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2018 (2) TMI 373

Head Note:
Validity of assessment order - section 39(1) of the KVAT Act, 2003 - Principles of Natural Justice - the adverse material was not confronted to the petitioner and merely on the basis of a Investigation Report, the disallowance of ‘ Input Tax Credit’ was made by the Assessing Authority which too was not supplied to the petitioner-assessee and he was not given an opportunity to controvert the said adverse material.

Held that: - There cannot be said to be any breach of principles of natural justice in the course of such assessment proceedings resulting in the disallowance of the Input Tax Credit in the hands of the petitioner-assessee, if the selling dealer himself is shown to be an non-existing dealer from entity. Mere production of papers, which could be a hand work of the petitioner-assessee himself, could not be allowed to be claimed such Input Tax Credit in the hands of the petitioner-assessee, unless on due verification and cross check, such tax paid by the selling dealer on the actual sale of such goods to the petitioner-assesse e was shown to have been deposited with the State Treasury by such selling dealer.

The State cannot be expected to give credit of Input Tax Credit unless on a verification that the selling dealer is not only shown to be existing but such actual sales attracting such liability is established in the hands of the selling dealer and such tax has been deposited by the selling dealers with the State in due discharge of his obligations under the provisions of the KVAT Act, 2003 or at least he exists to undertake the discharge of such tax obligation on his part - petition is misconceived and is thus dismissed.


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