2015 (12) TMI 182 - HC - VAT and Sales Tax

Disaollowance of Input tax credit - appellant failed to produce original purchase invoices and VAT C4 certificates before the respondent during the assessment proceedings. The invoices in possession of the appellant did not have its name, TIN number mentioned by the seller on them at the time of issue which is mandatory requirement under Rule 54 of the Haryana Value Added Tax Rules, 2003 - Held that - The non mentioning of the buyer s name or TIN number as it is issued by the seller cannot be taken to be fatal against the buyer and benefit of input tax credit declined to the buyer on that basis alone. The purpose of incorporating Rule 54(3) of he HVAT Rules is to safeguard the interest of the revenue from non-genuine transactions. It is procedural in nature and does not confer any substantive right. In the event of non-mentioning of the name and TIN No. of the buyer, a heavy onus is cast on the said dealer to produce material to discharge the said onus by producing other sufficient evidence to show that the transaction was genuine and it had made payment of VAT to the seller. Moreover, it is not within the control of the purchaser to ensure that the tax invoice contains his name and TIN No. as it is issued by the seller. Unless a mandatory duty is cast on the seller to issue tax invoice with such particulars, the purchasers cannot be penalized for no fault of theirs. Assessing Officer was not justified in declining the benefit of input tax credit only on the ground that the tax invoices did not contain the name of the buyer and also its TIN number. No doubt, non mentioning of the name and the TIN number can be a circumstance, but it cannot be held to be conclusively against the purchaser. The judgment cited by learned counsel for the State in Babu Verghese s case (1999 (3) TMI 628 - SUPREME COURT) was different. The question involved therein was validity of extension granted by the Bar Council of India to existing members of Kerala Bar Council (KBC) under proviso to Section 8 of the Advocates Act, 1961 and consequent validity of elections held by KBC during the extended term. - Matter remanded back - Decided in favour of assessee.

Issues Involved:

1. Whether the Haryana Tax Tribunal erred in rejecting the appeal without deciding the substantive issues.
2. Whether the authorities below passed contradictory orders regarding the production of documents.
3. Whether the Tribunal failed to provide an opportunity to avail statutory benefits.
4. Whether the Tribunal neglected to adjudicate the issue of limitation.
5. Whether the statutory notice in Form N.2 was barred by limitation.
6. Whether the Tribunal should have remanded the case for fresh decision.

Issue-wise Detailed Analysis:

1. Rejection of Appeal by Haryana Tax Tribunal:
The appellant argued that the Haryana Tax Tribunal, being the apex fact-finding authority, rejected the appeal without addressing the substantive issues. The Tribunal's decision to dismiss the appeal without proper adjudication on the merits was challenged as arbitrary and unjust.

2. Contradictory Orders by Authorities:
The appellant contended that the assessing authority disallowed the claim for input tax credit citing the non-production of original purchase invoices and VAT C4 certificates, despite the appellate authority entertaining such documents. The Tribunal's subsequent orders were seen as contradictory, failing to reconcile these discrepancies.

3. Opportunity to Avail Statutory Benefits:
The appellant argued that the Tribunal's order denied them the opportunity to avail statutory benefits. The Tribunal did not provide a fair chance to the appellant to rectify procedural lapses and submit the necessary documents, which was seen as a denial of justice.

4. Adjudication of Limitation Issue:
The appellant raised the issue of limitation, arguing that the Tribunal failed to adjudicate whether the statutory notice in Form N.2 was barred by limitation. This procedural oversight was seen as a critical flaw in the Tribunal's order.

5. Validity of Statutory Notice in Form N.2:
The appellant questioned the validity of the statutory notice in Form N.2, arguing it was barred by limitation. The Tribunal's failure to address this issue was seen as a significant lapse.

6. Remanding the Case for Fresh Decision:
The appellant argued that the Tribunal should have remanded the case for a fresh decision, especially given that similar cases had been remanded by the Full Bench of the Haryana Tax Tribunal. The Tribunal's refusal to do so was seen as inconsistent and unfair.

Detailed Analysis:

Facts and Procedural History:
The appellant, a proprietorship concern engaged in the manufacturing and trading of stone materials, challenged the orders disallowing input tax credit for the assessment year 2003-04. The appellant purchased boulders from a registered dealer, M/s Faridabad Gurgaon Minerals Limited, and claimed input tax credit based on invoices issued by the seller. The assessing authority disallowed the input tax credit due to the non-submission of original purchase invoices and VAT C4 certificates. The appellate authority and the Tribunal upheld this decision, leading to the present appeals.

Arguments by Appellant:
The appellant argued that the transactions were genuine, and the tax charged by the seller and paid by the purchaser was undisputed. The appellant contended that it was the seller's duty to issue invoices with the buyer's name and TIN number, and the denial of input tax credit due to the seller's failure was unjustified. The appellant relied on several judgments to support their claim that procedural lapses by the seller should not penalize the buyer.

Arguments by Revenue:
The revenue argued that the tax invoices did not contain the buyer's name and TIN number, which was a mandatory requirement under Rule 54 of the Haryana Value Added Tax Rules, 2003. The revenue relied on the judgment in Babu Verghese vs. Bar Council of Kerala to support their position.

Court's Analysis:
The court examined the relevant statutory provisions, including Section 2(w), Section 2(zl), Section 8(2), Section 28(2) of the HVAT Act, and Rule 54(3) of the HVAT Rules. The court noted that the purpose of Rule 54(3) was to safeguard revenue interests and was procedural in nature. The court held that the non-mentioning of the buyer's name and TIN number by the seller could not be fatal against the buyer if the buyer could prove the genuineness of the transaction.

Conclusion:
The court concluded that the assessing officer was not justified in declining the input tax credit solely on the ground that the tax invoices did not contain the buyer's name and TIN number. The court remanded the matter to the assessing officer to reconsider the case, allowing the buyer to justify the genuineness of the transaction with additional evidence. The impugned orders were set aside, and the appeals were disposed of accordingly.

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