2015 (9) TMI 631 - HC - VAT and Sales Tax

Denial of input tax deduction Bogus or false invoices Respondent-Authority vide impugned order disallowed input tax deduction as claimed by petitioner on ground that invoices produced by petitioner was based on fake or duplicate invoices Held that - petitioner had claimed input tax credit however said claim was disallowed by after verifying records and finding that invoice which was relied upon by petitioner to claim input tax credit was bogus invoice or false invoice Burden was cast on assesse, to prove that claim for deduction of input tax was correct Assessing officer arrived at conclusion that input tax credit claimed by petitioner was based on false invoice even prior to extending opportunity to petitioner to prove otherwise Thus order required to be interfered Matter remitted back for being adjudicated by extending opportunity to petitioner Decided in favour of Assesse.

Summary

Issues:
Challenge to re-assessment orders under KVAT Act for assessment years 2010-11 and 2011-12 based on disallowed input tax credit claimed from specific suppliers.

Analysis:
The petitioner contested re-assessment orders dated 06.05.2014 under KVAT Act for the years 2010-11 and 2011-12, challenging the disallowance of input tax credit claimed from suppliers M/s.KRS Coco Products and M/s Agro Coconut products. The assessing officer found discrepancies in the suppliers' declarations, non-remittance of input tax credit to the government, and discrepancies in the invoices provided by the petitioner. The assessing officer concluded that the input tax credit claimed was not allowable as the invoices were false and did not comply with statutory provisions. The petitioner argued that they were not given a fair opportunity to substantiate the genuineness of the invoices, claiming compliance with statutory provisions like Section 10(4) and Section 29 of the Act.

The Court noted that the burden of proof lies with the assessee under Section 70 of the Act to demonstrate the correctness of the input tax claim based on prescribed documents. Despite the assessing officer's premature conclusion regarding false invoices, the Court found it necessary to remit the matter back for re-adjudication, emphasizing the importance of providing the petitioner with an opportunity to prove the legitimacy of the input tax credit claim. The Court directed the petitioner to deposit the disputed sums before the assessing officer within a week for re-examination of the disallowed credit. The reassessment proceedings were instructed to be completed promptly, within two weeks of the petitioner's appearance, without disturbing other findings under the impugned orders.

In conclusion, the Court allowed the writ petitions, setting aside the re-assessment orders and remitting the matter back to the assessing officer for re-adjudication of the input tax credit claims. The petitioner was granted the opportunity to prove the legitimacy of the claimed credits, emphasizing the importance of following statutory provisions and providing a fair hearing before disallowing such claims.