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2020 (3) TMI 365 - KARNATAKA HIGH COURTImposition of penalty under Section 70[2] of KVAT Act - Whether the proceedings initiated under Section 39(1) of KVAT Act is after obtaining the necessary approval from the prescribed authority, namely, the authority prescribed under Section 2(24) of KVAT Act? - HELD THAT:- The authority who undertakes re-assessment provisions under Section 39(1) of KVAT Act could only be the prescribed authority and said authority is empowered to do so, which would be on the ground that it has reasons to believe that return furnished which is deemed as assessed is incorrect tax liability of the dealer. Whether the Revisional Authority was justified in initiating the proceedings under Section 64(1) of KVAT Act and setting aside the Appellate Authority order dated 24.07.2017 Annexure – C passed under Section 62(6) of KVAT Act? - HELD THAT:- It has been found by the Revisional Authority that seller of the appellant namely M/s. Tradex Metal Corporation had engaged in bill trading “to evade the tax due to the State Government”. In fact, 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 genuinely existing selling dealers. Thus, burden of proving that the claim of input tax credit is correct, is squarely upon the Assessee who never discharged the said 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 - substantial question of law No.2 in favour of revenue and against appellant/assessee. Appeal is hereby dismissed by answering the substantial question of law against appellant/assessee.
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