Input credit cannot be denied solely because invoices came from a second-stage dealer when goods moved between registered godowns.

Input credit could not be denied merely because the invoices were issued by a second-stage dealer where the respondent held two registered godowns and the goods were transferred between those godowns. On the admitted facts, the movement of goods did not amount to a separate sale by the dealer to the respondent in a manner that justified disallowance of credit solely on invoice source. The denial of input credit was therefore unsustainable, and the Revenue's appeal failed.

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Issues: Whether input credit could be denied on the ground that the invoices were issued by a second-stage dealer, where the respondent maintained separate registered godowns and the goods were transferred between those godowns of the same manufacturer.

Analysis: The Revenue did not dispute that the respondent had two dealer registrations and that the goods were moved from one godown to another. On those facts, the goods could not be treated as having been sold by the second-stage dealer to the respondent in a manner that would justify denial of credit merely on the basis of the invoice source.

Conclusion: The denial of input credit was not sustainable and the Revenue's appeal failed.

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