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Shreeji Impex (S) v. State Of Gujarat & 3 Opponent(S)
Factual and Procedural Background
The appellant, a purchaser-dealer, claimed input tax credit (ITC) of Rs. 1,69,872/- on purchases worth Rs. 42,46,800/- from M/s. Leela Trading and three other dealers for the assessment year 2007-08. The Assessing Officer (AO) denied the ITC on the basis that the registrations of the vendors were cancelled and that the appellant failed to prove actual purchase or movement of goods, concluding the transactions were billing activities intended solely to claim ITC. The First Appellate Authority upheld the AO's order, and the Gujarat Value Added Tax Tribunal dismissed the second appeal filed by the appellant, confirming the denial of ITC. Aggrieved, the appellant preferred the present Tax Appeal challenging the concurrent findings of fact and law.
Legal Issues Presented
- Whether the Appellate Tribunal failed to exercise its jurisdiction properly by not appreciating the Supreme Court's law in State of Maharashtra v. Suresh Trading Company and ignoring relevant documents, resulting in a miscarriage of justice?
- Whether the Appellate Tribunal exceeded its jurisdiction by not appropriately considering the facts and law presented?
- Whether the Appellate Tribunal erred in considering the retrospective cancellation of the registration of certain vendors from whom the appellant purchased goods?
- Whether the order disallowing ITC on the ground of retrospective cancellation of vendor registrations by the competent authority is bad in law and illegal?
- Whether the Appellate Tribunal erred in confirming the orders denying ITC despite inspection of the appellant's records showing no illegality and genuine transactions?
- Whether the Appellate Tribunal committed an error of law in appreciating the Supreme Court judgment in State of Maharashtra v. Suresh Trading Co.?
Arguments of the Parties
Appellant's Arguments
- The denial of ITC on the ground of vendor registration cancellation is incorrect as the appellant had genuine stock reflected in books of account and invoices evidencing purchases worth Rs. 42,46,800/-.
- The transactions were genuine and supported by documentary evidence including invoices and accounting records.
- The appellant relied on the Supreme Court decision in State of Maharashtra v. Suresh Trading Co. to argue that ITC should not be denied merely due to cancellation of vendor registrations.
Respondent's Arguments
- There are concurrent findings of fact by all authorities that the appellant failed to prove actual purchase or movement of goods from the vendors.
- The appellant did not produce any documentary evidence before any authority to establish genuine movement of goods on which ITC was claimed.
- The decision in Suresh Trading Co. is not applicable as the denial of ITC is based on failure to prove genuine transactions and movement of goods, not solely on cancellation of vendor registrations.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| State of Maharashtra v. Suresh Trading Company (109 STC 439) | Principle that denial of input tax credit solely on the ground of vendor registration cancellation is impermissible if transactions are genuine. | The Court distinguished the present case by noting that ITC denial was not solely due to cancellation but due to failure to prove actual movement of goods and genuineness of transactions; hence, the precedent was not applicable. |
Court's Reasoning and Analysis
The Court examined the evidence and orders of the Assessing Officer, First Appellate Authority, and Tribunal, noting that while the appellant produced invoices and accounting records, no material or cogent evidence was furnished to prove actual movement of goods from the vendors. The Court emphasized the concurrent findings of fact by all authorities that the transactions were not genuine purchases but billing activities aimed at claiming ITC. The Court further clarified that the Supreme Court decision in Suresh Trading Co. was not applicable because the denial of ITC was not merely on the basis of vendor registration cancellation but on the substantive failure to prove genuine transactions and payment of tax. The Court agreed with the view of the authorities below that the appellant failed to discharge the evidentiary burden, and thus the denial of ITC was justified.
Holding and Implications
The Tax Appeal is dismissed.
The Court upheld the concurrent findings of fact by the lower authorities denying the input tax credit claimed by the appellant due to lack of proof of genuine transactions and movement of goods. The decision reinforces the principle that input tax credit cannot be claimed without substantiating actual purchase and tax payment, regardless of vendor registration status. No new precedent was established; the ruling applies directly to the parties, confirming that mere possession of invoices and books without evidence of genuine transactions is insufficient to claim ITC.
ORAL ORDER
(PER: HONOURABLE MR. JUSTICE M.R SHAH)
1.0 Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Gujarat Value Added Tax Tribunal, Ahmedabad (hereinafter referred to as the “Tribunal”) dated 29.08.2013 passed in Second Appeal No. 711 of 2010, by which, the learned Tribunal has dismissed the said appeal preferred by the appellant and has confirmed the orders passed by the Assessing Officer as well as First Appellate Authority denying the input tax credit (partially), the appellant - purchaser - dealer has preferred the present Tax Appeal with the following proposed questions of law.
“A. Whether Hon'ble Appellate Tribunal (respondent no. 3) has failed to exercise the jurisdiction vested in it by not appreciating the law laid down by the Apex Court in the case of State Of Maharashtra Through The Secretary v. Suresh Trading Company has failed to exercise the jurisdiction vested in it by affirming the order of the First Appellate Tribunal (respondent no. 2 herein), who ignored to take into consideration documents on records, which has lead to miscarriage of the justice?
C. Whether Hon'ble Appellate Tribunal has exceeded the jurisdiction vested in it by not appropriately considering the facts of the case and law cited at Bar?
D. Whether Hon'ble Appellate Tribunal has erred to take into consideration the effect of the retrospective cancellation of the registration of the few of the vendors from whom this Appellant has purchased the goods?
E. Whether Hon'ble Appellate Tribunal has failed to appreciate that the order of disallowing Input Tax Credit (ITC for short) to the Appellant on the ground of alleged cancellation of the few traders with retrospective effect (ITC for short) by the competent authority (respondent no. 4 herein) is bad in law and illegal?
F. Hon'ble Appellate Tribunal failed to appreciate the fact that competent authority has took the inspection of the records of the Appellant and no illegality and/or infirmity was found while checking the records of the Appellant. This suggests that transaction entered in between the parties were genuine. It is in this back ground it is submitted that Whether Hon'ble Appellate Tribunal was right in confirming the order of the competent authority and that of first appellate by overlooking the binding judgment of the Apex Court delivered in case of State of Maharashtra v. Suresh Trading Co.?
G. Whether appellate Tribunal has committed an error of law while appreciating the judgment of Apex Court delivered in case of State of Maharashtra v. Suresh Trading Co.?”
2.0 That the appellant-purchaser - dealer claimed input tax credit on the alleged purchased made by it worth Rs. 42,46,800/- from one M/s. Leela Trading and three others dealers and claimed input tax credit of Rs. 1,69,872/- during the assessment year 2007-08. That on appreciation of evidence on record as well as considering the fact that the vendors from whom the appellant as alleged to have purchased the goods on which input tax credit was claimed and their registrations were canceled, the AO held that appellant has failed to prove the actual purchase of the goods from the aforesaid vendors and as such there was actual moment of the goods at all on which the input tax credit was claimed and therefore, it was the case of billing activity only for the purpose of getting input tax credit and it was not proved by leading the evidence that in fact any tax was paid on the purchase of the aforesaid goods, for which tax was paid. Under the circumstances and by holding so the AO denied the input tax credit claimed by the appellant on the purchase of goods worth Rs. 42,46,800/- i.e input tax credit claim of Rs. 1,69,872/-.
2.1 Feeling aggrieved and dissatisfied with the order passed by the Assessing Officer denying the input tax credit claim by the appellant, the appellant preferred appeal before the First Appellate Authority and First Appellate Authority dismissed the said appeal.
2.2 Feeling aggrieved and dissatisfied with the orders passed by the Assessing Officer as well as First Appellate Authority, the appellant preferred Second Appeal before the learned Tribunal and by impugned judgment and order, the learned Tribunal has dismissed the said appeal confirming the orders passed by both the authorities below denying the input tax credit of Rs. 1,69,872/- claimed by the appellant.
2.3 Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the Tribunal dismissing the appeal preferred by the appellant and confirming the orders passed by both the authorities below denying the input tax credit of Rs. 1,69,872/- claimed by the appellant, the appellant has preferred present Tax Appeal with the aforesaid proposed questions of law.
3.0 Shri J.F Mehta, learned advocate for the appellant has vehemently submitted that all the authorities below have materially erred in denying the input tax credit to the appellant on the purchase of goods worth Rs. 42,46,800/-. It is submitted that the AO denied the input tax credit of the appellant on the ground that the registration of the vendors came to be canceled. It is submitted that on the aforesaid ground, the input tax credit on the purchase made by the appellant, cannot be denied. It is submitted that as such on cross check of the records it was found that the appellant was having the stock which was reflected in the books of account etc. It is submitted that even invoices with respect to the purchase of the aforesaid goods worth Rs. 42,46,800/- were also placed on record. It is submitted that therefore, denial of input tax credit on the purchase of goods worth Rs. 42,46,800/- from M/s. Leela Trading and three others dealers ought not to have been denied. Shri Mehta, learned advocate for the appellant has heavily relied upon the decision in the case of State of Maharashtra v. Suresh Trading Co. reported in 109 STC 439 in support of his above submissions.
4.0 Present appeal is opposed by Shri Gandhi, learned AGP appearing on behalf of respondent State. It is submitted that as such there are concurrent findings of fact given by all the authorities below that the appellant failed to satisfy that in fact appellant purchase the goods worth Rs. 42,46,800/- on which input tax credit was claimed and as such failed to prove that there was any movement of goods from vendors-M/s. Leela Trading and three others dealers to the appellant - purchaser. It is submitted that as such the appellant failed to prove that any tax was paid on the goods alleged to have been purchased by them worth Rs. 42.46,800/-. It is further submitted that even neither before First Appellate Authority nor before learned Tribunal nor even before this Court the appellant has produced any documentary evidence to show actual movement of goods on which the input tax credit has been claimed. It is submitted that therefore, in the facts and circumstances of the case the decision in the case of Suresh Trading Co. (supra) would not be applicable to the present case.
5.0 Heard the learned advocates for the respective parties at length and perused the order passed by the learned Assessing Office; order passed by the learned First Appellate Authority and impugned judgment and order passed by the learned Tribunal. At the outset, it is required to be noted that the appellant claimed the input tax credit of Rs. 1,69,872/- on the purchase of the goods worth Rs. 42,46,800/- from M/s. Leela Trading company and other three vendors. In support of the above claim that they actually purchase the goods worth Rs. 42,46,800/- from M/s. Leela Trading Company and other three vendors, the appellant relied upon the invoices/bills and their books of profit and loss. However, it is required to be noted that not a single document and/or material was placed on record to show the actual movement of the goods from the vendors to appellant. The appellant miserably failed to prove the actual transaction by leading the cogent evidence and miserably failed to prove that purchase on which input tax credit was claimed, were genuine and/or on which the tax was paid. There are concurrent findings of fact given by all the authorities below that the alleged transaction/purchase worth Rs. 42,46,800/- from M/s. Leela Trading Company and three others, on which, the appellant claimed input tax credit of Rs. 1,69,872/- were not genuine and it was only billing activities for the purpose of claiming input tax credit etc. The aforesaid findings of facts recorded by all the authorities below are on appreciation of evidence and considering the material on record which are neither perverse nor contrary to the evidence on record.
6.0 Now, so far as decision of the Hon'ble Supreme Court in the case of the Suresh Trading Co. (supra) relied upon by the learned advocate for the appellant is concerned, it is required to be noted that in the present case input tax credit is not denied solely on the ground that registration of the vendors - M/s. Leela Trading Company and three others were canceled. As observed herein above, on appreciation of evidence all the three authorities below have concurrently held that in fact there was no moment of goods and it was only billing activity and transaction/alleged purchase on which input tax credit was claimed, were not genuine. It is required to be noted that neither before the Assessing Officer nor before the First Appellate Authority, learned Tribunal and/or even before this Court, the appellant has produced any evidence to show the actual movement of goods and the genuineness of the transaction/purchase from M/s. Leela Trading Company and three others on which input tax credit was claimed. In view of the aforesaid facts and circumstances of the case, we are of the opinion that no error has been committed by any of the authorities below denying the input tax credit of Rs. 1,69,872/- claimed by the appellant. We are in complete agreement with the view taken by all the authorities below.
7.0 In view of the above and for the reasons stated above, no substantial question of law arise in the present Tax Appeal and there are concurrent findings of fact given by all the authorities below with respect to genuineness of the transaction/purchase alleged to have been made by the appellant from M/s. Leela Trading Company and three others on which input tax credit was made, present Tax Appeal deserve to be dismissed and is accordingly dismissed. In view of the dismissal of Tax Appeal, Civil Application No. 359 of 2014 deserve to be dismissed and is also dismissed.
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