Input tax credit cannot be denied solely for missing seller returns or later de-registration where invoices and records are genuine.

Input tax credit could not be denied merely because the selling dealers' VAT returns were not traceable in the electronic filing system or because a seller was later de-registered, where genuine tax invoices and books of account supported the claim and the authorities accepted the invoices as genuine. The Court noted that the non-traceability of VAT-100 returns did not, by itself, justify disallowance in every case, especially where the record showed that some dealers had filed returns and remitted tax and additional material was produced for one dealer. The revision was allowed and the matter was remanded to the Assessing Officer for fresh consideration.

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Issues: Whether input tax credit could be denied merely because the selling dealers' VAT returns were not traceable in the electronic filing system or because some selling dealers were later de-registered, despite genuine tax invoices and materials indicating payment of tax.

Analysis: The claim for input tax credit was supported by tax invoices and the assessee's books of account, and the authorities themselves accepted that the invoices were genuine. The objection based on non-traceability of the sellers' VAT-100 returns could not by itself justify disallowance in every case, particularly where the record indicated that at least some of the selling dealers had filed returns and remitted tax, and where additional material was produced concerning one of the dealers. The Court distinguished the earlier precedent relied on by the Tribunal because the present dispute was not about belatedly claiming credit for a different tax period. The Court also noted that subsequent de-registration of a selling dealer would not, by itself, defeat credit for an earlier tax period if the underlying purchases and invoices were genuine.

Conclusion: Denial of input tax credit on the sole ground that the sellers' returns were not traceable or that a seller was later de-registered was not sustained on the present record. The revision was allowed and the matter was remanded to the Assessing Officer for fresh consideration.

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