2016 (7) TMI 36 - HC - VAT and Sales Tax

Disallowance of input tax credit to the petitioner on purchases - registration certificate of the supplier was cancelled with retrospective effect from 01.01.2007 - 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. Moreover, even on merits, for the reasons recorded hereinabove, the court is of the view that the impugned order passed by the Tribunal cannot be sustained. - credit allowed - Decided in favor of petitioner.

Summary

Issues involved:
1. Disallowance of input tax credit to the petitioner on purchases made from a canceled registration certificate holder.
2. Jurisdiction of the revisional authority in disallowing input tax credit without proper evidence.
3. Validity of the revisional proceedings initiated against the petitioner.
4. Comparison of facts between the present case and a previously allowed Special Civil Application.

Detailed Analysis:
1. The central issue in this case revolves around the disallowance of input tax credit to the petitioner on purchases made from a canceled registration certificate holder. The Tribunal had confirmed additional tax liability but deleted the penalty and additional interest. The petitioner challenged this order, arguing that the cancellation of input tax credit was unjustified.

2. The petitioner contended that the revisional authority did not establish that the transactions were not genuine or bogus. The Division Bench in a similar case had held that input tax credit cannot be denied without proof of transaction genuineness. The petitioner was not asked to provide evidence, yet the revisional authority concluded collusion for tax evasion without proper basis. The Tribunal disregarded documentary evidence and failed to address jurisdictional issues raised by the petitioner.

3. The petitioner highlighted the lack of justification for initiating revisional proceedings without proper jurisdiction. The court found the revision proceedings were unjustified as they were based on external material not part of the official record. Moreover, the Tribunal's order was deemed unsustainable on merits, leading to the quashing of the additional tax liability and interest imposed on the petitioner.

4. The comparison with a previously allowed Special Civil Application emphasized the inconsistency in handling similar cases. The court noted the lack of justification between the facts of the two cases, leading to the disposal of the present petition in favor of the petitioner. The Tribunal's order dated 15.07.2015 was set aside concerning the petitioner, granting input tax credit and relieving them from tax and interest liabilities.

Overall, the judgment focused on the procedural and substantive aspects of disallowing input tax credit, emphasizing the necessity of proper evidence and jurisdiction in tax-related matters. The court's decision favored the petitioner, highlighting the importance of fair treatment and adherence to legal principles in tax dispute resolutions.