Input tax credit burden of proof upheld where false invoices supported the claim and penalty was restored.

Penalty under section 70(2)(a) of the Karnataka Value Added Tax Act was validly restored because the assessee relied on input tax credit claims supported by invoices issued by non-existent dealers, and the authorities recorded a factual finding that the invoices were false. The burden under section 70(1) remained on the dealer to prove the correctness of the input tax claim, and that burden was not displaced merely by asserting bona fides. As the assessee failed to discharge that burden and no perversity in the material findings was shown, the revisional authority's restoration of penalty was upheld and no substantial question of law arose.

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Issues: Whether penalty under section 70(2)(a) of the Karnataka Value Added Tax Act, 2003 was rightly restored on the ground that the assessee knowingly produced false invoices to claim input tax credit, and whether the burden of proving the correctness of the input tax claim lay on the assessee.

Analysis: The claim for input tax credit was founded on invoices issued by dealers found to be non-existent, and the Court treated this as a factual finding recorded by the assessing and revisional authorities. Under section 70(1), the burden of proving that a claim to input tax credit is correct lies on the dealer claiming it. Section 70(2)(a) applies where a dealer knowingly issues or produces a false tax invoice or similar document to support a tax benefit claim. The Court held that the burden does not shift to the Revenue merely because the assessee asserts bona fides, and that the material on record showed that the assessee had not discharged its burden. The revisional authority was therefore justified in restoring the penalty, and no perversity or substantial question of law arose.

Conclusion: The penalty under section 70(2)(a) was validly restored and the appeal failed.

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