TMI Blog2019 (5) TMI 934X X X X Extracts X X X X X X X X Extracts X X X X ..... afacie case in their favour - Under the circumstances, the Tribunal and the first appellate authority were not justified in directing payment of huge amount of predeposit for the purpose of admitting the appeal and staying recovery - petition allowed. - R/SPECIAL CIVIL APPLICATION NO. 1173 of 2019 - - - Dated:- 1-5-2019 - MS HARSHA DEVANI AND MR BHARGAV D. KARIA, JJ. For The Petitioner (s) : UCHIT N SHETH (7336) For The Respondent (s) : NOTICE SERVED BY DS (5) ORAL JUDGMENT ( PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) 1. By this petition under Article 226 of the Constitution of India, the petitioners have challenged the order dated 22.10.2018 made by the Gujarat Value Added Tax Tribunal (hereinafter referred to as the the Tribunal ) in Second Appeal No.1105 of 2018. 2. The first petitioner Utsav Enterprise, a proprietorship firm registered under the Gujarat Value Added Tax Act, 2003 (hereinafter referred to as the GVAT Act ) is engaged in the business of trading in chemicals. It is the case of the petitioners that the returns were duly filed and tax a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anding dues as per the assessment orders passed for the year 2013-14. It was pointed out that insofar as as VAT demand in case of Chem Edge International Pvt. Ltd. is concerned there was a meager demand of ₹ 4831/but not related to sales to the petitioner and insofar as Ardor International Private Limited is concerned, while the amount of dues is much less than the amount mentioned in the assessment orders of the petitioners, the said vendor has informed the petitioner that majority of such dues are on account of disallowance or exemption from certain high seas sales transactions and that the remaining are dues relating to certain disputed claims of input tax credit unconnected with the sales made to the petitioners. The attention of the court was also drawn to the assessment orders passed in the case of those dealers. 4.1 It was contended that to invoke section 11(7A) of the GVAT Act, the respondents have to establish that qua these sales, the tax has not been paid and such exercise should have been carried out at the stage of the assessment proceedings; however, the assessment order has been passed without proper inquiry leading to a high pitched assessment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as, accordingly, urged that the petition being devoid of merits deserves to be dismissed. 6. The sole question that arises for consideration in the present case is as to whether the first appellate authority and the Tribunal were justified in directing the petitioners to make predeposit in terms of the orders passed by them. 7. A perusal of the record of the case reveals that in the assessment order, the Assessing Officer has, after examining the transaction tree, observed that in case of certain dealers the sales appear to be of Cancelled Tin/Abinitio Cancelled Tin. He has observed that in case of certain dealers who have sold goods to this dealer, there is absence of Tin movement of goods and as they are involved in only billing activities, their registrations have been cancelled abinitio. Input tax credit cannot be taken in respect of purchases made from such dealers. Keeping in view the provisions of section 11(7A) of the GVAT Act, the Assessing Officer has held that as tax had not been paid earlier, the dealer is not entitled to input tax credit on such purchases. The Assessing Officer has worked out the percentage of purchases made by the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. It is further stated that the company has been assessed for the year 2013-14 under the GVAT Act and as per the assessment order, the total dues against the company were ₹ 68,36,74,990/. A copy of the assessment order is also annexed along with the letter. It is further stated in the letter that almost the entire interState sales and total branch transfer transactions were of goods imported from outside the country. It is further stated in the letter that sales to Capital Traders are duly recorded in the books of account of M/s. Ardor International Limited and also assessed to tax in the assessment year 2013-14 passed under the GVAT Act. Though dues of ₹ 68,36,74,990/have been raised in the assessment order passed under the GVAT Act for the year 2013-14, they are not relating to the sales of Capital Traders. 10. Thus, after the impugned orders came to be passed by the Tribunal, the petitioners have come across material which establishes that insofar as two of the vendors are concerned, no dues were outstanding for the assessment year 2013-14. Insofar as the third and fourth vendors are concerned, that vendors have informed the assessee that none of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng input tax credit to the petitioners. Section 11(7A) of the GVAT Act reads as under:- Notwithstanding anything contained in this section, in no case the amount of tax credit on any purchase of goods shall exceed the amount of tax in respect of the same goods, actually paid, if any, under this Act or any earlier law, into the Government treasury: 14. Thus, subsection (7A) of section 11 of the GVAT Act envisages disallowance of tax credit in excess of the amount of tax paid in respect of the same goods. Therefore, to disallow tax credit on any purchase, it has to be established that it is in respect of the very goods purchased by a dealer that the tax has not been paid. Input tax credit cannot be disallowed by working out the percentage of purchases made from a dealer whose registration is cancelled, without first establishing that in respect of the goods purchased by the dealer, the vendor had not paid tax. 15. In the light of the above discussion, the court is of the view that the petitioners have made out a strong primafacie case in their favour. Under the circumstances, the Tribunal and the first appellate authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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