Input tax credit requires proof of genuine purchases and actual goods movement; fake invoices justify restoration of reassessment.

Reassessment under the Karnataka Value Added Tax Act was treated as valid where the Commissioner's authorization covered the dealer, so the challenge based on lack of sanction failed. Input tax credit was also denied because the purchases were linked to a bill trader issuing fake invoices, and the dealer did not discharge the statutory burden under Section 70 to prove genuineness of the transactions and actual movement of goods. Mere invoices were held insufficient. On that basis, the revisional authority's restoration of the reassessment order was upheld and the claim for input tax credit rejected.

---

---

Issues: (i) Whether reassessment proceedings under Section 39(1) of the Karnataka Value Added Tax Act, 2003 could be initiated only by the prescribed authority and pursuant to valid authorization. (ii) Whether the revisional authority was justified in setting aside the first appellate order and restoring the reassessment order by rejecting the claim of input tax credit on the basis of fake billing and failure to discharge the burden of proof.

Issue (i): Whether reassessment proceedings under Section 39(1) of the Karnataka Value Added Tax Act, 2003 could be initiated only by the prescribed authority and pursuant to valid authorization.

Analysis: The prescribed authority under Section 2(24) of the Karnataka Value Added Tax Act, 2003 is an officer of the Commercial Taxes Department authorized by the Government or the Commissioner. The record showed that the Commissioner had issued an authorization order covering the dealers concerned, including the assessee. On that basis, the challenge that reassessment lacked sanction was rejected as unsupported by the record.

Conclusion: The issue was answered against the assessee and in favour of the Revenue.

Issue (ii): Whether the revisional authority was justified in setting aside the first appellate order and restoring the reassessment order by rejecting the claim of input tax credit on the basis of fake billing and failure to discharge the burden of proof.

Analysis: The claim for input tax credit rested on purchases from a dealer found to be a bill trader issuing fake invoices. Under Section 70 of the Karnataka Value Added Tax Act, 2003, the burden of proving the correctness of the input tax claim lies on the dealer claiming it. The purchaser was required to establish genuineness of the transaction and actual movement of goods, and mere production of invoices was insufficient. The first appellate order had overlooked the material showing fake billing and tax evasion, while the revisional authority relied on those findings and restored the reassessment order.

Conclusion: The revisional order was upheld and the issue was decided against the assessee and in favour of the Revenue.

Final Conclusion: The appeal failed, and the revisional authority's restoration of the reassessment order remained in force.

Ratio Decidendi: A dealer claiming input tax credit bears the burden of proving the correctness and genuineness of the claim, and where the supporting transactions rest on fake invoices or non-genuine trade, the revisional authority may restore the reassessment order.

---