Input tax credit and revision jurisdiction fail when bogus purchases are not proved on record and extraneous material is relied on.

Input tax credit cannot be denied merely because a selling dealer's registration was retrospectively cancelled; the Department must establish with record-based material that the purchase transactions were sham, bogus or otherwise not genuine. Revisional additions also fail where the authority relies on material not forming part of the subordinate record or where jurisdiction is not validly assumed under section 75 of the Gujarat Value Added Tax Act, 2003. On these facts, the revisional proceedings were held without jurisdiction and the tax, interest and penalty demand was quashed.

---

---

Issues: Whether input tax credit could be denied and additional tax, interest and penalty sustained where the selling dealer's registration was cancelled retrospectively, and whether the revisional proceedings were validly initiated and sustained on the material relied upon.

Analysis: The denial of input tax credit was held unsustainable in the absence of any material established by the Department to show that the purchase transactions were bogus or not genuine. The revisional authority and the Tribunal had proceeded without first requiring the assessee to prove the genuineness of the transactions in the manner later relied upon, and the Tribunal had also relied on material not forming part of the record before the subordinate authority. The challenge also raised a jurisdictional objection under section 75 of the Gujarat Value Added Tax Act, 2003, which went to the root of the matter. In these circumstances, the initiation of revisional proceedings was held to be without jurisdiction and the findings sustaining the tax demand could not stand.

Conclusion: The assessee was held entitled to input tax credit on the purchases made from the dealer whose registration was retrospectively cancelled, and the additional tax liability, interest and consequential demand were quashed.

Ratio Decidendi: Input tax credit cannot be denied, and revisional additions cannot be sustained, unless the Department establishes with record-based material that the purchase transactions are sham, bogus or otherwise not genuine; findings founded on extraneous material and jurisdictional defects are liable to be set aside.

---