False input tax credit penalty requires full evaluation of invoices and supporting purchase records before inference of fraud.

Penalty for falsely or fraudulently claiming input tax credit could not be upheld where the Tribunal ignored material evidence showing the assessee had produced tax invoices, transportation bills and purchase accounts. The omitted documents were relevant to whether the credit claim was genuine and whether fraud or falsity could be inferred under the U.P. VAT Act. Because the Tribunal reversed the first appellate authority mainly on the basis of a survey finding about the selling dealer, without examining this evidence, its reasoning was unsustainable. The matter was therefore required to be reconsidered afresh by the Tribunal.

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Issues: Whether the penalty levied for allegedly false or fraudulent claim of input tax credit under Section 54(1)(19) of the U.P. VAT Act, 2008 could be sustained when the Tribunal had not considered the invoices, transportation bills and purchase accounts produced by the assessee.

Analysis: The penalty provision applies only where a dealer falsely or fraudulently claims input tax credit. The record showed that the assessee had placed tax invoices, transportation bills and purchase accounts before the first appellate authority, which were relevant to determine whether the claim was genuine. The Tribunal, while reversing the first appellate authority, did not advert to this material and proceeded mainly on the survey finding that the selling dealer was not engaged in the relevant business. Since the omitted evidence bore directly on the genuineness of the claim and on whether fraud or falsity could be inferred, the Tribunal's decision was unsustainable without such consideration.

Conclusion: The penalty order could not be sustained on the existing reasoning, and the matter was required to be reconsidered afresh by the Tribunal.

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