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2021 (7) TMI 383 - HC - VAT and Sales TaxInput Tax Credit - certain purchases made from M/s Ashapura Metal Corporation and JAS Modular Systems - Financial Year 2014-15 - VAT short paid by selling dealer - HELD THAT - The claim of the revenue that the goods purchased by the appellant could not have been transported by the vehicle is of no consequence, since the transaction is completed and a postmortem cannot now be resorted to verify whether the items were in fact transported by the conveyance or not? In that view of the matter, having regard to the various provisions under the Act which permits the revenue to pursue the selling dealers through various mode to recover the VAT collected including and not limited to initiating criminal proceedings against the selling dealers. There are no justification in the revisional authority exercising jurisdiction to upset the findings of the First Appellate Authority. The appellant is entitled to ITC for the purchases made by it from M/s Ashapura Metal Corporation and JAS Modular Systems during the Financial Year 2014-15 - Appeal allowed.
Issues:
Challenge to disallowance of Input Tax Credit (ITC) by Revisional Authority for purchases made from specific dealers in the Financial Year 2014-15. Detailed Analysis: 1. Issue of Disallowed ITC: - The appellant challenged the disallowance of ITC by the Revisional Authority for purchases made from M/s Ashapura Metal Corporation and JAS Modular Systems in the Financial Year 2014-15. - The prescribed authority disallowed ITC due to a mismatch in turnover and monthly returns of the selling dealers, leading to reversal of ITC amounts, interest, and penalties. - The First Appellate Authority ruled in favor of the appellant, stating that the appellant conducted business diligently and fulfilled its tax obligations to the selling dealers. - The Revisional Authority, however, held that ITC cannot be claimed if the tax collected by the selling dealer is not remitted to the Government, and questioned the legitimacy of the transactions and burden of proof on the appellant. 2. Arguments and Findings: - The appellant argued that verifying the tax deposit by the selling dealer was impractical and beyond their duty, emphasizing compliance with registration and transaction norms. - The Revisional Authority suspected the transactions' authenticity, citing discrepancies in E-sugam details and vehicle transport feasibility, rejecting the online cheque payments as proof of genuine transactions. - The appellant contended that pursuing selling dealers for tax remittance is the State's responsibility, referencing a similar ruling by the Court in a previous case (STRP No.82/2018). 3. Court's Decision: - The Court analyzed that the selling dealers were registered, issued proper invoices with VAT, and received payments from the appellant as per the invoices. - It held that if selling dealers failed to disclose VAT details, the revenue should pursue them for recovery, rather than penalizing the appellant. - The Court emphasized that due diligence for ITC eligibility is limited to verifying dealer registration and transaction compliance, as ruled in a previous case (STRP No.82/2018). - Consequently, the Court allowed the appeals, setting aside the Revisional Authority's order and granting ITC to the appellant for the disputed purchases within a specified timeframe. This detailed analysis outlines the issues, arguments, findings, and the Court's decision regarding the challenge to the disallowance of Input Tax Credit by the Revisional Authority for specific purchases made in the Financial Year 2014-15.
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