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2021 (7) TMI 307 - HC - VAT and Sales TaxValidity of reassessment order - Input tax credit on purchases from three dealers - bogus transaction - denial on the ground that the said three dealers were non-existent but bogus dealers and that they had not sold any goods to the respondent but had only issued tax invoice in order to enable the respondent to claim ITC - HELD THAT:- The provisions of the Act provide for registration of dealers and provides for detection of fraudulent acts to claim ITC and also provide a detailed mechanism for conducting audit of the registered dealers and also launch prosecution against dealers who indulge in generating bogus invoices to avail the ITC etc. It is seen from the case on hand that the selling dealers from whom the assessee had purchased the goods were all registered dealers. It is not the case of the revenue that these selling dealers were not traceable and or that they were not registered. Consequently, the revenue cannot contend that merely because the selling dealers have failed to deposit the VAT collected from the assessee, the transaction itself is bogus and is designed to claim ITC - This question is no longer res-intigra in view of the judgment of the Hon’ble Apex Court in the case of CORPORATION BANK VERSUS SARASWATI ABHARANSALA AND ANOTHER [2008 (11) TMI 387 - SUPREME COURT] where it was held that the bona fide buyer cannot be put in jeopardy when he was done all the law requires him to do so. The purchasing dealer has no means to ascertain and secure compliance by the selling dealer. In CENTRAL WINES VERSUS SPECIAL COMMERCIAL TAX OFFICER (AND OTHER APPEALS) [1987 (1) TMI 442 - SUPREME COURT], the Supreme Court inter-alia observed that the seller acts an agent of the buyer while collecting the tax. Therefore, a bonafide purchaser cannot be put at jeopardy, when he has done all that the law expects him to comply. The purchasing dealer has no means to ascertain and secure compliance provisions of the KVAT Act by the selling dealer - it cannot be said that the assessee has conspired with the selling dealers to avail the ITC fraudulently. If the revenue is able to demonstrate that the assessee and the selling dealers have conspired, then it is still open for the Revenue to initiate necessary steps against the assessee as well. This revision petition lacks merit and the same is dismissed.
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