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SHREE BHAIRAV METAL CORPORATION Versus STATE OF GUJARAT

2015 (6) TMI 624 - GUJARAT HIGH COURT

Denial of input tax credit - Purchases made from the petitioner whose registration certificate has been cancelled ab initio on the ground that the seller had involved into the billing activities only and all the transactions are held to be bogus - Held that:- petitioner was not served with the copy of the order in the case of M/s Lucky Enterprises. Now, the copy of the order passed in the case of M/s Lucky Enterprises is available with the petitioner. Therefore, after giving an opportunity to th .....

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ses made by the petitioner from M/s Lucky Enterprises. - Decided in favour of assessee. - SPECIAL CIVIL APPLICATION NO. 2149 of 2015 - Dated:- 26-3-2015 - MR. M.R. SHAH AND MR. S.H.VORA, JJ. MR MANISH K KAJI, ADVOCATE FOR THE APPELLANT MR CHINTAN DAVE, AGP FOR THE RESPONDENT JUDGMENT M.R. Shah, J. - 1. Rule. Shri Chintan Dave, learned AGP waives service of notice of Rule on behalf of the respondent. 2. In the facts and circumstances of the case and with the consent of learned advocates appearing .....

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nal has dismissed the said revision application confirming the order passed by the first revisional authority - Deputy Commissioner of Commercial Tax, Audit I, Ahmedabad dated 28.5.2013, by which the first revisional authority, in exercise of revisional jurisdiction, revised the order passed by the Assessing Officer dated 30.12.2010 and raised the demand of ₹ 9,83,465/-, which, inter alia, includes tax demand of ₹ 1,92,511/-, interest of ₹ 2,13,418/- and penalty of ₹ 2,88 .....

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/- VAT Payable on Sales - (Out - Put) - Rs.08,01,727/- Total - VAT Payable Rs.01,52,166/- Vat paid with returns Rs.01,52,167/- Excess - Rs.-Nil-" It appears that while claiming the aforesaid ITC, the petitioner dealer shown purchases of ₹ 48,12,825/- alleged to have been purchased from one M/s Lucky Enterprises. The petitioner also produced the bills with respect to purchase of goods alleged to have been purchased from M/s Lucky Enterprises. Thus, the assessee dealer claimed ₹ 1 .....

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nterprises is not a genuine dealer and had indulged into billing activities only and all the transactions made by M/s Lucky Enterprises were found to be bogus and non-genuine. 4. That the order passed by the Assessing Officer allowing the ITC claimed by the petitioner - dealer of ₹ 6,49,561/-came to be taken under suo motu revision by the first revisional authority - Deputy Commissioner of Commercial Tax, Audit 1, Ahmedabad. That the petitioner dealer was served with the show cause notice .....

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terprises, for which, bills were submitted and on which the ITC was claimed. Therefore, it was the case on behalf of the assessee that the transactions between the petitioner dealer - assessee and said M/s Lucky Enterprises were genuine. That by order dated 28.5.2013, the first revisional authority - Deputy Commissioner of Commercial Tax, Audit 1, Ahmedabad had revised the order passed by the Assessing Officer dated 30.12.2010 and raised demand of ₹ 9,83,465/-, which, inter alia, includes .....

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cer and raising the aforesaid demand and denying the ITC of ₹ 6,49,561/- on the purchases made by the petitioner from M/s Lucky Enterprises, the revisional authority had observed that as all the transactions by M/s Lucky Enterprises including the transactions between M/s Lucky Enterprises and the petitioner are found to be bogus and non-genuine and in the case of M/s Lucky Enterprises, it has been found that the aforesaid M/s Lucky Enterprises had not sold any goods to the petitioner deale .....

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he purchases made by the petitioner - assessee - dealer from M/s Lucky Enterprises, the petitioner - dealer preferred a further revision application before the learned Tribunal and by impugned judgment and order, the learned Tribunal relying upon its earlier decision in the case of one M/s Madhav Still Corporation, has dismissed the said revision application confirming the order passed by the first revisional authority denying the ITC of ₹ 6,49,561/- on the purchases made by the petitioner .....

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Civil Application under Articles 226 and 227 of the Constitution of India. 7. Shri Kaji, learned advocate appearing on behalf of the petitioner has vehemently submitted that both the first revisional authority as well as the learned Tribunal have materially erred in disallowing the ITC of ₹ 6,49,561/- on the purchases made by the petitioner from M/s Lucky Enterprises. 7.1 It is further submitted by Kaji, learned advocate appearing on behalf of the petitioner that as such, the first revisio .....

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om 22.2.2006 nor was the petitioner-assessee-dealer was given any opportunity to convert the findings recorded in the case of M/s Lucky Enterprises, more particularly, with respect to the transactions between the petitioner - assessee and M/s Lucky Enterprises. 7.3 It is submitted that as such, except on the basis of the order passed in the case of M/s Lucky Enterprises cancelling the registration certificate ab initio from 22.2.2006, there is no independent finding recorded by the first revisio .....

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first revisional authority, the petitioner did produce voluminous materials to prove the genuineness of the purchases made by the petitioner from M/s Lucky Enterprises. It is submitted that both the first revisional authority as well as the learned Tribunal have materially erred in not appreciating the facts that as such, the petitioner did produce the documentary evidences to prove the genuineness of the transactions/purchases made by the petitioner from M/s Lucky Enterprises. 7.6 It is submit .....

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by the petitioner. It is submitted that therefore, the order passed by the first revisional authority can be said to be in breach of principles of natural justice and therefore, the learned Tribunal ought to have allowed the revision application preferred by the petitioner and ought to have set aside the order passed by the first revisional authority and ought to have restored the order passed by the Assessing Officer. Making the above submissions and relying upon the decision of the Hon'bl .....

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ansactions between the petitioner and M/s Lucky Enterprises were found to be bogus and non-genuine and it was found that as such, there was no sale of any goods by M/s Lucky Enterprises and consequently, registration certificate of M/s Lucky Enterprises came to be cancelled ab initio from 22.2.2006 and the petitioner claimed the ITC on the purchases alleged to have been made from the said M/s Lucky Enterprises during the aforesaid period, the first revisional authority had rightly disallowed the .....

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ancelled ab initio and the judgment and order passed by the learned Tribunal in the case of M/s Madhav Steel Corporation (supra) has been confirmed by the Division Bench of this Court and also by the Hon'ble Supreme Court. 8.3 It is submitted that therefore, when in the case of M/s Lucky Enterprises, all the transactions made by M/s Lucky Enterprises were found to be bogus and not genuine and it was found that M/s Lucky Enterprises was not genuine dealer at all, but was indulging into billin .....

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h bills and/or even the dealer might have alleged to have been paid the amount by cheques, those are not sufficient to prove and establish the genuineness of the transactions/ purchases unless and until the actual movement of goods from the place of the seller to the place of a dealer/purchaser is established and proved. In support of his submissions, Shri Dave, learned AGP has heavily relied upon the decision of the Division Bench of this Court in case of Madhav Steel Corpn. v. State of Gujarat .....

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proved, which in the present case, the petitioner has failed to establish and prove. 8.4 It is further submitted by Shri Dave, learned AGP that in the present case, even the alleged seller M/s Lucky Enterprises had not paid any tax as in the case of M/s Lucky Enterprises, it has been established and proved that M/s Lucky Enterprises had not paid any tax on the goods sold by it including the goods alleged to have been sold by M/s Lucky Enterprises to the petitioner and therefore, when the seller .....

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er - dealer was not served with the copy of the order in case of M/s Lucky Enterprises cancelling its registration certificate ab initio w.e.f 22.2.2006, which is now available with the petitioner. 8.5 Now, so far as reliance placed upon the decision in case of Suresh Trading Co. (supra) and the decision of the Division Bench of this Court in case of Giriraj Sales Corpn. (supra) are concerned, it is submitted by Shri Dave, learned AGP that in the facts and circumstances of the case, the aforesai .....

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ed advocates appearing for the respective parties at length. We have gone through and considered the order passed by the Assessing Officer; order passed by the first revisional authority as well as the impugned judgment and order passed by the learned Tribunal. 9.1 That the Assessing Officer allowed the ITC claimed by the petitioner - dealer on the purchases made by the petitioner alleged to have been made from one M/s Lucky Enterprises. That in exercise of revisional jurisdiction, the first rev .....

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r on the purchases alleged to have been made/purchased from M/s Lucky Enterprises on the ground that the registration certificate in the case of M/s Lucky Enterprises has been cancelled ab initio from 22.2.2006 and the transactions/purchases made by the petitioner from M/s Lucky Enterprises are during the interregnum period. That while disallowing the ITC to the petitioner on the purchases from M/s Lucky Enterprises, the first revisional authority has observed that the registration certificate i .....

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uming so. However, the petitioner - dealer - purchaser was required to be served with the order in case of M/s Lucky Enterprises cancelling its registration certificate ab initio and the findings recorded by the appropriate authority in case of M/s Lucky Enterprises holding the transactions by M/s Lucky Enterprises including the transaction with the petitioner - dealer as bogus and non-genuine and the finding recorded that M/s Lucky Enterprises had indulged into the billing activities only. Afte .....

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. However, an opportunity is required to be given to such dealer/purchaser to prove the genuineness of the transaction and/or to justify its claim of ITC. In the present case, the first revisional authority had disallowed the ITC claimed of ₹ 6,49,561/- on the purchases alleged to have been made from M/s Lucky Enterprises relying upon the order passed by the appropriate authority in the case of M/s Lucky Enterprises cancelling its registration certificate ab initio from 22.2.2006 and the f .....

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as bills, vouchers, weigh bills/slips and the payments were made by cheques and therefore, the first revisional authority ought not have disallowed the ITC is concerned, as such, it cannot be accepted. As held by Division Bench of this Court in case of Madhav Steel Corpn. (supra) in which the Division Bench of this Court had also considered the decision in case of Giriraj Sales Corpn. (supra), that while claiming ITC on the purchases made by a dealer, a dealer is also required to prove and estab .....

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e impugned order has been passed by the adjudicating authority denying the ITC claimed by the petitioner on the alleged purchases made by the petitioner from M/s Lucky Enterprises on the ground that the registration certificate of M/s Lucky Enterprises on the ground that the registration certificate of M/s Lucky Enterprises - seller has been cancelled ab initio on the ground that the seller had involved into the billing activities only and all the transactions by M/s Lucky Enterprises are held t .....

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e of M/s Lucky Enterprises insofar as the alleged transactions between the petitioner and M/s Lucky Enterprises and after giving an opportunity to the petitioner to prove the genuineness of the transaction between the et and M/s Lucky Enterprises in light of the observations made herein above, therefore, the matter is required to be remanded to the adjudicating authority to consider the claim of the petitioner for ITC on the alleged purchases made by the petitioner from M/s Lucky Enterprises. 9. .....

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