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TMI Blog2020 (3) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, a criminal case has also been registered against said dealer by the jurisdictional police namely, Kalasipalayam Police Station which fact is available on record and completely ignored by the 1st Appellate Authority and said issue having not been addressed to by the 1st Appellate Authority. Revisional Authority having taken note of all these aspects has arrived at a conclusion that input tax credit claimed by the assessee is not sustainable. 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 - mere his production before the Assessing Authority and his cross examination recorded by the Assessing Authority does not dispel the fact that the tax invoices produced by the Assessee for claiming input tax credit emanates from the genuine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who by order dated 24.07.2017 Annexure C allowed the appeal granting the relief as indicated at the said order. 3. The above said order of 1st Appellate Authority was sought to be revised by Additional Commissioner of Commercial Taxes under Section 64(1) of KVAT Act. Hence, notice under Section 64(1) of KVAT Act came to be issued to appellant herein on 08.12.2017 whereunder it was proposed to set aside the order dated 24.07.2017 passed by 1st Appellate Authority and to restore the order dated 28.02.2014. In response to said notice, written objections was filed on 22.01.2018 by appellant/assessee; and by order dated 09.02.2018 Annexure A, the Revisional Authority set aside the 1st Appellate Authority order dated 24.07.2017 and restored the re-assessment order passed on 28.02.2014 for the reason that seller of the appellant, namely, M/s.Tradex Metal Corporation was inspected by the authorities and it was found that said dealer was not doing business in the address given in the registration application. It was also opined by the Revisional Authority that M/s.Tradex Metal Corporation was only a bill trader who had issued fake bills to facilitate others dealers like the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s appended to the said order as Annexures containing the names of 219 dealers which also include petitioner against whom permission has been accorded to carryout re-assessment proceedings by the respective authorities, which is found at sl.nos.26 and 27 of the said Annexures. As such, we are of the considered view that first substantial question of law framed hereinabove deserves to be answered against the appellant and in favour of the respondent-revenue. 5) Re : Question No.2 : In the instant case, the assessee has claimed input tax credit on the strength of having purchased goods from M/s.Tradex Metal Corporation, Bengaluru and during the course of reassessment proceedings, same was disallowed on the ground that M/s.Tradex Metal Corporation, Bengaluru had not remitted the said tax to the department. 6. The contention of Sri.A.Sathyanarayana, learned counsel appearing for appellant/assessee is that in the event of department arriving at a conclusion that purchaser of the dealer has not paid the tax (output tax), it is always open for the department to proceed against such person/dealer to recover tax from such person/dealer and not against the dealer who is claiming input ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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; (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. 8. In the event of dealer claiming input tax credit fails to furnish the name and address, contact number of the selling dealer, vehicle which has delivered the goods, payment of freight charges, acknowledgement for taking delivery of goods and payment particulars etc., then such dealer would not be qualified for benefit of input tax credit. This information would be in addition to tax invoices, payment particulars etc., as held by the co-ordinate bench of this Court in the case of M/s.Microqual Techno Private Limited V/s Additional Commercial of Commercial Taxes, Zone1, Bangalore reported in (2012) 52 VST 362 (Karn). In fact, if a dealer claims input tax credit on purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Commercial Taxes in STA No.71/2013 disposed of on 13.06.2018, while examining the issue regarding the burden of proof, has held: 9. Having heard the learned Counsel for the parties, we are of the opinion that no question of law arises in the present appeal for consideration by this Court and essentially it is a finding of fact arrived at by the Assessing Authority as well as the Revisional Authority in the present case that the Appellant-Assessee claimed input tax credit on the basis of invoices issued by the non existent dealers. We do not find any force in the submission made by learned Counsel for the Appellant-Assessee and as held by the first Appellate Authority that the burden of proof gets shifted on the Revenue to establish that the circumstances exist for imposition of penalty under Section 70[2] of the Act. The provisions of Section 70 quoted below in its plain terms clearly stipulates that the burden of proving that input tax claim is correct lies upon the dealer claiming such input tax credit. 70. Burden of proof.- (1) For the purposes of payment or assessment of tax or any claim to input tax under this Act, the burden of proving that any transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... burden in the present case. The first Appellate Authority was absolutely wrong in setting aside the penalty assuming such burden of proof to be on the Revenue. The Revisional Authority, was therefore, perfectly justified and within his jurisdiction to restore the order of penalty in these circumstances. We also find that at least two of the dealers from whom input tax credit invoices were claimed in the present case were for consideration before this Court in Microqual s case also [supra], namely, M/s. S.L.V. Enterprises and M/s. T.D. and Company. Therefore, the same or similar bogus selling dealers registered without actual dealers existing appears to be forming the chain of producing false and fake invoices, on the basis of which, such input tax credit was claimed by the purchasing dealers. 11. In the light of factual finding arrived under re-assessment order dated 28.02.2014 which had been set aside by the 1st Appellate Authority without scrutiny or foundational facts being disturbed, resulted in Revisional Authority upsetting the said finding recorded by the 1st Appellate Authority since burden which was upon the appellant, as prescribed under Section 70 of KVAT Act, having ..... X X X X Extracts X X X X X X X X Extracts X X X X
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