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TMI Blog2016 (6) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... claim to have purchased these goods from local VAT dealers, and to have sold them partly in inter-state trade and commerce, and partly as export sales; and that they had claimed refund of excess tax credit for Rs. 29,38,176/- in the March, 2013 returns. On being so authorised, the 1st respondent conducted an audit, and verified the books of accounts of the petitioner for the tax period 2010-11 and 2011-12. Thereafter a show cause notice dated 16.07.2015 was issued proposing to disallow the petitioner's claim of input tax credit, for Rs. 6,24,701/-, on the ground that the selling dealers, i.e., the dealers from whom the petitioner had purchased the subject goods, had not effected sales of edible oil, valued at Rs. 1,24,94,015/-., to the petitioner herein. The 1st respondent issued a show cause notice in Form - VAT 305A on 16.07.2015 asking the petitioner to file their written objections against the proposed assessment. In the said show cause notice, the 1st respondent stated that the correctness and completeness of returns filed by the petitioner were verified with reference to the books of accounts, purchase and sales bills, and the trading and P&L accounts for the period from 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , however, claim to have filed an application before the 5th respondent, under the Right to Information Act; and claim that no reply has been received, from the 5th respondent, till date. Sri P. Balaji Verma, Learned Counsel for the petitioner, would place reliance on the judgment of this Court, in M/s. Harsh Jewellers v. Commercial Tax Officer (2012) 54 APSTJ 133 (AP) , to submit that, as the petitioner has produced a tax invoice, failure on the part of the selling VAT dealer to declare the goods sold to the petitioner as part of their turnover, would not disable the petitioner from claiming input tax credit. In The State of Andhra Pradesh v. Thungabhadra Industries Ltd. (1986) 62 STC 71 (AP)a Division Bench of this Court observed that the twin tests to be applied, to determine whether the assessee is entitled to exemption of turnover from tax, were (1) the first seller should be a real and identifiable dealer within the State and (2) mere non-payment of tax by the first seller within the State does not shift the liability to pay tax on the second seller; in disposing of the matter, the Tribunal had rightly applied the said tests and, on the facts and circumstances of the case a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the tax on the gross turnover of Rs. 8,85,500 and determined the tax of Rs. 63,313.25 paise. The reason that the vendor of the petitioner did not pay the assessed tax cannot be a valid ground to disallow the claim of the petitioner. We say this because under the statute, if the vendor is alone is liable to be taxed and if he fails to discharge the said liability, it is always open for the authorities under the Act to proceed against him and recover the same by the mode known to law. But that circumstance can never be a valid and tenable ground to disallow the exemption claimed by the petitioner. ...." (emphasis supplied) In Harsh Jewellers1, a Division Bench of this Court, relying on Thungabhadra Industries Ltd.2; and Sri Ramanjaneya Groundnut Factory v. CTO, Kadiri (1996) 103 STC 297, held that the principles laid down therein were afortiori applicable since Section 13(1) of the Act entitled the VAT dealer to claim input-tax credit for the tax charged in respect of all purchases of taxable goods made by that dealer during the tax period; failure on the part of M/s. Karat 24 (selling dealer) to file returns, or remit the tax component of the sales made to the petitioner, coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e details specified in the said Rule. Among the details referred in Rule 27(1) are (d) the serial number of the invoice and the date on which the invoice is issued; (e) the date of delivery of the goods; (f) the description of the goods supplied; (g) the quantity or volume of the goods sold; (h) the rate of tax for each category of goods; (i) the basic price of the goods sold, the rate of tax, the amount of tax and the total sale price which is the sum of the basic price and the tax amount. Rule 27(4) stipulates that input tax credit shall be claimed only against an original tax invoice. Section 55 of the AP VAT Act relates to penalty for issue of a tax invoice, and for the use of false tax invoices. Under Section 55(2) any VAT dealer, who issues a false tax invoice, or receives and uses a tax invoice knowing it to be false, shall be liable to pay a penalty of 200% of the tax shown on the false invoice. The entitlement of a VAT dealer to claim input tax under Section 13(1) of the Act, in view of Section 13(3) thereof, is only if he is in possession of a "tax invoice". A valid "tax invoice", in view of Section 2(35) of the Act, (1) must contain the details prescribed by the Rules; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent is said to be a registered dealer, and the petitioner claims to have purchased the goods from him and to have obtained tax invoices in this regard, the information, on which the assessing authority placed reliance upon, shows that the selling VAT dealer had not declared the turnover, relating to the sale of goods to the petitioner, in their returns. Section 16 of the Act relates to burden of proof and, under subsection (1) thereof, the burden of proving that any sale or purchase effected by a dealer is eligible for input tax credit shall lie on the dealer. It is for the petitioner, in reply to the show cause notice issued by the assessing authority, to prove that the goods were physical delivered to him by the 6th respondent, and the mode and manner in which they paid the sale price to the 6th respondent; and to satisfy the assessing authority that, notwithstanding failure of the selling VAT dealer to disclose the turnover (representing the sale of goods by them to the petitioner) in their returns, the goods had, in fact, been sold to them. It is not even contended before us by Sri P. Balaji Verma, Learned Counsel for the petitioner, that the petitioner did not receive a co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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