Case Law Details
M/s Onyx Designs Vs The Assistant Commissioner of Commercial Taxes (Karnataka High Court)
Conclusion:
In absence of any other allegations made against the purchasing dealer in the assessment orders, merely for the reason that selling dealers had not deposited the collected tax amount or some of the selling dealers had been subsequently deregistered could not be a ground to deny the input tax credit. Thus, re-assessment orders and the demand notices were set aside.
Held:
Assessee-dealer of bags and gift items had availed the credit of input tax paid on the purchases made from the dealers. After deducting the same from the output tax, it discharged the net tax liability. Department initiated re-assessment proceedings against assessee by holding that dealer with whom assessee had transacted with were all deregistered and hence input tax on purchases made by assessee was not available. It was held the benefit of input tax could not be deprived to the purchaser dealer if the purchaser dealer satisfactorily demonstrated that while purchasing goods, he had paid the amount of tax to the selling dealer. If the selling dealer had not deposited the amount in full or a part thereof, it would be for the revenue to proceed against the selling dealer. If there was any default on the part of such registered dealers in not remitting the tax, so collected into the Government treasury or any designated bank and furnish monthly returns as specified u/s 35 to the prescribed authority, the proceedings were required to be initiated against such registered selling dealers in accordance with the provisions of the KVAT Act. In view of admission of the genuine transaction as well as bonafide claim and in the absence of any other allegations made against the purchasing dealer in the assessment orders, merely for the reason that selling dealers had not deposited the collected tax amount or some of the selling dealers had been subsequently deregistered could not be a ground to deny the input tax credit. Thus, re-assessment orders and the demand notices were set aside.
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