Input tax rebate fails on purchases from de-registered or unregistered dealers when invoices and tax remittance are not proved.

Input tax rebate under the Karnataka Value Added Tax Act, 2003 was unavailable where purchases were made from dealers who were de-registered or never registered, because the invoices did not satisfy the statutory conditions and the claimant failed to prove valid tax remittance by the selling dealers. The burden to establish a correct deduction claim rested on the dealer under Section 70(1), and on the facts found the invoices were unreliable evidence of a lawful input tax claim. The denial of rebate, reassessment, and demand were therefore upheld.

---

---

Issues: Whether the assessee was entitled to input tax rebate under the Karnataka Value Added Tax Act, 2003 on purchases made from dealers who had been de-registered or were not registered, and whether the denial of rebate and consequent reassessment were sustainable.

Analysis: The assessee claimed input tax rebate on the strength of tax invoices said to have been issued by dealers from whom it purchased goods. The record showed that several of those dealers had already been de-registered on the dates of purchase, one dealer was never registered, and the dealers had not remitted the tax collected. Under Section 10(4) of the Karnataka Value Added Tax Act, 2003, input tax deduction is permissible only where the tax invoice or similar document is issued in accordance with Sections 29 or 30 and is held by a registered dealer at the time of furnishing returns. Section 70(1) places the burden on the dealer claiming deduction to prove that the claim to input tax is correct. On the facts found by the authorities, the transactions were with non-existent or bogus dealers and the invoices relied upon were not reliable proof of a lawful input tax claim. The assessee also failed to establish that the tax had been duly remitted by those dealers.

Conclusion: The assessee was not entitled to input tax rebate, and the reassessment, demand, and denial of rebate were upheld.

Final Conclusion: The revision petitions failed because the statutory conditions for claiming input tax rebate were not satisfied and the assessee did not discharge the burden of proving a valid deduction claim.

Ratio Decidendi: A claim for input tax rebate under the VAT regime cannot succeed where the purchases are made from de-registered or unregistered dealers on the basis of unreliable invoices and the claimant fails to prove compliance with the statutory conditions and remittance of tax by the selling dealer.

---