TaxTMI 
TaxTMI 
2026 (3) TMI 473
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....e for the petitioners-Authorities; Sri Y.C. Shivakumar, learned counsel for the respondent in STRP No. 55/2022; Sri Jaya Kumar S.R., learned counsel for the respondent in STRP No. 15/2024; Sri Atul Krishna Rao Alur, learned counsel for the respondent in STRP No.16/2024, and Sri B. Raja Subrahmanya Bhat, learned counsel for the respondent in STRP No. 18/2024. 2. These STRPs raise a common question. Since the learned counsel appearing for the parties have advanced common arguments, all these appeals are disposed of by this common judgment. 3. These batch of petitions are filed by the Revenue against the order in STAs passed by the Karnataka Appellate Tribunal, Bengaluru (for short, 'the KAT') as tabulated below; Sl. No. STRP Filed Against STA Date of STA Order 1. 55/2022 246/2019 22.03.2021 2. 59/2022 909/2016 10.11.2021 3. 15/2024 2977 to 2987/2013 15.02.2023 4. 16/2024 18/2021 30.09.2022 5. 18/2024 93/2022 28.02.2023 For convenience, facts in STRP No. 55/2022 are referred. 4. The brief facts of the case are that the respondent is a registered dealer engaged in the manufacture of precision sheet meta....
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....right in allowing the Respondent's Appeal and setting aside the disallowance of input tax credit claimed by the Respondent on purchases effected from dealers who were deregistered and failed to disclose and discharge their tax liability on such sales? (2) Whether the Tribunal was right in allowing the Respondent's Appeal and setting aside the disallowance of input tax credit claimed by the Respondent, despite the fact that the Respondent had utterly failed to discharge his burden under Section 70 of the KVAT Act of proving the correctness and genuineness of such claim?" 6. Sri Adithya Vikram Bhat, learned Additional Government Advocate appearing for the petitioners-State, submits that the KAT has erroneously placed the burden on the State/Revenue Authorities to establish the genuineness of the transactions, whereas the provisions of the Act cast such burden on the dealer claiming input tax credit. The learned AGA submits that the mere existence of invoices and payment of the sale consideration through banking channels is not sufficient where the transactions are bogus or non-existent. 6.1 The learned Additional Government Advocate further submits that the mat....
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....bmits that e-UPass can be generated through the portal only by an existing dealer and, once such e-UPass is issued, there is neither any mechanism nor any reason available to the purchasing dealer to disbelieve the status of the selling dealer as a registered dealer. It is also submitted that there is no statutory mechanism provided to independently verify the status of the selling dealer beyond the information available on the portal. It is contended that if the selling dealers had in fact been de-registered, their TIN numbers ought not to have remained active and no e-UPass ought to have been generated using such TIN numbers. 7.3 Learned counsel for the respondents placed reliance on the judgment of the Hon'ble Supreme Court in The Commissioner of Trade and Taxes, Delhi v. M/s. Shanti Kiran India (P) Ltd., in Civil Appeal Nos. 2042-2047 of 2015, decided on 09.10.2015, to contend that once invoices are issued, there is no further burden on the dealer to discharge in order to claim input tax credit. 8. We have considered the submissions advanced by the learned counsel for the parties and have perused the appeal papers. 9. In the reassessment proceedings, the A.A. disallowe....
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....he burden of proof and the requisite particulars necessary for examining the genuineness of transactions, and has held as under; "xxx 9. While considering the aforesaid issue/question, Section 70 of the Karnataka Value Added Tax Act, 2003 is required to be referred to, which reads as under: "70. Burden of proof.- (1) For the purposes of payment or assessment of tax or any claim to input tax under this Act, the burden of proving that any transaction of a dealer is not liable to tax, or any claim to deduction of input tax is correct, shall lie on such dealer. (2) Where a dealer knowingly issues or produces a false tax invoice, credit or debit note, declaration, certificate or other document with a view to support or make any claim that a transaction of sale or purchase effected by him or any other dealer, is not liable to be taxed, or liable to tax at a lower rate, or that a deduction of input tax is available, the prescribed authority shall, on detecting such issue or production, direct the dealer issuing or producing such document to pay as penalty: (a) in the case of first such detection, three times the tax due in respect of such trans....
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.... of the sale and purchase and even as per section 70(2) if a dealer knowingly issues or produces a false tax invoice, credit or debit note, declaration, certificate or other document with a view to support or make any claim that a transaction of sale or purchase effected by him or any other dealer, is not liable to be taxed, or liable to take at a lower rate, or that a deduction of input tax is available, such a dealer is liable to pay the penalty. Therefore, as observed hereinabove, for claiming ITC, genuineness of the transaction and actual physical movement of the goods are the sine qua non and the aforesaid can be proved only by furnishing the name and address of the selling dealer, details of the vehicle which has delivered the goods, payment of freight charges, acknowledgement of taking delivery of goods, tax invoices and payment particulars etc. The purchasing dealers have to prove the actual physical movement of the goods, alleged to have been purchased from the respective dealers. If the purchasing dealer/s fails/fail to establish and prove the said important aspect of physical movement of the goods alleged to have been purchased by it/them from the concerned dealers and o....
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....and for the reasons stated above and in absence of any further cogent material like furnishing the name and address of the selling dealer, details of the vehicle which has delivered the goods, payment of freight charges, acknowledgement of taking delivery of goods, tax invoices and payment particulars etc. and the actual physical movement of the goods by producing the cogent materials, the Assessing Officer was absolutely justified in denying the ITC, which was confirmed by the first Appellate Authority. Both, the second Appellate Authority as well as the High Court have materially erred in allowing the ITC despite the concerned purchasing dealers failed to prove the genuineness of the transactions and failed to discharge the burden of proof as per section 70 of the KVAT Act, 2003." 11. The KAT has directed reconsideration of the matter on the ground that the invoices were issued bearing valid TIN numbers, the status of the supplying dealers continued to be reflected as registered in the departmental portal, e-UPass were generated from the portal, and payments were made through banking channels, thereby leading the dealer claiming input tax credit to believe that the supplying d....