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TMI Blog2015 (1) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... ged to have been purchased by them from the aforesaid vendors and therefore, it is held that there was no actual physical movement of the goods and therefore, the sale transaction is/are not genuine and it was only billing activities to defraud the government - Decided against petitioner assessee. Dismissal of appeal by JC on account of non-payment of pre-deposit - Whether the Tribunal was right in deciding the appeal when the Joint Commissioner had not passed the appeal on merits but dismissing it only for non-payment of pre-deposit – Held that:- The similar issue has been decided in RG SCRAP TRADERS Versus STATE OF GUJARAT [2015 (1) TMI 221 - GUJARAT HIGH COURT] wherein it was held that the Tribunal ought not to have entered into the merits of the case and / or decided the appeals on merits against the order of assessment - when the appellant made submissions on merits against the order of assessment as if the appeals before the Tribunal were against the order of assessment and when the Tribunal has dealt with and considered the same and decided the appeals on merits and when appellant has lost in the appeals on merits, thereafter it not open for the appellant now to make the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 86 of 2013 With CIVIL APPLICATION NO. 671 of 2013 In TAX APPEAL NO. 986 of 2013 With TAX APPEAL NO. 987 of 2013 With CIVIL APPLICATION NO. 672 of 2013 In TAX APPEAL NO. 987 of 2013 With TAX APPEAL NO. 1034 of 2013 With CIVIL APPLICATION NO. 684 of 2013 In TAX APPEAL NO. 1034 of 2013 With TAX APPEAL NO. 1087 of 2013 With CIVIL APPLICATION NO. 700 of 2013 In TAX APPEAL NO. 1087 of 2013 With TAX APPEAL NO. 1088 of 2013 With CIVIL APPLICATION NO. 701 of 2013 In TAX APPEAL NO. 1088 of 2013 MR. M.R. SHAH AND MR. R.P.DHOLARIA, JJ. MR MANISH K KAJI, ADVOCATE FOR THE APPELLANT MR JAIMIN GANDHI, ASSTT. GOVERNMENT PLEADER FOR THE RESPONDENT COMMON ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) [1.0] As common question of law and facts arise in this group of appeals and they arise out of the impugned common judgment and order passed by the learned Gujarat Value Added Tax Appellate Tribunal, Ahmedabad [hereinafter referred to as Tribunal ], all these appeals are decided and disposed of by this common judgment and order. [1.1] At the outset it is required to be noted that the learned Tribunal has considered Second Appeal No.451/2011 against which Tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quently, the genuine transactions on which tax credit was claimed in the year 2006-07, could not be disallowed merely because the registration certificate of the said vendor was cancelled retrospectively. [2.1] That the Deputy Commissioner on appreciation of evidence and documentary evidences produced on record did not accept the submissions made on behalf of the appellant and passed the assessment order under the Act on 11.02.2001. That in the said assessment order, the Deputy Commissioner disallowed the claim of input tax credit on the purchases of ₹ 2,84,153/made from one M/s. Mangal Enterprise holding registration No.24140503950 by specifically observing that the registration certificate of the said vendor has been cancelled ab initio as the said vendor is involved in billing activity. That in the said assessment order the Deputy Commissioner also disallowed the appellant s claim of input tax credit on the purchases of ₹ 5,69,03,694/made from M/s. Shree Bhavani Ispat, Bhavnagar also on the aforesaid ground. That the Deputy Commissioner raised demand of tax of ₹ 24,85,546/against the appellant. That the Deputy Commissioner also charged interest of ₹ 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of penalty and remanded the matter to the assessing authority to examine the issue of levy of penalty afresh by observing that Assessing Officer has not made any discussion nor he has explained as to why such exorbitant penalty is levied despite the fact that discretion is given to him to levy any penalty between the minimum as well as maximum. [2.4] Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Tribunal insofar as confirming the respective assessment order denying input tax credit claimed by the respective appellants, the appellants herein original appellants have preferred the present tax appeals with the following proposed substantial questions of law. 1. Whether in law and of facts of the case the Tribunal was right in deciding the appeal when the Joint Commissioner had not passed the appeal on merits but dismissing it only for non payment of predeposit? 2. Whether in law and of facts of the case the Tribunal has power to decide appeal when there is no order on merits passed by the appellate authority? 3. Whether the Tribunal was right in law and in facts and in not following th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vocate has appeared on behalf of the respective appellants and Shri Jaimin Gandhi, learned AGP has appeared on behalf of the State and the Department. [3.1] Shri Kaji, learned advocate appearing behalf of the respective appellants has vehemently submitted that the learned Tribunal has materially erred in considering the appeals on merit and considering the assessment orders on merits. It is submitted by Shri Kaji, learned advocate appearing on behalf of the respective appellants that as such the second appeal before the learned Tribunal was against the order passed by the Joint Commissioner dismissing the respective appellants on the ground of non-payment of the amount of predeposit. It is submitted that the learned Tribunal has committed a serious error in examining the appellants grievances on merit of the order of assessment. It is submitted that therefore when the appellants preferred appeals before the learned Tribunal against the order of first Appellate Authority dismissing the appeals on the ground of non-payment of predeposit, the scope of the appeals before the learned Tribunal, therefore, had to be limited to the question of finding out whether the first appellate au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kaji, learned advocate appearing on behalf of the appellants that the learned Tribunal has materially erred in confirming the assessment order denying input tax credit claimed by the respective appellants solely on the ground that the vendor s registration from whom the respective appellants have purchased the goods, has been cancelled retrospectively and ab initio. [3.4] It is submitted that the learned Tribunal has materially erred in not relying upon the decision of the Tribunal in the case of M/s. Shree Kiran Oil Mill rendered in Second Appeal No.640/2009 in which it was held that the tax credit claimed cannot be disallowed after the date of publication of particulars of cancellation of such dealer where registration certificate of the vendor is cancelled retrospectively. It is submitted that in the present case the Assessing Officer/Deputy Commissioner disallowed the appellant s claim of input tax credit on the purchases made from M/s. Shree Bhavani Ispat and M/s. Mangal Enterprise on the ground that the registration certificates of the aforesaid vendors were cancelled ab initio for billing activity. It is submitted that however Assessing Officer as well as the learned Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gandhi, learned AGP appearing on behalf of the State. It is submitted by Shri Gandhi, learned AGP that the impugned judgment and order passed by the learned Tribunal insofar as confirming the denial of the input tax credit claimed by the respective appellants is absolutely just and proper and as such there are concurrent findings of facts by both the authorities that the sale transactions on which the input tax credit have been claimed are not genuine and only they were billing activities and as such there was no movement of goods at all. It is submitted that the aforesaid finding of facts are on appreciation of evidence which are not required to be interfered by this Court. [4.1] Now, so far as the contention on behalf of the appellants that the learned Tribunal ought not to have entered into the merits of the assessment order as the second appeal before the learned Tribunal was against the order passed by the first appellate authority dismissing the appeal on the ground of nonpayment of predeposit is concerned, Shri Gandhi, learned AGP has vehemently submitted that as such the appellant also challenged even the assessment order before the learned Tribunal and even made elabor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e input tax credit, to prove the genuineness of the transactions, which the appellants dealers have failed to establish and prove. It is submitted that therefore in the facts and circumstances of the case, the decision of the Tribunal in the case of M/s. Kiran Oil Mill is not rightly applied by the Assessing Officer as well as the learned Tribunal. [4.3] It is further submitted by Shri Gandhi, learned AGP that whether a transaction is genuine or bogus is a question of fact and not a question of law. In support of his above submissions, he has relied upon the following decisions of Hon ble Supreme Court and this Court. 1. 288 ITR 10 Kachwala Gems v. Joint Commissioner of Income Tax 2. 252 ITR 476 Deputy Commissioner of Income Tax v. Adinath Industries 3. Tax Appeal No.1090/2009 Commissioner of Income Tax- IV v. Vijay Mistry Construction Ltd. 4. Tax Appeal No.533/2012 Vijay @ Rajnikant R. Patel v. Assistant Director 1 [4.4] It is further submitted by Shri Gandhi, learned AGP that as held by this Court in the case of Happy Oil Industries v. State of Gujarat reported in 93 STC 427 (Guj), onus to prove the genuineness of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposit the cheque in its Bank account and after deducting its commission (Rs.2), B will withdraw the balance amount (Rs.98) and pay back to C. However if A and B have designed a chain of transactions, then B will pass the money to X, X to Y and so on and some one else in place of B may pay the balance amount to C. The same goods are sold by C to D in normal market at 105 + tax. [4.7] It is submitted that accordingly in the above circumstances, the government suffers huge revenue loss. The Government cannot collect tax on sale by A to C as it is neither recorded in the books accounts of A nor C. However, the Government is less concerned about transaction between A C as C does not demand input tax credit on its purchases qua A. Further as regards the transaction between B and C, as B is involved in billing activities, so normally it will not deposit the tax collected from C in the government treasury. B is a dealer engaged in billing activities. After registration, B issues bogus bills on commission basis. So, before revenue authorities come to know about the activities of B, B would have earned a huge amount of commission. Normally B does not file return. After a certain peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods / genuineness of purchases. [4.11] It is submitted that in the present case the appellant has filed a paper book running into 400 pages, however only relevant pages regarding the physical movement of goods are page Nos.77, 79 and 81 and pages 83 265 are stock register, which is internal evidence. Page 283349 is bank statement and page 365373 is bank certificate, which does not prove that payment is made to M/s. Shree Bhavani Ispat. However, even if it does not prove payment that payment is made to M/s. Shree Bhavani Ispat, it does not establish physical movement of goods between M/s. Shree Bhavani Ispat M/s. Madhav Steel Corporation. It is further submitted that pages 77 and 79 are the invoices issued by M/s. Shree Bhavani Ispat. It is further submitted that the loading and freight column in the said invoices are Nil and the loading and freight charges are for the purpose of transportation of goods and it indicates physical movement of goods. It is further submitted that page 81 is the weigh bridge receipt. In the said receipt there is neither the name of the consignor, nor the name of the consignee. Accordingly, the weigh bridge receipts credibility is full of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned judgment and order/s passed by the learned Tribunal. We have also gone through and considered in detail the documents/documentary evidences forming part of the paper book supplied by the learned advocate appearing on behalf of the appellants. At the outset it is required to be noted that the Assessing Officer/Deputy Commissioner has denied the input tax credit claimed by the respective appellants dealers claimed under Section 11 of the Act on the purchases made by the respective appellants/dealers from M/s. Shree Bhavani Ispat and M/s. Madhav Steel Corporation, mainly on the ground that the respective vendors i.e. M/s. Shree Bhavani Ispat and M/s. Madhav Steel Corporation and the respective appellants dealers have failed to establish and prove the actual movements of goods and that the sale transactions are not genuine and there were only billing activities only. As such there are concurrent findings of fact given by the Assessing Officer as well as the learned Tribunal holding the transaction on which the input tax credits have been claimed as not genuine and therefore, the input tax credit on the same have been denied. [5.1] Learned advocate appeari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half of the appellant made elaborate submissions on merits against the Assessing Officer passed by the Deputy Commissioner. Under the circumstances when the appellant challenged the Assessment Order before the learned Tribunal in the second appeal and they made elaborate submissions on merits against the assessment order passed by the Deputy Commissioner and when the same have been dealt with by the learned Tribunal, it cannot be said that the learned Tribunal has committed any error in considering the appeal on merits against the assessment order passed by the Assessing Officer. Identical question came to be considered by this Court in Tax Appeal No.667/2013. In the case before this Court in the aforesaid tax appeal, the appeal before the learned Tribunal was against the order passed by the learned first appellate authority rejecting the appeal on the ground of non-payment of predeposit and before the learned Tribunal the appellant also challenged the original order of assessment and made elaborate submissions before the learned Tribunal on merits against the assessment order which came to be dealt with by the learned Tribunal and thereafter when the decision was against the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as lost in the appeals on merits, thereafter it not open for the appellant now to make the grievance that the Tribunal ought not to have decided the appeals on merits. It is also required to be noted at this stage that as such there is no such grievance raised in the appeal and even no substantial question of law is proposed on the aforesaid. However, as the learned advocate for the appellant has made submissions on that we have dealt with and considered the same. 12. Now, so far as reliance placed upon the decision of the Hon ble Supreme Court in the case of Smithkline Beecham Co. Holding Limited(supra) is concerned, as such there cannot be any dispute with respect to proposition of laid down by the Hon ble Supreme Court in the said decision. It is true that normally when the appeal before the Tribunal is against the order passed by the First Appellate Authority, dismissing the appeal on the ground of non deposit of pre deposit, the Tribunal is not required to enter into the merits of the case. However, it depends upon the facts and circumstances of the case. In a given case it may happen that identical question is before the Tribunal and / or some other appeals are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, stock register and copy of the account which would prove and establish that the sale transactions were genuine and the learned Tribunal has not dealt with the said documentary evidences are concerned, as the documents which are sought to be relied upon by the appellant/s are on record and the entire paper book is on record, we ourselves have gone through and considered the same. [5.5] The paper book is running into 400 pages, however relevant pages regarding the physical movement of goods are on pages 77, 79 and 81 and pages 83 to 265 are stock register, which is internal evidence. Page 283349 is bank statement and pages 365 to 373 is bank certificate However, from the aforesaid documents, payments made to M/s. Shree Bhavani Ispat are not proved. From the invoices issued by M/s. Shree Bhavani Ispat pages 77 and 79 are concerned, the loading and freight column in the said invoices are Nil. The loading and freight charges are for the purpose of transportation of goods. Page 81 is the weigh bridge receipt. However, in the said receipt there is neither the name of the consignor nor the name of the consignee. Under the circumstances, credibility of the weight bridge receipts are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amely M/s. Shree Bhavani Ispat and M/s. Mangal Enterprises. Under the circumstances, when the respective appellant/s dealer/s have failed to establish and prove the aforesaid important aspect of actual physical movement of the goods alleged to have been purchased by them from M/s. Shree Bhavani Ispat and M/s. Mangal Enterprises and on which the input tax credit have been claimed, the Assessing Officer as well as the learned Tribunal have rightly rejected the claim of the respective appellant/s dealer/s of input tax credit claimed under Section 11 of the Act. [5.6] Now, so far as the contention on behalf of the appellants dealers that as, when they purchased the goods from the aforesaid two vendors, both the aforesaid two vendors were having the registration and their registration came to be cancelled subsequently retrospectively and therefore, they cannot be denied the input tax credit on the purchases made by them, made from the aforesaid two vendors is concerned, it is required to be noted that in the present case the input tax credit/s have not been denied solely on the aforesaid ground. The input tax credit has / have been denied also on the ground that the respective ..... X X X X Extracts X X X X X X X X Extracts X X X X
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