2012 (7) TMI 857 - HC - VAT and Sales Tax

Whether the petitioner is entitled for input-tax rebate under section 10 of the Act and has made out a case for interference with the order passed by the authorities below? Held that - It is clear from the records that the petitioner-firm has not produced any materials to show that the dealers with whom the petitioner has made transaction have remitted the tax collected from him though the petitioner has been making transaction with the said firms for the last more than three years. In order to gain the input tax rebate the petitioner has produced the bogus tax invoices. Petitioner-firm has not furnished reliable and proper information about the existence of the six dealers. The whereabouts of the said dealers were also not made known to the Department. Under section 70 of the Act the duty is cast upon the petitioner to prove that the said dealers have remitted the said amount to the State Government. Hence it is clear that the petitioner-firm has purchased the jungle wood from the bogus dealers who had TIN number without authority of law. The purchase was effected by the petitioner after the date of de-registration under the KVAT Act hence the petitioner is not entitled to claim input-tax rebate. Hence the petitioner is liable to pay the penalty as provided under section 72(2) of the Act and interest under section 36 of the Act. Thus revision petitions is answered against the petitioner.

Summary

Issues Involved: Denial of input-tax rebate, purchase from unregistered dealers, reassessment of tax, and legality of tax invoices.

Detailed Analysis:

1. Denial of Input-Tax Rebate:
The petitioner, a registered dealer engaged in the manufacture of wooden packing materials and plywood goods, claimed input-tax rebate for purchases made from local dealers. The assessing officer denied the input-tax rebate on the grounds that the petitioner purchased goods from unregistered dealers who did not remit the tax collected to the State Government. The petitioner contended that the responsibility to collect the tax from the dealers lies with the Government and not with the petitioner.

2. Purchase from Unregistered Dealers:
The petitioner purchased goods from six dealers, some of whom were de-registered as of the dates of the transactions. The assessing officer found that the petitioner claimed input-tax rebate on purchases from these de-registered dealers. The petitioner argued that the purchases were made from registered dealers who issued tax invoices as per the prescribed procedure under the Karnataka Value Added Tax Act, 2003.

3. Reassessment of Tax:
The assessing authority reassessed the tax and denied the input-tax rebate, which was upheld by the first appellate authority and the Karnataka Appellate Tribunal. The petitioner challenged these decisions, arguing that the reassessment was contrary to law and that the petitioner was entitled to the input-tax rebate based on the tax invoices issued by the registered dealers.

4. Legality of Tax Invoices:
The petitioner argued that the tax invoices issued by the registered dealers were valid and that the petitioner should not be penalized for the dealers' failure to remit the tax. The respondent contended that the burden of proving the payment or assessment of tax lies with the dealer claiming the input-tax rebate. Since the dealers did not remit the tax, the petitioner was not entitled to the rebate.

Judgment:
The court found that the petitioner purchased goods from de-registered dealers and that the dealers did not remit the tax collected from the petitioner. The petitioner failed to produce evidence that the dealers had remitted the tax to the State Government. The court held that the petitioner was not entitled to claim input-tax rebate and was liable to pay penalties and interest under the Act. The court dismissed the revision petitions, finding no infirmity or irregularity in the orders passed by the Karnataka Appellate Tribunal, the first appellate authority, and the assessing authority.

Conclusion:
The court upheld the denial of the input-tax rebate, emphasizing the petitioner's responsibility to ensure that the dealers remitted the tax to the State Government. The court dismissed the revision petitions, confirming the reassessment and penalties imposed by the authorities.