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TMI Blog2018 (7) TMI 399X X X X Extracts X X X X X X X X Extracts X X X X ..... ts or machinery for such purpose - All in all, the Tax Authorities had concurrently found that the sole activity of the said two agencies was of giving bogus bills of purchases. They were not genuinely dealing in the goods. The case of the appellant that the agencies may be dealing in some bogus billing activities but his purchases from the said dealers were genuine was therefore not believed. These findings were accepted by the Tribunal by giving brief but independent reasons. We do not find that the Tribunal committed any error in this respect - The disentitlement of input tax credit and consequent demand of tax and interest was not on the ground that the registrations of the selling dealers which were valid when the purchases were made, were cancelled later on with retrospective effect. It was on the basis that the purchases made by the appellant from such dealers themselves were found to be nongenuine. Appeal dismissed - decided against appellant-assessee. - R/TAX APPEAL NO. 72 of 2014 With R/TAX APPEAL NO. 73 of 2014 With R/TAX APPEAL NO. 74 of 2014 With R/TAX APPEAL NO. 75 of 2014 - - - Dated:- 15-6-2018 - MR. AKIL KURESHI AND MR. B.N. KARIA, JJ. For The PETITI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed the duty and interest demands. With respect to the penalties, the Tribunal set aside the same but remanded the matter to Assessing Officer to reexamine the issue and pass fresh order after issuing proper notice and giving opportunity of being heard to the appellant. The assessee has thereupon preferred the present appeals. 5. Appearing before us, learned counsel Mr.Mehta for the assessee submitted that the Tax Authorities as well as the Tribunal have committed a serious error in raising the duty demand against the appellant. He pointed out that the registration of the two dealers was valid when the purchases were made. Merely because the registration was later on cancelled, may be with retrospective effect, would not disentitle the purchaser from availing input tax credit. He submitted that in the present case the assessee had established the actual movement of goods by producing reliable cogent evidence. Ignoring such evidence, the authorities relied only on retrospective cancellation of the registration of the dealers to confirm the tax demand. The Tribunal failed to detect and correct such error. 6. On the other hand, learned AGP opposed the appeals contending th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the genuineness of the transaction between the assessee and Sulekha Enterprises was not in doubt, thus, laying clear scope for the Revenue to prove the matter further in cases where the transactions themselves are not genuine. The Supreme Court held and observed as under: 5. In our view, the High Court was right. A purchasing dealer is entitled by law to rely upon the certificate of registration of the selling dealer and to act upon it. Whatever may be the effect of a retrospective cancellation upon the selling dealer, it can have no effect upon any person who has acted upon the strength of a registration certificate when the registration was current. The argument on behalf of the department that it was the duty of persons dealing with registered dealers to find our whether a state of facts exists which would justify the cancellation of registration must be rejected. To accept it would be to notify the provisions of the statute which entitle persons dealing with registered dealers to act upon the strength of registration certificates. 6. It must also be noted that the learned Advocate General, appearing for the department before the High Court, stated that the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax payable by the purchasing dealer to a registered dealer who has sold such goods to him during the tax period. Thus, input tax credit is available only in respect of goods purchased from a registered dealer. When a dealer bonafide purchases goods from another dealer who was granted registration under the Gujarat Value Added Tax Act, he would not be aware of the cancellation of his registration unless the same is duly published by the Commissioner under subsection (11) of section 27 or section 97 of the Act. In the absence of any such publication, a dealer may not be aware of such cancellation and may bonafide purchase goods from such dealer. Therefore, with a view to ensure that a registered dealer who purchases goods from another registered dealer is not unduly prejudiced by the cancellation of the registration of the selling dealer, clause (mmmm) of subsection (5) of section 11 of the GVAT Act provides that input tax credit shall not be allowed in respect of purchases made from a dealer after the name of the dealer is published under subsection (11) of section 27 or section 97. In other words, ordinarily, input tax credit can be disallowed only after the name of the deale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t claimed by the appellants/dealers. Thus, the above decision cannot ipso facto be applied to all cases where registration of the selling dealer has been cancelled to deny the purchasing dealer the benefit of input tax credit. To apply the decision of Madhav Steel Corporation (supra), findings of fact as regards the genuineness of transactions not having been established, have to be recorded. 11. Issue was yet again examined by this Court in case of Madhav Steel Corporation v. State of Gujarat reported in 2014 (72) VST 318 . The Court made following observations: [ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advocate appearing on behalf of the appellant/s, the appellant/s dealer/s have failed to prove the actual physical movement of the goods alleged to have been purchased from the aforesaid two vendors namely 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivity of the said two agencies was of giving bogus bills of purchases. They were not genuinely dealing in the goods. The case of the appellant that the agencies may be dealing in some bogus billing activities but his purchases from the said dealers were genuine was therefore not believed. These findings were accepted by the Tribunal by giving brief but independent reasons. 13. In the present Tax Appeals, we are called upon to decide the questions of law and not disturb the findings of fact which do not suffer from perversity. We do not find that the Tribunal committed any error in this respect. If we therefore proceed on such basis, it can be immediately seen that the disentitlement of input tax credit and consequent demand of tax and interest was not on the ground that the registrations of the selling dealers which were valid when the purchases were made, were cancelled later on with retrospective effect. It was on the basis that the purchases made by the appellant from such dealers themselves were found to be nongenuine. 14. Both the questions are therefore answered against the appellantassessee and the Tax Appeals are dismissed. - - TaxTMI - TMITax - CST, VAT & Sales ..... X X X X Extracts X X X X X X X X Extracts X X X X
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