2019 (6) TMI 450 - HC - VAT and Sales Tax

Input tax credit - Appellant has produced tax invoices and its recording in its books of account - the vendors of the Appellant had not filed their returns and/or had filed defective returns. - HELD THAT - We note that the impugned order of the Tribunal while confirming the order of the 1st Appellate-Authority has upheld the finding of fact arrived at by the 1st Appellate-Authority that the evidence of taxes have been paid by the vendors of the Appellant, were not forthcoming. It is pertinent to note that while referring to the list on Mahvikas (a site of Sales Tax Department, showing the filing of returns etc.), the original authority had found that some of the vendors of the Appellant had not filed their returns and/or had filed defective returns. This led to an independent search and enquiry by the 1st Appellate Authority and on being satisfied that taxes has been paid, it had granted relief. The attitude of the Assessee that it would make no efforts to have his vendors produce their records in the face of the finding of the authorities and claim that it is entitled to ITC as claimed, is not reasonable. This particularly so as ITC is not a matter of right but a concession. The impugned order of the Tribunal on the facts cannot be found fault with as it is not shown to be perverse. This being essentially a finding of fact which is not perverse, does not give rise to any substantial question of law - appeal dismissed.

Summary

Issues:
Challenge to disallowance of Input Tax Credit (ITC) by the Tribunal for the Financial Years 2005-06 and 2006-07.

Analysis:

1. The Appellant contested the disallowance of Input Tax Credit (ITC) by the Tribunal for the Financial Years 2005-06 and 2006-07. The primary question of law raised was whether the Tribunal was justified in disallowing the ITC despite the Appellant producing tax invoices and recording them in its books of account.

2. The Assessment Orders for the subject years resulted in the Appellant being assessed to pay significant amounts due to the disallowance of ITC. However, the 1st Appellate Authority modified the Assessment Orders, reducing the demand substantially after being satisfied that the Appellant had correctly claimed ITC to a certain extent by providing evidence through its Inspector.

3. Despite the relief granted by the 1st Appellate Authority, the Appellant was still aggrieved and appealed to the Tribunal seeking credit for the entire ITC claimed for the Financial Years 2005-06 and 2006-07.

4. The Tribunal, in its common impugned order, dismissed the appeals by the Appellant. It noted the efforts made by the 1st Appellate Authority to verify tax payments by the vendors of the Appellant, including deputing an Inspector and issuing letters to vendors individually. The Tribunal found that evidence of tax payments by vendors was not forthcoming in some cases, and the Appellant failed to provide evidence that vendors had deposited taxes into the Government treasury.

5. The Appellant's counsel argued that it is the Revenue's duty to verify vendors' tax filings and payments, not the Appellant's responsibility. However, the Tribunal upheld the findings of the 1st Appellate Authority that evidence of tax payments by vendors was lacking, and the Appellant's lack of effort to produce vendor records was unreasonable.

6. The Tribunal's decision was based on factual findings and not deemed as perverse. The Court emphasized that ITC is a concession, not a right, and upheld the Tribunal's order, concluding that no substantial question of law arose. Consequently, both appeals were dismissed.

In conclusion, the High Court upheld the Tribunal's decision to disallow Input Tax Credit based on the lack of evidence of tax payments by vendors, emphasizing the Appellant's failure to provide necessary documentation. The Court highlighted that ITC is a concession and not an absolute right, affirming the Tribunal's factual findings and dismissing the appeals.