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TMI Blog2016 (5) TMI 1274X X X X Extracts X X X X X X X X Extracts X X X X ..... en the authorities below have not called upon the petitioner to establish the genuineness of the transactions, in the opinion of this court, the Tribunal was not justified in brushing aside the documentary evidence produced by the petitioner by stating that the same had been subsequently created - Credit cannot be denied - Decided in favor of assessee. - SPECIAL CIVIL APPLICATION NO. 90 of 2016 - - - Dated:- 5-5-2016 - MS. HARSHA DEVANI and MR. G.R.UDHWANI JJ. MR UCHIT N SHETH, ADVOCATE FOR THE PETITIONER(S) NO.1 MS MAITHILI MEHTA, ASSISTANT GOVERNMENT PLEADER FOR THE RESPONDENT(S) NO.1 ORAL JUDGMENT (PER : MS. HARSHA DEVANI) 1. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the order dated 15th July, 2015 passed by the Gujarat Value Added Tax Tribunal (hereinafter referred to as the Tribunal ) whereby the Tribunal has confirmed the additional liability raised by the revisional authority as well as the interest thereon. 2. The petitioner, a proprietary concern, is engaged in the business of trading in edible oil and oilseeds and is registered under the Gujarat Value Added Tax Act, 2003 (he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment, the effective date of cancellation of registration was being shown as 1st January, 2007. 2.4 While no proceedings were conducted pursuant to the above notice, on 7th January, 2013, another officer being the Deputy Commissioner of Commercial Tax, Audit Division-7, Rajkot, issued a revision notice in Form 503 on the same ground, that is, on the ground that the registration certificate of M/s. Om Incorporation had been cancelled with retrospective effect. In response thereto, the petitioner gave a written reply dated 9th February, 2013, enclosing therewith a copy of the registration cancellation order of M/s. Om Incorporation. It was contended by the petitioner that the registration certificate of the vendor had been cancelled much after the date of the transactions and hence, input tax credit could not be disallowed in view of the provisions of section 11(5)(mmmm) of the GVAT Act. During the pendency of the revision proceedings, the petitioner filed another application under the RTI Act to inquire whether M/s. Om Incorporation had disclosed sales made to the petitioner in the returns filed under the GVAT Act for the period from 1st January, 2007 to 31st March, 2007. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision application under section 75 of the GVAT Act before the Tribunal. The petitioner also annexed the tax invoices, payment evidences as well as the documents obtained under the RTI Act, with the revision application and urged that the revision proceedings had been initiated based on extraneous material and not on the basis of the material available on record and hence, the revision order was without jurisdiction. By the impugned order, the Tribunal confirmed the disallowance of input tax credit on purchases made from M/s. Om Incorporation on the ground that they were only the billing transactions. Consequently, the Tribunal also confirmed the demand of interest but deleted the penalty imposed upon the petitioner. 3. Mr. Uchit Sheth, learned advocate for the petitioner, invited the attention of the court to the provisions of section 75 of the GVAT Act to submit that under sub-section (1) thereof, the Commissioner is empowered to call for and examine the record of any order passed by any officer appointed under section 16 to assist him and to pass such order thereon as he thinks just and proper. It was submitted that in the present case, the revision proceedings have been in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re year 2006-07, but the revision was proposed only in respect of the purchases made from 1st January, 2007. Therefore, the fact that the petitioner had made purchases from M/s. Om Incorporation was not in dispute and the input tax credit was proposed to be disallowed only on the ground that registration certificate of M/s. Om Incorporation had been cancelled. It was contended that the conclusion that the transactions of the petitioner with M/s. Om Incorporation were not genuine are absolutely without notice and, therefore, the order is without jurisdiction and in breach of the principles of natural justice. It was urged that the conclusion arrived at by the Tribunal that the petitioner had acted in collusion with M/s. Om Incorporation for evasion of tax is completely arbitrary and without any notice, inasmuch as, there is no such allegation either in the notice for revision or in the revision order. In support of such submission, the learned advocate placed reliance upon the decision of this court in the case of State of Gujarat v. Virumal Santumal, [2014] 72 VST 403 (Guj), wherein the court was dealing with a case where revisional proceedings were taken under section 67 of the Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed and set aside. 4. Opposing the petition, Ms. Maithili Mehta, learned Assistant Government Pleader supported the impugned orders. It was submitted that while passing the revision order, the Deputy Commissioner has specifically observed that the petitioner had made purchases from M/s. Om Incorporation during the period 1st January, 2007 to 31st March, 2007 to the tune of ₹ 77,06,032/- and had claimed input tax credit on these purchases to the tune of ₹ 1,52,057/-. However, the registration certificate of M/s. Om Incorporation was cancelled with effect from 1st January, 2007. It was submitted that in terms of the provisions of the GVAT Act, more particularly, section 11(1)(a)(i), input tax credit can be allowed only if purchases are made from a registered dealer. It was submitted that in view of the fact that the registration certificate of M/s. Om Incorporation stood cancelled with effect from 1st January, 2007, in view of the provisions of section 11(1)(a)(i) of the GVAT Act, the petitioner is not entitled to claim input tax credit for the period after 1st January, 2007 to 31st March, 2007. The attention of the court was invited to the submissions made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars that no action was taken pursuant to the said notice. Thereafter, the Deputy Commissioner of Commercial Tax, Audit Division 5, Rajkot (hereinafter referred to as the revisional authority ), issued revision notice in Form 503 on 7th January, 2013 on the same ground, that is, on the ground that the registration certificate of M/s. Om Incorporation has been cancelled with retrospective effect. 7. On behalf of the petitioner, a contention has been raised that the revisional proceedings being based on material extraneous to the record, the very initiation thereof is without jurisdiction. Since the question of jurisdiction goes to the root of the matter and touches the very authority of the Commissioner to exercise powers of revision, such question is required to be dealt with at the outset. 8. Section 75 of the GVAT Act which makes provision for Revision empowers the Commissioner of his own motion to call for the record of any order passed by any officer appointed under section 16 to assist him (hereinafter referred to as the subordinate officer ) and pass such order thereon as he thinks just and proper. On a plain reading of the language employed in the section, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant an opportunity of being heard, pass such orders on the appeal as such authority may think fit. Under Section 12(2) of the Act, the revisional authority may suo motu call for and examine the record of any order passed or proceeding recorded under the provisions of the Act by an officer subordinate to him, for the purpose of satisfying himself as to the legality or propriety of such order, or as to the regularity of such proceeding, and may pass such order with respect thereto as he thinks fit . When the legislature confers a right of appeal in one case and a discretionary remedy of revision in another, it must be deemed to have created two jurisdictions different in scope and content. When it introduced the familiar concepts of appeal and revision, it is also reasonable to assume that the well-known distinction between these two jurisdictions was also accepted by the legislature. There is an essential distinction between an appeal and a revision. The distinction is based on differences implicit in the said two expressions. An appeal is a continuation of the proceedings, in effect the entire proceedings are before the Appellate Authority and it has power to review ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er after the name of such dealer had been published under sub-section (11) of section 27 or section 97 10. Sub-section (11) of section 27 of the GVAT Act casts an obligation upon the Commissioner to publish the address of the dealers whose certificate of registration has been suspended or cancelled under the provisions of the Act. Section 97 of the Act provides for publication of information regarding dealers and other persons in public interest and provides that notwithstanding anything contained in section 92, if the Commissioner is of the opinion that it is necessary or expedient in the public interest to publish or disclose the names of any dealers or other persons and any other particulars relating to any proceedings under the Act in respect of such dealers and persons, he may publish or disclose or cause to be published or disclosed such names and particulars in such manner as may be prescribed. The reason behind enacting section 11(5)(mmmm) is clear. Under sub-section (1) (a) of section 11 of the GVAT Act, a registered dealer who has purchased taxable goods is entitled to tax credit equal to the amount of tax collected from the purchasing dealer by a registered dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 (Guj), on which strong reliance is generally placed on behalf of the authorities under the GVAT Act, the court was dealing with a case wherein two parties viz., M/s Shree Bhavani Ispat, Bhavnagar and M/s Mangal Enterprise, from whom the appellant therein had purchased goods failed to establish the genuineness of their purchases and also failed to establish the genuineness of the sales made to the appellant therein. The appellant therein upon being called upon to establish the genuineness of the purchases from the said parties failed to do so. Thus, in that case, there were findings of fact to the effect that genuineness of the purchases made by the selling dealers was not established and the genuineness of the sale in favour of the appellant therein was also not established. It is in such circumstances that the court held that when the appellant/s had failed to provide any documentary evidence with regard to physical movement of the goods from the two parties namely, M/s. Shree Bhavani Ispat and M/s. Mangal Enterprise to the respective appellants/dealers, the sale transactions are not found genuine, and are found to be bogus, and are also found to be billing activities only, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e registration has been cancelled in the manner prescribed under sub-section (11) of section 27 and section 97 of the Act except where specific findings are recorded by the authorities under the GVAT Act regarding non-genuineness of the transactions, bogus sales and purchases, etc. 14. The Tribunal in the impugned order has recorded the following findings:- 12. We have considered the rival submissions and the facts of the case. We have also gone through the orders passed by the authorities below and the documents produced before this Tribunal. The written submissions made by the applicant, documents along with necessary details and various authorities or decisions were also taken into consideration. Certain departmental correspondences exchanged by the departmental officials, which are placed on record were also perused by this Tribunal. Various propositions of law made by Mr. Patel either orally or in written submission are to be appreciated in the context of facts on record. The facts of M/s Om Incorporation which are on record and which are brought to the notice of the Tribunal clearly indicate that the said party is nothing but fraud and its main activity right from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of input tax credit, the applicant is not liable to pay penalty as per settled legal position discussed above while considering the submissions made by Mr. Patel on this issue. The Revisional authority cannot levy the penalty for the first time while passing revisional order. Thus, while holding that the petitioner is not entitled to input tax credit, the Tribunal has placed reliance upon material extraneous to the record including departmental correspondence, some report placed on the record as well as its decision in the case of M/s. Arvind Export Solvent Oil Industries v. State of Gujarat, wherein it had come to the conclusion that the transactions entered into with M/s. Om Incorporation were not genuine. In that case, the Tribunal observed that the applicant in that case had used its name as the Department could not trace out the said party on spot visit. The findings recorded by the Tribunal regarding M/s. Om Incorporation being nothing but a fraud whose main activity right from the inception was to issue only bills without delivery of goods etc. is also based upon material produced by the respondents directly before the Tribunal. Besides, it is settled law that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon material produced by the respondent directly before the Tribunal. 16. Another aspect of the matter is that before the Tribunal, all aspects with regard to the scope of the revisional proceedings etc. had been canvassed by the learned advocate for the petitioner. It was categorically stated by the petitioner that there was no dispute at all with regard to genuineness of purchase transactions and the petitioner had also produced documents in support thereof. However, such documents have been brushed aside by the Tribunal on the ground that they are not genuine and were subsequently created. 17. In the facts of the present case, when the authorities below have not called upon the petitioner to establish the genuineness of the transactions, in the opinion of this court, the Tribunal was not justified in brushing aside the documentary evidence produced by the petitioner by stating that the same had been subsequently created. Moreover, the Tribunal has noted that without disputing the legal propositions canvassed on behalf of the petitioner, it emerges that the transactions are not genuine and that the petitioner has acted in collusion with the said party for evasion of ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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