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TMI Blog2018 (6) TMI 974X X X X Extracts X X X X X X X X Extracts X X X X ..... vision Bench of this Court in the case of 'Microqual Techno Private Limited Vs. Additional Commissioner of Commercial Taxes, Zone 1, Bangalore' [(2012) 52 VST 362 (Karn)], in which the Division Bench of this Court, almost in similar circumstances, upheld the order passed by the Revisional Authority restoring the similar penalty under Section 70[2] of the Act, with the following observations: "9. It is not in dispute that, a show- cause notice as contemplated under section 3(3) of the Act had been issued and the assessee had given his written reply. Now, the only question is, whether the assessee had knowingly produced a false tax invoice to support a deduction of input tax, which is available to him under law. The revisional authority has clearly set out the adverse materials justifying imposition of penalty. they have clearly set out number of invoices raised by the four suppliers with invoice number, date, quantity, value of goods and VIT and IRG numbers. The total input- tax credit claimed by the assessee is Rs. 3,85,183. From the dates of the invoice, it is clear that the supply is neither occasional nor stray cases. It is continuous and it is for three months from October 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut tax claim, once purchase invoices are considered as false and input tax claimed is found to be incorrect, penalty U/s 70(2)(a) of the KVAT Act is attracted. Further, in similar circumstances the appellate authority had confirmed the order of disallowing input tax credit and set aside the penalty imposed on the ground that if the registered dealer who collected tax from the assessee had not paid the tax to the department it cannot be said that the assessee knowingly produced invoices which are not genuine and penalty was set aside. The Revisional authority set aside the order of FAA and restored the penalty. On appeal before the Hon'ble High Court by M/s Microqual Techno Pvt. Ltd., in STA No.1/2010 the Hon'ble High Court in its judgment dated 06-08-2010 has upheld the levy of penalty U/s 70(2)(a) of the Act by the revisional authority. Therefore the objection are rejected and following order is made. ORDER UNDER SECTION 64(1) OF THE KARNATAKA VALUE ADDED TAX ACT, 2003 Since the objection filed are found to be not acceptable, the appeal dated 23-10-2009 is set aside in respect of penalty levied under Section 70(2)(a) of the KVAT Act, 2003 and order passed by assessing authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (INV-1) 6. The Joint Commissioner of Commercial Taxes [Appeals]-3, Bangalore, the first Appellate Authority, however, set aside the said penalty imposed upon the Assessee by his Order dated 23.10.2009 shifting the burden of proof on the Department to prove the existence of circumstances which justifies the penalization of Assessee for commission of offence of producing false and fake invoices on the basis of which penalty under Section 70[2] of the Act is imposed. The relevant portion of his order from paragraph-25 is quoted below for ready reference: 'Ultimately the burden is on the department to prove the existence of circumstances which justifies the penalization of an assessee for the commission of an offence. It is totally another thing as to how far or to what extent to depend and proceed on the basis of affidavits or statements given by the suppliers who are themselves bill traders or benami's when such bill traders or benami's themselves are engaged in fraudulent and unlawful activities. Accordingly, in view of these facts and circumstances and the position of law, the penalty levied under Section 70(2) of the KVAT Act, 2003 for the tax periods under appeal does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dealer issuing or producing such document to pay as penalty: (a) in the case of first such detection, three times the tax due in respect of such transaction or claim; and (b) in the case of second or subsequent detection, five times the tax due in respect of such transaction or claim. (3) Before issuing any direction for the payment of the penalty under this Section, the prescribed authority shall give to the dealer the opportunity of showing cause in writing against the imposition of such penalty." 10. The penalty imposable under Section 70[2] of the Act using the words 'knowingly issues or produces a false tax invoice' does not shift the burden on the Revenue, merely because the dealer claiming such input tax credit claims that he is a bonafide purchaser and knowingly he has not produced a false and fake invoice in question. The burden of proving the correctness of input tax credit remains upon the dealer claiming such input tax credit. Such a burden of proof does not get shifted on to the Revenue. Even the findings of fact arrived at by the Assessing Authority after process of cross examination of one of the persons, Mr. Chhatar Singh Kathotia indicates that he obtaine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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