Input tax credit requires proof of genuine purchases and physical movement of goods; remand ordered for fresh verification.

Input tax credit under the Karnataka Value Added Tax Act depended on the purchasing dealer discharging the burden of proving genuine purchase transactions and actual physical movement of goods. Invoices, ledger entries and bank payment details were treated as insufficient by themselves where the supplier's returns did not support the turnover, and the revisional authority's interference was based on the need for supporting material beyond cheque payments. The prior orders were set aside and the matter was remanded to the assessing authority for fresh adjudication of the credit claim, with the assessee allowed to establish the claim again under Section 70.

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Issues: Whether the denial of input tax credit for want of proof of genuine purchase transactions and physical movement of goods was sustainable, and whether the revisional interference with the appellate order called for reconsideration.

Analysis: The dispute turned on discharge of the burden under Section 70 of the Karnataka Value Added Tax Act, 2003. The assessing authority had rejected input tax credit on the basis that supplying dealers had filed nil returns or had not reflected the turnover, and the appellate authority had granted relief on the footing that invoices, ledger entries, bank payment particulars and proof of receipt of goods were sufficient. The revisional authority interfered after applying the principles later stated by the Supreme Court on the need for the purchasing dealer to establish the genuineness of the transaction and the actual physical movement of goods through supporting material beyond invoices and cheque payments.

Conclusion: The earlier orders were set aside and the matter was remanded to the assessing authority for fresh adjudication of the input tax credit claim in accordance with the burden of proof requirements under Section 70 of the Karnataka Value Added Tax Act, 2003. The assessee was given an opportunity to establish the claim afresh.

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