2010 (4) TMI 902 - HC - VAT and Sales Tax

Entitlement for input tax rebate - petitioner contended that he has purchased the jungle wood and plywoods from the registered dealer who are having TIN numbers & it is not his concern whether the said dealer has remitted the amount to the Government or not - Held that - Under Section 10-4 of the Act, no deduction for input tax shall be made unless a tax invoice, debit note or credit note, in relation to a sale has been issued in accordance with Sections 29 or 30 and is with the registered dealer taking deduction at the time any returns in respect of sale is furnished. As the said six dealers have not filed any declarations nor remitted the tax collected from the petitioner-firm. Further it is clear from the records that the petitioner-firm has not produced any materials to show that the dealers with whom the petitioner has made transaction have remitted the tax collected from him though the petitioner has been making transaction with the said firms for the last more than three years. In order to gain the input tax rebate, the petitioner has produced the bogus tax invoices. Hence, the petitioner is not entitled to claim input tax rebate. Further, the petitioner-firm has not furnished reliable and proper information about the existence of the above said six dealers. The whereabouts of the said dealers was also not made known to the Department. Under Section 70 of the Act, the duty is cast upon the petitioner to prove that the said dealers have remitted the said amount to the State Government. Hence it is clear that the petitioner-firm has purchased the jungle wood from the bogus dealers who had TIN number without authority of law. The purchase was effected by the petitioner after the date of de-registration under the KVAT Act, hence the petitioner is not entitled to claim input tax rebate. Hence, the petitioner is liable to pay the penalty as provided under Section 72(2) of the Act and interest under Section 36 of the Act - against the assessee.

Summary

Issues:
Entitlement to input tax rebate under Section 10 of the Karnataka Value Added Tax Act, 2003 based on transactions with unregistered dealers.

Analysis:
The petitioner contended that despite purchasing goods from registered dealers with valid tax invoices, the Assessing Authority denied input tax rebate as the dealers were unregistered and failed to remit tax to the government. The petitioner argued that the responsibility lies with the government to collect tax from dealers and penalizing the petitioner is unjust. The petitioner highlighted Sections 10(4) and 11 of the Act, emphasizing that the Act does not bar claiming input tax rebate based on transactions with unregistered or canceled dealers without due process. The petitioner also argued that dealer registration cancellation procedures were not followed in this case.

The respondent argued that the petitioner purchased goods from de-registered dealers who did not remit tax collected, making the petitioner ineligible for input tax rebate. The respondent emphasized the burden on the dealer to prove tax payment or assessment for claiming rebate, as per Section 70(1) of the Act. The respondent stressed that unless tax is remitted to the government, the dealer cannot claim input tax rebate, as per Section 10(4) requirements.

The court examined the petitioner's transactions with de-registered dealers for jungle wood purchases. It was found that the dealers did not remit tax collected, and the petitioner used fake invoices to claim input tax rebate. The court noted that the burden of proof lies with the dealer, and in this case, the petitioner failed to demonstrate tax remittance by the de-registered dealers. The court concluded that the petitioner's reliance on the judgments cited was not applicable to the case, as the dealer de-registration was not challenged. The court upheld the orders disallowing input tax rebate, dismissing the revision petitions.

In summary, the judgment addressed the issue of entitlement to input tax rebate under the Karnataka VAT Act based on transactions with unregistered dealers. The court upheld the denial of rebate as the petitioner failed to prove tax remittance by de-registered dealers, emphasizing the burden of proof on the dealer and compliance with statutory requirements for claiming input tax rebate.