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SRI VENKATESWARA INDUSTRIES Versus COMMERCIAL TAX OFFICER, AND 5 OTHERS

2016 (6) TMI 630 - ANDHRA PRADESH HIGH COURT

Refund of excess tax credit - genuineness of credit - purchase of goods from local VAT dealers, and sale of those goods partly in inter-state trade and commerce, and partly as export sales - denial of credit 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 - Held that:- While the purchasing VAT dealer would not be entitled to claim input tax credit without obtaining a tax invoice from the sell .....

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oner, 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.

Maintainability .....

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sideration to the 6th respondent. This Court would also not substitute its views for that of the assessing authority. It is only if the impugned order suffers from an error of law apparent on the face of the record would this Court interfere. The impugned order does not suffer from any such infirmity.

Writ petition fails - Dismissed. - WRIT PETITION NO.7654 OF 2016 - Dated:- 15-3-2016 - SRI RAMESH RANGANATHAN AND SRI M.SATYANARAYANA MURTHY, JJ. FOR THE PETITIONER : BALAJI VARMA FOR TH .....

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the respondents to refund ₹ 6,24,702/-, which was claimed by the petitioner as excess input tax credit, with interest. The facts, as stated in the affidavit filed in support of the Writ Petition, are that the petitioner is a registered dealer on the rolls of the 1st respondent carrying on business in oil and oil seeds. They 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 h .....

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ject goods, had not effected sales of edible oil, valued at ₹ 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 trad .....

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edible oils of ₹ 1,24,94,015/- to the petitioner; and hence the ITC claim of the petitioner for ₹ 6,24,701/-, on the said transactions, was proposed to be disallowed. Thereafter, the assessing authority passed an assessment order in VAT 305 dated 27.07.2015 wherein, after referring to the contents of the earlier show cause notice issued by him, he stated that the show cause notice was served on the petitioner-dealer calling for their written objections if any, against the proposed t .....

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problem in the petitioner s business and in their family. It is the petitioner s case that he had approached the 1st respondent, and had requested for the copy of the report; the 1st respondent did not supply him a copy of the report of the 5th respondent; and, without granting sufficient time to produce the relevant documents, the 1st respondent had hurriedly passed the impugned assessment order. The claim of the petitioner, to have the impugned assessment order set aside to the extent they wer .....

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fore 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 turno .....

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ax 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 after verifying the records, had granted relief in respect of the purchases made by the assessee from real and identifiable sellers within the State whose registration number was mentioned in the bills; in respect of some other dealers whose registration numbers were mentioned, the Deputy Commissioner had disallowed the exemption for want of suffici .....

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ribunal, the department had filed T.R.C, and in so far as the assessee's claim was disallowed the assessee had filed T.R.C; and both the T.R.C, must be dismissed. In B. Narasaiah & Co. v. State of A.P. (AP) (2002) 127 STC 606a Division Bench of this Court held:- ….. This Court in State of A.P. v. Thungabhadra Industries Ltd. dealing with a claim of registered dealer, who claimed as a second seller of groundnut oil, taxable at the first point of sale within the State of Andhra Prad .....

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iled to establish that he made the purchase from a real and identifiable dealer within the State. There is no controversy that Bantu Chinnaiah & Co., Nizamabad, is a registered dealer under the provisions of the Act and its identity is also not in dispute. As rightly pointed out by the learned Special Government Pleader for Taxes, it is true that there is no satisfactory evidence placed before the Tribunal or before us to show that the vendor of the petitioner filed returns including the sal .....

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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 .....

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in fact, obtain the invoices from the registered dealer; and it was also not disputed, and in fact was conceded in the order of assessment, that the registration of M/s. Karat 24 was cancelled on February 28, 2010, i.e., after the transaction in question occurred whereunder the petitioner had purchased bullion from the registered dealer, and had produced the vouchers. Section 13 of the Act relates to credit for input-tax and under sub-section (1) thereof, subject to the conditions if any prescr .....

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tax to another VAT dealer, shall issue, at the time of sale, the tax invoice in such form as may be prescribed. Section 2(35) of the Act defines tax invoice to mean a sales invoice containing such details as may be prescribed, and issued by a VAT dealer to another VAT dealer. Section 2(43) defines VAT dealer to mean a dealer who is registered for VAT. Rule 26 of the A.P. VAT Rules, 2005 ( the Rules for short) relates to invoices and, under sub-rule (1) thereof, the invoices, bills or cash memora .....

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f the basic price and tax amount. Rule 27 relates to tax invoice and, under sub-rule (1) thereof, a tax invoice, specified in Section 14, is required to contain the 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 goo .....

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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; and (2) should have been issued by a VAT dealer to another VAT dealer. In view of the requirement of Section 14 of the Act, it is only in ca .....

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d the goods to the purchasing dealer; whether there was physical delivery of such goods; whether the tax invoice was issued by a registered VAT dealer; whether or not the transactions of sale were genuine, etc. If, on enquiry, the assessing authority is satisfied, on the basis of the material evidence on record, that there has been no sale of goods, or the tax invoice was not issued by the VAT dealer, or that there was no physical delivery of goods, or that inter-state purchases had been suppres .....

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s from the dealer to whom he has sold the goods; and to pay only the differential tax (the difference between output tax and the input tax). (M/s. Vijaya Venkata Durga Oil Traders v. The Commercial Tax Officer, Sivalayam Street, Circle, Vijayawada I Division, Gunadala, Vijayawada, Krishna District (Order in W.P. No.15413 of 2014 dated 25.09.2014)). While the purchasing VAT dealer would not be entitled to claim input tax credit without obtaining a tax invoice from the selling VAT dealer, mere pro .....

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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 th .....

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pute that the petitioner did not even choose to reply to the show cause notice, let alone establish the genuineness of the transactions. While nonpayment of tax, by a registered VAT dealer, on the sale of goods by him to the purchasing VAT dealer, may not disentitle the purchasing VAT dealer from claiming input-tax credit, the assessing authority, in the present case, has, on the basis of the material on record, opined that the selling VAT dealer has not even disclosed the said turnover in their .....

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