Input-tax credit cannot be denied merely for a seller's later tax default without proof of false invoices or sham purchases.

Input-tax credit under section 13(1) of the Andhra Pradesh Value Added Tax Act, 2005 cannot be denied merely because the selling registered dealer later failed to file returns, disclose turnover, or remit tax. Where the purchaser shows purchases of taxable goods during the relevant period through invoices and vouchers, and the invoices are not shown to be false or fabricated, the dealer's subsequent cancellation or non-compliance does not by itself defeat the credit claim. The department must establish a substantive defect, such as false invoices or no genuine purchase, before disallowing input-tax credit.

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Issues: Whether input-tax credit under section 13(1) of the Andhra Pradesh Value Added Tax Act, 2005 could be denied solely because the selling dealer later failed to file returns, disclose turnover, or remit tax, when the purchaser claimed to have purchased goods from a registered dealer against invoices issued during the relevant period.

Analysis: Section 13(1) entitles a VAT dealer to input-tax credit for tax charged on purchases of taxable goods during the tax period. The denial of credit cannot rest only on the selling dealer's subsequent default in filing returns or paying tax, particularly when the invoices are not shown to be false or fabricated and the purchases from a registered dealer are supported by vouchers. The cancellation of the selling dealer's registration after the transaction does not by itself defeat the purchaser's claim for input-tax credit.

Conclusion: Input-tax credit could not be disallowed on the sole ground that the selling dealer later failed to remit tax or file returns; the issue was decided in favour of the assessee.

Ratio Decidendi: A purchaser's entitlement to input-tax credit cannot be rejected merely because the selling registered dealer later defaults in tax compliance, unless the department establishes a substantive defect such as false invoices or an absence of genuine purchase.

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