्रकार से बिल जारी करते समय माल का वास्तविक मूल्य
तय नहीं हुआ था, बल्कि बाद में तय हुआ है। इस प्रक्रिया को एकाउन्ट फार करने हेतु के डिट नोट् स जारी
हुआ। अतः स्पष्ट है कि माल का बिकी मूल्य बिल में अंकित मूल्य में क्रे डिट नोट् स का समायोजन के
उपरान्त जो राशि प्राप्त होगी, वही बिकी मूल्य होगा।”.

11. Further, the Tribunal has recorded that the petitioner had entered into
an agreement with its purchaser, on the basis of which the rate was to be
determined at a later stage. The said fact was brought forward by the
respondent for the first time before the Tribunal. Neither the date of the
alleged agreement has been mentioned nor has any material been
brought on record to show how the rate was to be determined under the
said agreement. Further, the record does not disclose when the credit
note was issued or whether any debit note was received from the
purchaser as required under Section 21 read with sub-Rules 14 and 15.
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                            The Tribunal has also failed to record any finding as to whether the
                            dealer had disclosed the said fact and the issuance of the credit note in
                            the subsequent returns. In the absence of compliance with these vital
                            requirements prescribed under the provisions of the Act, the Tribunal
                            was not justified in allowing the claim of the respondent-dealer in
                            respect of the credit note.

                            12. In view of the peculiar facts stated above, the judgment relied upon
                            by the respondent is of no aid to it. Furthermore, the circular issued by
                            the Commissioner is also of no aid to the respondent, as the present case
                            does not relate to RITC. The circular specifically stipulates that where
                            the amount of tax has been deposited and no benefit is derived from the
                            issuance of a credit note, proceedings for RITC should not be initiated.
                            Since the issue at hand does not concern RITC, the said circular does
                            not aid the respondent dealer.

                            13. The Tribunal, being the final court of fact, ought to have set aside
                            the findings of the assessing authority as well as the first appellate
                            authority. Without reversing the findings of fact recorded against the
                            dealer, the impugned order cannot be sustained.

                            14. In view of above, the revision is allowed. The impugned order is set
                            aside.

                            15. The substantial question of law is answered accordingly in favour of
                            the revisionist and against the opposite party.




                                                                                 (Piyush Agrawal,J.)


                            September 15, 2026
                            A.N. Mishra




Digitally signed by :-
AMARNATH MISHRA
High Court of Judicature at Allahabad