Bhavani Enterprises Vs Additional Commissioner of Commercial Taxes (Karnataka High Court)
The appeal was filed under Section 66 of the Karnataka Value Added Tax Act, 2003, challenging the revisional order dated 26.03.2012 passed by the Additional Commissioner of Commercial Taxes, which restored a penalty imposed under Section 70(2)(a) of the Act. The penalty had originally been levied by the Assessing Authority on 30.04.2009 but was subsequently set aside by the first Appellate Authority on 23.10.2009.
The Revisional Authority restored the penalty by relying on a Division Bench judgment in a similar case, where it was held that the assessee had knowingly produced false tax invoices to claim input tax credit. In that precedent, the Court found that the transactions were not genuine, invoices were fabricated, and the assessee failed to respond adequately to queries, establishing deliberate tax evasion.
In the present case, the penalty was imposed on the ground that the assessee had claimed input tax credit based on invoices issued by non-existent dealers. Investigations revealed that the selling dealers did not exist at the registered addresses, and therefore, the input tax credit claimed was invalid.
The Revisional Authority rejected the assessee’s objections, observing that once the invoices were found to be false and the input tax claim incorrect, penalty under Section 70(2)(a) was attracted. The authority also noted that similar circumstances had previously led to restoration of penalties, which had been upheld by the High Court. Consequently, the order of the first Appellate Authority was set aside, and the original penalty was reinstated.
