Bogus purchase transactions defeat input tax credit where dealer identity and supporting bills are not proved, leaving no substantial question of law

Disallowance of input tax credit and penalty was sustained where the purchasing dealers were found to be fictitious, the goods were traced to bogus transactions, and the verification report was not effectively challenged. The Tribunal treated the findings of bogus dealers and absence of genuine supporting bills as factual conclusions, and they were not shown to be perverse or erroneous. On that basis, the challenge raised no substantial question of law, so the Revenue's position prevailed.

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Issues: Whether the disallowance of input tax credit and levy of penalty on the basis that the purchase dealers were fictitious and the claim was unsupported by genuine transactions gave rise to any substantial question of law.

Analysis: The authorities recorded that the purchases were shown from bogus dealers and that the goods were routed without genuine supporting bills. The earlier remand order to reopen the assessment had attained finality, and the verification report relied upon by the assessing authority was not effectively challenged. The Tribunal affirmed the finding that the concerned dealers were fictitious and bogus, and that factual finding was not shown to be perverse or erroneous. In such circumstances, the challenge to the disallowance of input tax credit and the consequential penalties did not disclose any legal infirmity warranting interference.

Conclusion: The question was answered against the assessee and in favour of the Revenue, and no substantial question of law arose.

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