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Issues: Whether input tax credit could be denied to a purchasing dealer merely because the selling dealer had not been assessed, had not filed returns, or had failed to remit tax reflected in the departmental verification.
Analysis: The impugned assessments proceeded on the footing that the petitioner had availed excess input tax credit because the seller's turnover did not match the departmental website and because certain sellers had allegedly not filed returns. The governing provisions and the earlier decisions relied on by the Court make it clear that, where the purchasing dealer has complied with the prescribed requirements and established the payment on purchases, the revenue cannot deny input tax credit only on account of the seller's default. The liability, if any, has to be pursued against the defaulting selling dealer, and the purchaser cannot be penalised for matters beyond its control when statutory compliance on its part is shown.
Conclusion: Input tax credit could not be denied to the petitioner on the ground of the selling dealer's default; the objection was unsustainable and the assessment orders were liable to be quashed to that extent.
Ratio Decidendi: A purchasing dealer who satisfies the statutory conditions for claiming input tax credit cannot be denied that credit merely because the selling dealer has not filed returns or remitted tax; the revenue must proceed against the defaulting seller.
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