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TMI Blog2018 (7) TMI 399X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the evidence produced by the assessee to contend that there was actual movement of goods ? 2. Briefly stated, the facts are as under. 3. Appellantassessee is a proprietary concern and is engaged in oil manufacturing activity. As part of its business, the assessee would purchase ground nut oil from various sources. For the period between 01.08.1994 to 31.03.1995, the assessee had claimed to have made such purchases from two registered dealers viz. Shrinathji Industries and Umiya Industries. It was found that their registrations were cancelled vide orders dated 15.07.1995 and 08.09.1995 respectively with retrospective effect. This was on the premise that according to the departmental authorities, these two dealers Shrinathji Industries and Umiya Industries were engaged in bogus billing activities. In the context of these developments, the question of granting input tax credit on the purchases stated to have been made by the assessee from such dealers came up for consideration before the adjudicating authority. The Sales Tax Officer, Gondal, by his order dated 16.08.2000 held that the entire quantity of groundnuts purchased from the two dealers by the assessee was taxable. He i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of a dealer subsequently, even with retrospective effect, ipsofacto, cannot harm the purchasing dealers' interest. The second stream of decisions is that if the purchasing dealer himself who is involved in bogus billing activities and if it can be safely culled out that the purchases themselves were bogus, the input tax credit can certainly be disallowed. 8. In case of State of Maharashtra v. Suresh Trading Company reported in 1997 (11) SCC 378, the Supreme Court in the context of Bombay Sales Tax Act, 1959, considered a somewhat similar issue. The assessee in the said case had purchased goods from one Sulekha Enterprises at the time when Sulekha Enterprises enjoyed registration under the Sales Tax Act. The assessee resold goods so purchased and claimed deduction of the turnover of the goods purchased from Sulekha Enterprises as per law. This claim was disallowed by the Sales Tax Officer on the ground that registration of Sulekha Enterprises was canceled with retrospective effect and therefore the purchases made by the assessee from Sulekha Enterprises cannot be said to be from a registered dealer. The High Court set aside such a decision observing, inter alia, that subsequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in view of statement made by the department that genuine transactions will not be affected by such provision. 10. These aspects have been reiterated by this Court in several subsequent decisions. We may refer to one such judgment. In case of Mahadev Enterprise v. State of Gujarat passed in Special Civil Application No.90 of 2016, Court made following observations: "10. Subsection (11) of section 27 of the GVAT Act casts an obligation upon the Commissioner to publish the address of the dealers whose certificate of registration has been suspended or cancelled under the provisions of the Act. Section 97 of the Act provides for publication of information regarding dealers and other persons in public interest and provides that notwithstanding anything contained in section 92, if the Commissioner is of the opinion that it is necessary or expedient in the public interest to publish or disclose the names of any dealers or other persons and any other particulars relating to any proceedings under the Act in respect of such dealers and persons, he may publish or disclose or cause to be published or disclosed such names and particulars in such manner as may be prescribed. The reason behind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistration of the selling dealer has been cancelled retrospectively, input tax credit cannot be disallowed except as provided under section 11(5)(mmmm) of the Act. 11. In the case of Madhav Steel Corporation v.State of Gujarat, (2014) 72 VST 318 (Guj), on which strong reliance is generally placed on behalf of the authorities under the GVAT Act, the court was dealing with a case wherein two parties viz., M/s Shree Bhavani Ispat, Bhavnagar and M/s Mangal Enterprise, from whom the appellant therein had purchased goods failed to establish the genuineness of their purchases and also failed to establish the genuineness of the sales made to the appellant therein. The appellant therein upon being called upon to establish the genuineness of the purchases from the said parties failed to do so. Thus, in that case, there were findings of fact to the effect that genuineness of the purchases made by the selling dealers was not established and the genuineness of the sale in favour of the appellant therein was also not established. It is in such circumstances that the court held that when the appellant/s had failed to provide any documentary evidence with regard to physical movement of the good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them from M/s. Shree Bhavani Ispat and M/s. Madhav Steel Corporation. At this stage it is required to be noted that even their vendors M/s. Shree Bhavani Ispat and M/s. Madhav Steel Corporation have also failed to satisfy and/or prove that they have infact suppressed the goods from other 23 dealers. Thus, when the vendors could not prove their purchase from other 23 dealers, no goods were available with them which could have been sold to the appellants - original dealers herein and infact there was no physical movement of the goods. If there were no goods with the vendors which were alleged to have been sold to the appellants - dealers, naturally there cannot be any physical movement of the goods. The appellants/dealers could prove the genuineness of the transactions not only from the cheques alleged to have been paid to the vendors but as such by proving actual physical movement of the goods, which the appellants/dealers have failed to prove. It cannot be disputed that as such the onus to prove the genuineness of the purchase is on the assessee/dealer. Even the onus to prove the genuineness of the purchase of the dealer from whom the appellant - dealers made purchases is also on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turing activity. The spot visits showed no equipments or machinery for such purpose. He came to the conclusion that said two agencies were solely involved in issuing bogus bills. He gave detailed reasons why he believed that the goods said to have been sold by the said two agencies to the assessee could not have been so subjected to sale. During repeated visits, the premises of both the industries were shut. There was no stock at the site. No account books were found. He weighed the evidence produced by the appellant in order to demonstrate the actual movement of goods in the background of such overwhelming damaging evidence of the said two industries being engaged only in bogus billing activities. He gave detailed reasons to discard such evidence, principally, pointing out that the claim that the payments were made through cheques was not established. The assessee did contend that the cheques were issued but could not establish in whose favour the cheques were encashed. In fact, before the Tribunal, the departmental representative pointed out that huge amount of cash was deposited in the account of the assessee in a short time out of which such cheques were issued. It was also poi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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