2025 (10) TMI 677 - HC - VAT / Sales Tax

Revision dismissed; taxpayer failed to prove interstate wheat purchases, transporter proof insufficient, tax liability upheld

HC dismissed the revision challenging assessment of tax exemption on alleged interstate purchases of wheat. The revisionist failed to discharge the burden ... Benefit of exemption of tax paid on purchase - interstate purchases or not - duty of the revisionist to supply the cogent material in its favour - burden of proof of actual movement of goods - HELD THAT:- The record shows that the purchases of wheat which were transported, were made from the vehicles found to be Jeep, Tractor, Motorcycle, Bulldozer etc to which no cogent material has been brought on record by the revisionist to rebut the same. Further nothing has been brought on record to show the actual movement of goods from Delhi to the place of business of the revisionist. Further at the time of survey, certain adverse material was found and on the said premise, the inference has been drawn that the purchase of wheat disclosed as interstate purchase, was made from unregistered dealer within the State to which the liability has been fasten by the assessing authority - Merely the disclosure on the part of the revisionist that the goods were purchased and handed over to transporter for transportation of the same by the selling dealer, will not absorb its liability to prove the actual movement of the goods. The record shows that show cause notice was issued in which details of make of vehicle was given, which was used for transportation of wheat from Delhi but no material was brought on record to rebut the same up to the stage of this Court. Only submission has been made that seller handover the wheat to the transporter who deliver the wheat at the business place of revisionist. Thus, merely by the said submission, actual physical movement of wheat from Delhi to UP, which can show the genuineness of the transaction, cannot be proved. The case is hand is squarely covered with the decision of this Court passed in M/s Ramway Foods Ltd. [2023 (8) TMI 1130 - ALLAHABAD HIGH COURT] and this Court finds no reasonable justification to defer the same, therefore, the case law relied upon by the learned Senior Counsel for the revisionist is of no aid to the revisionist. Thus, no interference is called for in the impugned order - revision dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether purchases claimed as interstate purchases (from outside the State) supported by Form 38 and bank payments satisfy the burden of proof under Section 16 of the UP VAT Act to establish actual movement of goods and entitlement to non-taxability/INPUT credit. 2. Whether anomalies in transporter/vehicle particulars (vehicle makes/numbers such as Jeep, Tractor, Motorcycle, Bulldozer, two-wheelers, small three-wheelers or untraceable registration numbers) permit the assessing authority to treat disclosed interstate purchases as suppressed intra-State purchases and impose tax liability. 3. Whether mere production of invoices, Mandi Parchis, bank payment evidence and the seller's handing over goods to a transporter conclusively proves the genuineness and physical movement of goods for exemption/ITC purposes, or whether further cogent proof is required. ISSUE-WISE DETAILED ANALYSIS Issue 1: Burden of Proof for Claiming Non-Taxability/ITC (Section 16 UP VAT Act) Legal framework: Section 16 casts the burden of proof on the assessee where any fact is specially within its knowledge, expressly requiring the dealer to prove existence of circumstances bringing the case within exemptions, exceptions or reliefs, including claims of input tax credit. Precedent treatment: The Court follows and applies the principle endorsed by the Apex Court in construing pari materia provisions (e.g., the decision interpreting Section 70 KVAT Act) that the purchasing dealer must prove beyond doubt the correctness of its ITC/exemption claim; mere invoices or bank payments are insufficient. Interpretation and reasoning: The Court interprets Section 16 as placing primary responsibility on the dealer to establish genuineness and actual physical movement of goods. Documentary evidence such as Form 38, Mandi Parchis and banking payments, while relevant, do not displace the statutory burden; the assessing authority is entitled to presume absence of claimed circumstances absent cogent proof. The Court emphasizes that proof of actual movement includes transporter details, vehicle particulars, freight payment, and delivery acknowledgement. Ratio vs. Obiter: Ratio - the statutory allocation of burden to the dealer under Section 16 and the requirement that the dealer must prove actual movement and genuineness for claiming non-taxability/ITC. Obiter - illustrative discussion of categories of supporting evidence (e.g., freight payment, acknowledgement) as examples of cogent proof. Conclusion: The dealer must discharge the burden under Section 16 by proving actual physical movement and genuineness of the purchases; absence of such proof justifies rejecting the claim of non-taxability/ITC. Issue 2: Effect of Anomalous/Untraceable Transporter/Vehicle Particulars on Acceptability of Claimed Interstate Purchases Legal framework: Assessment and re-assessment powers permit the authority to examine and disbelieve claimed interstate transactions where the facts surrounding physical movement are within the dealer's exclusive knowledge and not satisfactorily proven. Precedent treatment: The Court follows its prior decision (cited from its own bench) and Apex Court authority holding that where vehicle registration numbers are fictitious, untraceable or of vehicles incapable of carrying such consignments, the movement of goods cannot be accepted and ITC/exemption can be denied. Interpretation and reasoning: The Tribunal and assessing authority compiled detailed charts of selling dealers, e-way/evidence, invoices, values and vehicle makes/numbers. Verification showed many vehicle numbers were missing from official records or corresponded to inappropriate vehicle types (two-wheelers, small three-wheelers, passenger vehicles, tractors, bulldozers). Such anomalies, unexplained by cogent material from the dealer, legitimately support an adverse inference that interstate movement did not occur and that purchases may be from unregistered intra-State sources. Ratio vs. Obiter: Ratio - anomalous, fictitious or untraceable vehicle particulars constitute valid grounds for the authority to disbelieve claimed interstate movement and treat purchases as suppressed intra-State purchases. Obiter - emphasis on the kinds of vehicle anomalies that are probative. Conclusion: Where transporter/vehicle particulars are anomalous or unverified and no cogent rebuttal is produced by the dealer, the assessing authority is justified in disallowing claimed interstate purchases and imposing tax liability accordingly. Issue 3: Sufficiency of Invoices, Bank Payments, Form 38 and Seller's Delivery to Transporter as Proof of Genuineness Legal framework: The statutory presumption under Section 16 and the jurisprudence require more than documentary indicia of transaction (invoices, cheques, forms); the assessee must prove actual physical movement and genuineness. Precedent treatment: The Court applies authority holding that mere production of invoices and payment by cheque is insufficient to discharge the burden; additional proof (seller details, vehicle delivery, freight payment, delivery acknowledgment) is necessary. Interpretation and reasoning: The revisionist's reliance on Form 38, banking channel payments and a contention that sellers handed goods to transporters was held insufficient because no documentary or testimonial proof of actual arrival at the purchaser's premises, no cogent transporter records, and no verification of vehicle movements were produced. The Court reasons that an unsubstantiated assertion that goods were handed to a transporter does not establish physical movement or genuineness when contradicting facts were found on survey and verification. Ratio vs. Obiter: Ratio - invoices, bank payments and forms alone do not discharge the statutory burden; actual movement and delivery must be demonstrated by cogent evidence. Obiter - examples of additional evidence that may discharge the burden. Conclusion: Reliance solely on invoices, bank payments and Mandi Parchis is inadequate; the dealer failed to discharge the burden of proving actual movement and genuineness, so the claim for non-taxability/ITC was rightly rejected in part. Court's Overall Conclusion and Holding The Court holds that the statutory burden of proof under Section 16 lies on the dealer and was not discharged; anomalies in transporter/vehicle particulars and absence of cogent evidence of physical movement justified the assessing authority's treatment of claimed interstate purchases as suppressed intra-State purchases and the consequent tax liability. The impugned orders require no interference; the substantial questions of law are answered in favour of the revenue and against the dealer.