Input Tax Credit cannot be denied for seller's non-remittance when genuine purchases are proved by invoices and bank records.

A purchasing dealer who proves genuine purchases with invoices and bank payment details discharges the statutory burden for input tax credit. The High Court held that once the assessee established that the transactions were real and not bogus, credit could not be denied merely because the selling dealer allegedly failed to remit tax to the Department. The Act did not permit action against the buyer for the seller's non-remittance. The denial of input tax credit was therefore unjustified, and the appellate tribunal's relief to the assessee was upheld.

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Issues: Whether the assessee was entitled to input tax credit when the purchases were supported by invoices and bank payment details, despite the allegation that the selling dealer had not remitted tax to the Department.

Analysis: The statutory scheme places the burden on the dealer claiming input tax to prove the correctness of the claim. The assessee produced the relevant documents, including invoices and account payee cheque details, and established that the purchases were genuine and not a make-believe or bogus transaction. Once that burden was discharged, the assessee could not be penalised merely because the selling dealer allegedly failed to remit tax. The Act did not confer power to proceed against the purchasing dealer for such non-remittance by the seller.

Conclusion: The denial of input tax credit was unjustified, and the assessee was entitled to succeed on this issue.

Final Conclusion: The revision petition failed because the order of the appellate tribunal granting relief to the assessee was upheld.

Ratio Decidendi: A purchasing dealer who substantiates a genuine purchase and discharges the statutory burden of proof cannot be denied input tax credit or penalised merely on account of the selling dealer's failure to remit tax.

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