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2022 (1) TMI 444 - HC - VAT and Sales Tax


Issues:
Challenge to reassessment order under Section 66(1) of the Karnataka Value Added Tax Act, 2003 based on denial of input tax credit. Jurisdiction of revisional authority under Section 64(1) of the Act to set aside first appellate authority's order. Burden of proof on the appellant to establish genuineness of transactions. Examination of details of selling dealers to determine eligibility for input tax credit.

Analysis:
The appellant, a registered dealer under the Karnataka Value Added Tax Act, challenged a reassessment order denying input tax credit based on non-compliance by selling dealers. The first appellate authority partially allowed the appeal, but the revisional authority set aside this decision, questioning the genuineness of transactions. The appellant argued that the first appellate authority correctly allowed credit only for genuine transactions, and the revisional authority exceeded its jurisdiction. The Revenue contended that the first appellate authority's decision was erroneous, justifying the revisional authority's intervention.

The burden of proof rests on the appellant to establish transaction genuineness. Mere non-filing of returns by selling dealers does not automatically justify denying input tax credit unless transactions are proven fictitious. The first appellate authority should have scrutinized selling dealers' details regarding return filings and tax payments. Lack of clear reasons for denying credit to non-existing or deregistered dealers necessitates setting aside the orders and remanding the matter to the first appellate authority for reconsideration in light of legal precedents.

The judgment emphasized the importance of thorough analysis and clear reasoning in denying input tax credit, especially in cases involving non-compliant selling dealers. The decision highlighted the need for proper documentation and justification for disallowing credit, ensuring a fair and lawful assessment process. The judgment also referenced specific legal cases to guide the first appellate authority in making a well-founded decision. Ultimately, the appeal was allowed to the extent indicated, leaving all rights and contentions open for further proceedings.

 

 

 

 

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