2016 (6) TMI 906 - HC - VAT and Sales Tax

Disallowance of input tax credit in revision proceedings to the petitioner on purchases made from one M/s. Om Incorporation whose registration certificate was cancelled with retrospective effect from 01.01.2007. - GVAT - Held that - the very initiation of the revisional proceedings was itself without jurisdiction inasmuch as the same was based upon material extraneous to the record of order of the officer appointed under section 16 of the Act to assist the Commissioner - Decided in favor of assessee.

Summary

Issues involved:
Challenge to order passed by Gujarat Value Added Tax Tribunal regarding disallowance of input tax credit on purchases made from a canceled registration certificate holder.

Analysis:
The central issue in this case revolves around the disallowance of input tax credit to the petitioner on purchases made from a company whose registration certificate was canceled with retrospective effect. The petitioner challenged the order passed by the Gujarat Value Added Tax Tribunal, which partially allowed the revision application, confirming additional tax liability but deleting the penalties levied. The petitioner contended that the Tribunal's decision was unjust as it did not establish that the transactions were not genuine or bogus. The petitioner argued that they were not given the opportunity to prove the genuineness of the transactions and that the Tribunal relied on external material rather than the record. The Division Bench in a similar case had allowed input tax credit, emphasizing that the burden of proof lies with the department to show transactions are not genuine. The court found that the revisional proceedings were initiated without jurisdiction and that the Tribunal's order could not be sustained. Consequently, the court quashed the Tribunal's order, allowing the petitioner's claim for input tax credit.

The learned counsel for the petitioner highlighted that in a similar case decided by the Division Bench, input tax credit was allowed as the department failed to prove the transactions were not genuine. The court emphasized that the burden of proof lies with the department to establish the transactions' genuineness. The petitioner had produced documents supporting the transactions, which were disregarded by the Tribunal. The court found that the Tribunal's reliance on external material and failure to address the lack of jurisdiction issues raised by the petitioner rendered the revisional proceedings unjust. Consequently, the court quashed the Tribunal's order, allowing the petitioner's claim for input tax credit.

In the absence of justification between the facts of the two cases, the court disposed of the petition, setting aside the Tribunal's order against the petitioner. The court emphasized the importance of establishing the genuineness of transactions and the burden of proof resting with the department. The court found that the Tribunal's reliance on external material and failure to address jurisdictional issues rendered the revisional proceedings unjust. As a result, the court allowed the petitioner's claim for input tax credit, quashing the Tribunal's order.