Outcome: The petition was dismissed as not pressed, with liberty to pursue the statutory settlement remedy before the competent authority under the amended West Bengal sales tax settlement framework.

Issues: Whether purchase tax under Section 7A of the Tamil Nadu General Sales Tax Act, 1959 could be levied on the buyer merely because the seller did not remit tax on a sale that was otherwise liable to tax.

Analysis: Section 7A is a separate charging provision and applies only where the purchase is made in circumstances in which no tax is payable. The expression "no tax is payable" does not include a transaction where tax is legally payable on the sale but has not been remitted by the seller. On the facts, the vendors' sales were liable to tax in their hands under the Act, and the buyer had already used the goods in manufacture and discharged tax on the finished products. The proper course, if the vendors failed to pay tax, was for the Revenue to proceed against the vendors rather than fasten purchase tax on the purchaser. The impugned order had therefore proceeded on an incorrect understanding of the charging provision.

Conclusion: Purchase tax under Section 7A was not attracted merely because the seller failed to remit tax on a sale that was otherwise taxable, and the levy on the buyer was unsustainable.

Final Conclusion: The assessment based on purchase tax could not stand, and the writ petitions succeeded by setting aside the Tribunal's order.

Ratio Decidendi: Purchase tax under Section 7A of the Tamil Nadu General Sales Tax Act, 1959 can be levied only when the purchase is made in circumstances in which no tax is legally payable on the sale, not merely when the seller defaults in remitting tax that was otherwise payable.

Issues: Whether an H Form covering transactions of more than one quarter of a financial year is invalid under Rule 12(10)(b) of the Central Sales Tax (Registration and Turnover) Rules, 1957, and whether the revisional authority could interfere with the appellate order on that ground.

Analysis: Rule 12(10)(b) applies the procedural requirements governing C Forms to H Forms mutatis mutandis. Rule 12(1) permits a single declaration to cover transactions of sale in a quarter, and the relaxation recognized in the circular dated 11.04.2014 in relation to C Forms was held to apply equally to H Forms. The Court held that the H Form could not be invalidated merely because it covered transactions of more than one quarter. Since the appellate authority had taken one of the possible views, the revisional authority could not invoke revisional jurisdiction merely because another view was possible.

Conclusion: The H Form was held to be valid and in conformity with Rule 12(10)(b) of the Central Sales Tax (Registration and Turnover) Rules, 1957. The revisional order was unsustainable and the appellate order was restored, in favour of the assessee.

Outcome: The petitions were dismissed as not pressed, with liberty to pursue the statutory settlement mechanism under the West Bengal sales tax dispute settlement framework.

Issues: Whether the writ petition challenging the impugned order could be entertained in the absence of a challenge to the underlying notifications, and whether the relief sought could be granted.

Analysis: The petition was filed under Articles 226 and 227 of the Constitution of India challenging an order passed pursuant to a show cause notice. The Court noted that no challenge had been laid to the notifications and that, without such a challenge, the relief sought in the petition could not be granted.

Conclusion: The petition was not entertained on merits and was dismissed, with liberty to the Petitioner to pursue a fresh writ petition in accordance with law, including appropriate challenge to the show cause notice and impugned order.

Issues: Whether exemption or rebate under the sales tax policy could be claimed without furnishing C Forms in terms of section 8(4) of the Central Sales Tax Act, 1956, and whether the assessment and revisional orders called for interference.

Analysis: Section 8(5) of the Central Sales Tax Act, 1956 operates only upon fulfilment of the requirements of section 8(4). Furnishing of the prescribed declaration in C Form within the prescribed time is a statutory condition, and the absence of such compliance disentitles the dealer from claiming the notified rebate. The writ court also treated the revisional authority's approach as reasonable, noting that the assessment had already allowed more than the legally admissible remission and that no prejudicial order could be passed in the revision. The principle of strict interpretation of exemption provisions was applied, and the authorities relied on by the petitioner were held to be distinguishable on facts.

Conclusion: The claim for exemption without compliance with the C Form requirement was rejected, and the impugned orders were upheld.

Final Conclusion: The writ petition failed on merits because the statutory preconditions for availing the tax benefit were not satisfied.

Ratio Decidendi: A statutory tax exemption dependent on compliance with declaration requirements cannot be granted unless the prescribed conditions are strictly fulfilled, and exemption provisions must be construed strictly in favour of the Revenue.

Issues: (i) Whether a writ petition challenging a penalty show-cause notice as barred by limitation was maintainable; (ii) Whether penalty proceedings initiated under Section 45A beyond a reasonable period were time-barred.

Issue (i): Whether a writ petition challenging a penalty show-cause notice as barred by limitation was maintainable.

Analysis: A challenge founded on limitation raises a jurisdictional issue. The absence of an express limitation period in the penalty provision did not require the assessee to pursue the statutory process before invoking writ jurisdiction where the notice was alleged to be ex facie delayed.

Conclusion: The writ challenge to the notice on the ground of limitation was maintainable, in favour of the assessee.

Issue (ii): Whether penalty proceedings initiated under Section 45A beyond a reasonable period were time-barred.

Analysis: Although Section 45A prescribed no express period, penalty proceedings had to be commenced and completed within a reasonable time. The five-year period governing original and escaped assessments under the statutory scheme supplied the appropriate benchmark. For assessment year 2011-12, that period expired on 31.03.2017, whereas the penalty notice was issued only on 20.12.2018. Earlier requests for documents and alleged non-cooperation could not preserve limitation, since the Department could proceed on available material.

Conclusion: The penalty notice was issued beyond the reasonable period and was liable to be quashed, in favour of the assessee.

Final Conclusion: The limitation-based jurisdictional objection invalidated the delayed initiation of penalty proceedings.

Ratio Decidendi: Where a taxing statute provides no limitation for penalty proceedings, they must nevertheless be initiated and completed within a reasonable period determined with reference to analogous limitation periods in the statutory scheme; departmental inaction cannot be justified by the assessee's alleged non-cooperation where proceedings could be concluded on available material.

ISSUES PRESENTED AND CONSIDERED

1. Whether an application under an amnesty/amendment scheme can be rejected where the assessee pays the substantial part of the settlement and is late by two days in depositing the final installment due to technical glitches on the administering authority's online portal.

2. Whether the Court in writ jurisdiction under Article 226/227 can condone brief, inadvertent delay in payment relating to an amnesty scheme and direct acceptance of payment despite statutory or scheme provisions not expressly conferring condonation power on the authority.

3. How prior judicial decisions concerning amnesty/settlement schemes, short delays and extraordinary writ jurisdiction (including decisions allowing late deposit subject to conditions) should inform the exercise of the Court's discretion in favour of the assessee.

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of rejection of amnesty application for two-day delay caused by technical glitches

Legal framework: The amnesty scheme required full payment by a specified date to obtain settlement benefits; non-compliance with the deadline led to rejection under departmental action and consequential enforcement (freeze of bank account, lien). The scheme's objective is to resolve old disputes, expedite recoveries and reduce administrative costs.

Precedent Treatment: Decisions of this Court and other High Courts have treated the object of amnesty schemes as paramount and have not been strictly mechanical where genuine inadvertence or technical impediments prevented timely compliance; reliance was placed on authoritative appellate precedent permitting relief in analogous short-delay contexts.

Interpretation and reasoning: The Court accepted as uncontroverted that substantial instalments were paid within time and that the remaining shortfall arose from unilateral readjustment by the online portal followed by inability to reconcile e-payments with the scheme due to technical errors. There was demonstrable, unequivocal intention to comply and contemporaneous attempts to make payment. The rejection for a mere two-day delay was considered arbitrary and contrary to the scheme's object of effective resolution and revenue realisation.

Ratio vs. Obiter: Ratio - where substantial compliance with an amnesty scheme has been effected and only a de minimis delay (two days) arises from technical faults beyond the taxpayer's control, rejection of the application frustrates the scheme's object and can be set aside. Obiter - reference to the specific quantum of shortfall and the portal-readjustment mechanics serve as factual illustration rather than prescriptive limits for all cases.

Conclusion: The Court quashed the order rejecting the application and condoned the two-day delay; the departmental action (rejection and consequent measures) was set aside to effectuate the scheme's objects.

Issue 2: Scope of High Court's extraordinary writ jurisdiction to condone delay where scheme/authority has no express condonation power

Legal framework: Article 226 confers broad equitable powers on the High Court to do complete justice in extraordinary writ jurisdiction; statutory absence of condonation power for administrative authorities does not preclude judicial intervention to remedy injustice.

Precedent Treatment: The Court relied upon higher judicial authority establishing that High Courts may exercise wide remedial powers under Article 226 to prevent injustice even where statutory schemes do not provide parallel powers (including Supreme Court and High Court decisions permitting late compliance subject to conditions in extraordinary circumstances).

Interpretation and reasoning: The Court reasoned that denial of relief on technical, inadvertent grounds would render the amnesty scheme illusory and defeat its purpose. Given the admitted bona fides, substantial prior compliance and absence of prejudice to the revenue, exercise of writ jurisdiction to condone delay was appropriate to further the scheme's objectives and conserve public resources that would otherwise be spent in prolonged litigation.

Ratio vs. Obiter: Ratio - the High Court can, in exercise of extraordinary writ jurisdiction, condone short, inadvertent delay in payment under an amnesty scheme where there is demonstrable bona fides, substantial compliance, and no prejudice to the revenue; such relief advances the scheme's object. Obiter - comparative references to broader situations (e.g., Covid hardships) exemplify circumstances warranting judicial relief but are not exhaustive prerequisites.

Conclusion: The Court exercised Article 226 jurisdiction to condone the two-day delay and to set aside the rejecting order, finding such relief necessary to remedy injustice and to further the statutory objective of the amnesty scheme.

Issue 3: Application of precedents and their treatment

Legal framework: The object and purpose of amnesty schemes - expeditious disposal of old disputes, revenue generation, reduction of administrative costs - guide judicial assessment of strict compliance where minor lapses are attributable to circumstances beyond the applicant's control.

Precedent Treatment: The Court followed and relied upon decisions that (a) emphasized the scheme's object and permitted relief for short inadvertent non-compliance, (b) allowed late deposits subject to conditions where hardship and lack of prejudice were established, and (c) recognized the High Court's power under Article 226 to effect equitable relief despite absence of explicit statutory condonation powers. A decision distinguishing an otherwise cited authority (where factual matrix and payment completeness were unclear) was expressly noted, justifying selection of the precedent permitting relief in short-delay contexts.

Interpretation and reasoning: The Court distinguished any authority that did not demonstrate comparable facts (e.g., full payment or pleaded hardship) and preferred precedent which supported granting relief where delay was brief, unintentional and causally linked to external impediments. The Court emphasized consistency with the settled approach that the administration and judiciary should further the primary object of amnesty schemes rather than defeat them by hyper-technical rejections.

Ratio vs. Obiter: Ratio - precedents permitting judicial condonation of short delays in amnesty-like schemes form binding guidance for similar factual matrices; authorities that are factually dissimilar are distinguishable. Obiter - detailed policy reflections on scheme-object promotion and administrative expectations are ancillary, supportive reasoning rather than standalone legal rules.

Conclusion: Relevant precedents were followed to condone the short delay and to set aside the departmental rejection; in the absence of prejudice and given bona fide attempts to comply, the Court applied those authorities to further the scheme's objectives.

Relief and Consequence

On the established facts and applicable legal principles, the Court quashed the order rejecting the application under the amnesty scheme, condoned the two-day delay in payment, set aside consequent demand/enforcement steps to the extent challenged, and made the rule absolute without costs.

Issues: Whether the Tribunal's order rejecting rectification was sustainable when the grounds raised in the second appeal were not dealt with, and whether the matter should be remanded for fresh consideration.

Analysis: The record showed that the petitioner had specifically raised the grounds relating to non-service of statutory notice and levy of penalty, but those grounds were not considered while deciding the second appeal. A failure to adjudicate material grounds amounts to a breach of fair hearing, since all relevant issues must be considered before an order is passed. In these circumstances, the rectification order rejecting the request to address the omitted grounds could not stand.

Conclusion: The Tribunal's order was quashed and the second appeal was restored for fresh adjudication of all raised grounds.

Issues: Whether the property owned by a Hindu Undivided Family, but leased to a company, could be provisionally attached or subjected to recovery proceedings for the company's VAT dues merely because some members of the HUF were directors of the company.

Analysis: The Gujarat Value Added Tax Act, 2003 permits provisional attachment only of property belonging to the defaulting dealer under section 45. Recovery under section 44 is confined to monies due to or held for the dealer by another person, while section 46 authorises recovery of tax as arrears of land revenue only from the dealer or other person liable under the Act. The Court held that the expression "other person" in this scheme does not extend to the owner of land merely because it is leased to the dealer, and that the dues of a company cannot be recovered from the personal property of its directors in the absence of an express statutory provision. The HUF remained the owner of the land, and the lease created only a lessor-lessee relationship; the company's default did not convert the HUF's property into property of the dealer.

Conclusion: The attachment and mutation objection were unsustainable, and recovery of the company's dues from the HUF property was not permitted.

Ratio Decidendi: Under the Gujarat Value Added Tax Act, 2003, provisional attachment and recovery can be enforced only against the property of the defaulting dealer or a statutorily liable person, and not against property of a third party merely because it is leased to the dealer or because its members are connected with the dealer company.

Issues: (i) Whether the transaction was an inter-State sale effected by transfer of documents of title during movement or only a stock transfer to the dealer's Uttar Pradesh branch. (ii) Whether exemption under Section 6(2) of the Central Sales Tax Act, 1956 was available on the basis of the statutory declarations and forms furnished.

Issue (i): Whether the transaction was an inter-State sale effected by transfer of documents of title during movement or only a stock transfer to the dealer's Uttar Pradesh branch.

Analysis: The record showed that the purchase was made at Assam through the dealer's Assam registration, the tax invoice and railway receipt reflected completion of the sale at Assam, and the Uttar Pradesh unit was shown as consignee. The movement of goods commenced from Assam and the goods were sent to the Uttar Pradesh registered dealer after the purchase had already been concluded. On these facts, the movement was not treated as a sale in the course of inter-State trade effected by transfer of title during transit, but as a branch or stock transfer.

Conclusion: The transaction was held to be a stock transfer and not an inter-State sale in favour of the assessee.

Issue (ii): Whether exemption under Section 6(2) of the Central Sales Tax Act, 1956 was available on the basis of the statutory declarations and forms furnished.

Analysis: Exemption under Section 6(2) applies only to a subsequent sale during movement that satisfies the statutory conditions, including the prescribed declarations under Section 8(4) and Rule 12(1). Since the transaction was found to be a stock transfer and not a subsequent inter-State sale, the forms furnished, including Form C and Form E-I, could not confer the claimed exemption. The Court also held that the appropriate form in the circumstances would have been Form F.

Conclusion: The claim to exemption under Section 6(2) failed and was rejected in favour of the revenue.

Final Conclusion: The revisions failed because the goods had already been purchased and moved as a completed sale within Assam, with the later movement to Uttar Pradesh being treated as a stock transfer rather than a taxable subsequent inter-State sale exempt under the Central Sales Tax Act.

Ratio Decidendi: Where goods are purchased and the sale is completed in one State and are thereafter sent to another State to the dealer's own branch or registration, the movement is a stock transfer and not an inter-State sale by transfer of documents of title, so the exemption for subsequent sales under Section 6(2) is unavailable.

Issues: Whether interest on additional tax demand created by the revisional authority is leviable only from the date of the revisional order, or from an earlier date when the tax liability arose.

Analysis: The appeals turned on Section 14(6) of the Haryana Value Added Tax Act, 2003, under which interest is chargeable when tax is not paid in accordance with the Act and the rules. The Court followed its earlier Division Bench view that the additional tax determined on revision represents tax that was always due from the date the liability arose, and that the liability to pay interest is not postponed merely because the revisional order quantifies the demand later. On the admitted facts, the controversy was confined to the commencement date for interest on the additional demand.

Conclusion: Interest on the additional tax demand is leviable from the date when the tax ought to have been paid and not merely from the date of the revisional order. The issue is decided in favour of the Revenue and against the assessees.

Issues: (i) Whether solar cells fall within the expression "all kinds of dry cells/batteries". (ii) Whether the petitioner, being a second-stage dealer, was liable to pay tax when the first-stage dealer had not paid tax.

Issue (i): Whether solar cells fall within the expression "all kinds of dry cells/batteries".

Analysis: The classification of goods in a taxing entry must be determined by their popular or commercial understanding and not by a scientific or technical comparison. Solar cells and dry cells serve different functions: dry cells store electricity for use in devices, whereas solar cells generate electricity from sunlight. They are not interchangeable in common trade parlance, and the broad expression "all kinds of" cannot be used to expand the entry beyond its natural meaning.

Conclusion: Solar cells do not fall within the description of all kinds of dry cells/batteries.

Issue (ii): Whether the petitioner, being a second-stage dealer, was liable to pay tax when the first-stage dealer had not paid tax.

Analysis: Under the first-stage levy scheme, tax is exigible at the stage fixed by the notification, and a subsequent sale is exempt where the statutory conditions are satisfied. Liability cannot be shifted to the second-stage dealer merely because the first-stage dealer did not discharge its liability, particularly where the dealer acted on the accepted practice reflected in the forms and assessments then in force. A party cannot be compelled to perform an act that was impossible in the circumstances, and the proper course is to proceed against the dealer on whom the statute fastens the primary liability.

Conclusion: The petitioner, being a second-stage dealer, was not liable to pay tax.

Final Conclusion: The assessment and appellate orders were set aside and the petition was allowed with consequential relief.

Ratio Decidendi: A taxing entry must be construed according to common parlance, and liability for first-stage tax cannot be shifted to a subsequent dealer merely because the first-stage dealer failed to pay tax when the statute fastens the primary levy at the notified stage.

Issues: Whether the defendant was justified in denying input tax credit and making deductions on account of belated submission of invoices, thereby sustaining only the part-decree passed by the courts below.

Analysis: The dispute turned on the effect of Section 19(11) of the Tamil Nadu Value Added Tax Act, 2006, which prescribes that input tax credit shall be claimed within the same month or, if not so claimed, before the end of the financial year or within ninety days, whichever is later. The invoices for a substantial part of the supplies were found to have been furnished after the contractual and statutory timeframe, with the result that the defendant could not avail input tax credit within the prescribed period. The Court accepted that the statutory time limit is mandatory, that the benefit of input tax credit is a concession available only in the manner contemplated by the statute, and that the delayed supply of invoices prejudiced the defendant's ability to claim the credit. The Court also accepted the contractual deduction for delayed supply in the facts of the case.

Conclusion: The denial of VAT credit and the consequent part-decree were upheld, and the appellant was not entitled to interference on the ground urged.

Issues: Whether the revisionist discharged the burden of proving the genuineness of the interstate wheat purchases and the actual physical movement of goods so as to dislodge the adverse inference drawn from the vehicle details and survey findings.

Analysis: The dispute turned on the dealer's claim that wheat was purchased from Delhi through disclosed transactions and banking channels. The record, however, showed that the vehicle numbers furnished in support of transportation included Jeep, Tractor, Motorcycle and Bulldozer entries, and no cogent material was produced to rebut that verification. The Court applied the statutory burden of proof under Section 16 of the Uttar Pradesh Value Added Tax Act, 2008 and followed the settled principle that production of invoices, forms or banking entries does not by itself prove bona fide purchase unless actual movement and genuineness of the transaction are established. The revisionist failed to produce material showing the delivery route, acknowledgement of receipt, freight details or any reliable evidence of physical transport from Delhi to the place of business.

Conclusion: The revisionist failed to prove the actual physical movement of goods and the genuineness of the claimed purchases, and the adverse inference sustained.

Issues: (i) Whether the reassessment proceedings were vitiated for want of permission or sanction from the Additional Commissioner to reopen the completed assessment; (ii) Whether reassessment under section 29(7) of the Uttar Pradesh Value Added Tax Act could be invalidated on the ground that it involved a change of opinion.

Issue (i): Whether the reassessment proceedings were vitiated for want of permission or sanction from the Additional Commissioner to reopen the completed assessment.

Analysis: The original records were summoned and examined. They disclosed that the order dated 13.05.2019 of the Additional Commissioner was available on record, and the departmental record also showed issuance of notice before grant of permission. The finding of the Tribunal that no permission existed was therefore contrary to the material on record.

Conclusion: The reassessment was not invalid for want of sanction, and the Tribunal's finding on this aspect was unsustainable.

Issue (ii): Whether reassessment under section 29(7) of the Uttar Pradesh Value Added Tax Act could be invalidated on the ground that it involved a change of opinion.

Analysis: Section 29(1) empowers reassessment where turnover has escaped assessment or tax has been levied at a lower rate, and section 29(7) specifically authorises reassessment within the prescribed period notwithstanding that it may involve a change of opinion. Once the statute expressly permits reassessment even on a change of opinion, the Tribunal was not justified in setting aside the reassessment on that ground.

Conclusion: Reassessment could validly be made even if it involved a change of opinion.

Final Conclusion: The reassessment order was restored and the assessee's challenge failed, as the questions of law were answered against the assessee and in favour of the State.

Ratio Decidendi: Where the statute expressly authorises reassessment notwithstanding a change of opinion, and the record shows that the requisite sanction existed, the reassessment cannot be struck down on either ground.

Issues: Whether, for the purpose of composition tax under Section 15(1) of the Karnataka Value Added Tax Act, 2003, the amount paid by the main contractor to registered sub-contractors for work executed by them is to be included in the main contractor's total consideration or deducted from it.

Analysis: The liability under the composition provision was examined in the context of a works contract, where property in goods passes on the theory of accretion and the transfer effected by a sub-contractor is treated as a direct deemed sale to the contractee to the extent the work is actually executed by the sub-contractor. On that premise, the consideration attributable to work done by sub-contractors does not form part of the consideration for works contract executed by the main contractor. The Court further noted that including such amounts in the main contractor's turnover would produce double taxation and would be inconsistent with the statutory scheme and the constitutional understanding of works contracts after Article 366(29A)(b).

Conclusion: The amounts paid to registered sub-contractors for the work executed by them are deductible while computing the taxable value under Section 15(1), and the revenue's challenge fails.

Final Conclusion: The interpretation adopted by the High Court was upheld, and the appeal was dismissed.

Ratio Decidendi: In a works contract, amounts paid for work independently executed by registered sub-contractors are not part of the main contractor's consideration for composition tax, because that portion is the main contractor's charging base and cannot be subjected to tax again.

Issues: Whether the appeal was liable to be allowed in view of an earlier decision on an identical controversy arising from the same common order.

Analysis: The appeal arose from the same common tribunal order and involved the same substantive controversy as the connected matter already decided. Since the issues were directly and substantially identical, no fresh independent adjudication on merits was required. The earlier decision was treated as governing the present appeal, and the impugned order was examined in that light.

Conclusion: The appeal was allowed by applying the earlier decision on the identical issue, and the impugned order stood set aside.

ISSUES PRESENTED AND CONSIDERED

1. Whether a registered purchaser is entitled to Input Tax Credit (ITC) where it has paid tax to a seller who was registered at the time of the transaction but subsequently failed to deposit the tax collected with the Government.

2. Whether the proviso in clause (g) of Section 9(2) (denial of ITC unless tax is actually deposited by selling dealer or reflected in returns) must be read down so as not to deprive bona fide purchasing dealers of ITC, consistent with principles of equality and legitimate expectation.

3. The proper remedial course: whether the Revenue may deny ITC to a purchasing dealer as against proceeding against the defaulting selling dealer, and the standard for invoking collusion to deny ITC (relation to Section 40A).

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Entitlement to ITC where seller was registered at time of transaction but later failed to deposit tax

Legal framework: Section 9(1) grants ITC to a registered dealer for purchases used in taxable sales; Section 9(2)(g) lists conditions when ITC is not allowed, including where tax paid by purchaser has not been deposited by the selling dealer or reflected in returns.

Precedent treatment: The Delhi High Court in the cited authority construed Section 9(2)(g) so as not to operate to deny ITC to bona fide purchasing dealers who dealt with validly registered selling dealers and received tax invoices; that decision was not disturbed by this Court (special leave disposed without interference).

Interpretation and reasoning: Where the selling dealer was validly registered on the date of the transaction and tax invoices were issued, and where neither the invoices nor the transactions are shown to be false or questionable on inquiry, the purchaser acted bona fide. In such circumstances, the purchaser's entitlement to ITC should not be negated merely because the selling dealer later failed to deposit the collected tax. The appropriate focus is on the bona fides of the purchasing dealer and the veracity of documentary transactions.

Ratio vs. Obiter: Ratio - A bona fide purchasing dealer who entered into a purchase transaction with a validly registered selling dealer and received tax invoices is entitled to ITC notwithstanding the subsequent failure of the selling dealer to deposit the tax, subject to verification of invoices and absence of collusion. Obiter - ancillary remarks about administrative remedies against sellers and practical implementation were explanatory.

Conclusions: The Court upheld the High Court's direction to grant ITC to such purchasing dealers after due verification of invoices, dismissing appeals challenging that principle.

Issue 2 - Reading down Section 9(2)(g) and Article 14 implications

Legal framework: Clause (g) of Section 9(2) negates ITC where tax paid by a purchaser is not deposited by the selling dealer or correctly reflected in returns. Fundamental rights considerations (equality before law) inform statutory interpretation when a provision would otherwise produce arbitrary or discriminatory outcomes.

Precedent treatment: The High Court read down the phrase "dealer or class of dealers" in Section 9(2)(g) to exclude bona fide purchasing dealers who transacted with validly registered selling dealers issuing tax invoices; this reading was accepted by this Court by not disturbing the High Court's order.

Interpretation and reasoning: The provision, if read literally to deny ITC to all purchasers whose sellers defaulted post-transaction, would punish purchasers who had no role in the seller's subsequent default and would risk arbitrariness. Reading down to protect bona fide purchasers aligns the statutory scheme with principles of equality and avoids disproportionate consequences. The correct construction limits the Department's ability to deny ITC to purchasers in such circumstances.

Ratio vs. Obiter: Ratio - Clause (g) must be read so as not to operate to deny ITC to bona fide purchasing dealers who obtained valid tax invoices from sellers validly registered at the time of transaction; such reading prevents violation of Article 14. Obiter - discussion of hypothetical applications and broader policy implications are illustrative.

Conclusions: The Court affirmed the read-down interpretation: the Department cannot invoke Section 9(2)(g) to deny ITC to bona fide purchasing dealers in the described situation; the remedy lies against the defaulting selling dealer unless collusion is shown.

Issue 3 - Remedy against defaulting selling dealer; role of collusion and Section 40A

Legal framework: The statutory scheme contemplates enforcement action against defaulting dealers for recovery of tax; Section 40A (as applied by the High Court) addresses situations of collusion or contrived transactions enabling the Department to deny ITC or take other action.

Precedent treatment: The High Court held that where collusion between purchaser and seller is established, the Department may invoke provisions (such as Section 40A) to deny ITC; absent material showing of collusion, the Department's remedy is to proceed against the defaulting selling dealer and not to strip the purchaser of ITC.

Interpretation and reasoning: Distinguishing bona fide purchasers from collusive actors is essential. Denial of ITC to innocent purchasers is not an appropriate primary enforcement tool against seller defaults; fiscal recovery must be aimed at the party responsible for non-deposit of tax. However, when material shows collusion, the statutory bar in Section 9(2)(g) and Section 40A permit action against both seller and purchasing dealer to prevent abuse.

Ratio vs. Obiter: Ratio - Revenue must pursue recovery from defaulting sellers and may not generally deny ITC to bona fide purchasers; collusion, if materially proved, is an exception permitting denial of ITC under relevant provisions. Obiter - procedural modalities for such investigations and standards of proof were noted but not exhaustively prescribed.

Conclusions: The appropriate course is verification of invoices and inquiry into collusion; absent such material, purchasers entitled to ITC should not be penalized for a seller's subsequent non-deposit of tax. The Court upheld the High Court's approach that left denial only where collusion is established and directed grant of ITC after verification.