2016 (12) TMI 1869 - HC - VAT and Sales Tax

Input tax credit - Respondent Assessee has not proved the transaction between it and M/s Mahesh Steel Centre M/s Rajahans Metals - whether the finding recorded by the Tribunal for the discharge of the burden by the assessee could be said as perverse to the record or not? - Section 70 of the KVAT Act - HELD THAT - Once the purchaser dealer-assessee satisfactorily demonstrates that while purchasing goods he has paid the amount of VAT to the selling dealer the matter should end so far as his entitlement to the claim input tax credit. If the selling dealer has not deposited the amount in full or a part thereof it would be for the Revenue to proceed against the selling dealer. But thereby the benefit of input tax credit cannot be deprived to the purchaser dealer. Petition dismissed.

Summary

Issues:
1. Condonation of delay in filing the petition.
2. Challenge to the order of the Karnataka Appellate Tribunal allowing input tax credit.
3. Questions of law raised by the State regarding the Tribunal's decision.
4. Burden of proof on the assessee for claiming input tax credit.
5. Examination of evidence by the Tribunal.
6. Entitlement of purchaser dealer to claim input tax credit even if selling dealer has not deposited VAT with the Government.

Analysis:
1. The petition sought condonation of a 22-day delay, which the court considered but decided to proceed to evaluate the merits of the petitions due to the facts and circumstances presented.

2. The petitions challenged the order of the Karnataka Appellate Tribunal, which had allowed the claim of the assessee as a purchaser dealer for extending the benefit of input tax credit.

3. The State raised questions of law regarding the Tribunal's decision, questioning the correctness of allowing the appeals and the application of relevant case law in determining the transaction covered under the KVAT Act.

4. The court noted that the key question for consideration was whether the Tribunal's finding on the discharge of the burden of proof by the assessee for claiming input tax credit could be deemed as perverse to the record.

5. The Tribunal had observed that the appellant had provided various documentary evidence to support the claim of deduction of input tax, including tax invoices, stock register, bank statements, and other relevant documents, which led to the conclusion that the burden of proof had been fully discharged by the assessee.

6. The court upheld the Tribunal's finding that the assessee had satisfactorily demonstrated the payment of VAT to the selling dealer, emphasizing that the entitlement to claim input tax credit should not be affected by whether the selling dealer had deposited the VAT with the Government. Any non-compliance by the selling dealer would be a matter for the Revenue to address separately.

In conclusion, the court dismissed the petitions as meritless, even after condoning the delay, as it found no adverse effect on the respondent. The judgment affirmed the entitlement of the purchaser dealer to claim input tax credit based on the evidence presented, regardless of the selling dealer's VAT compliance status.