Facts :The petitioners, registered dealers under the DVAT Act, claimed Input Tax Credit on purchases supported by valid tax invoices from registered selling dealers. The tax authorities denied ITC on the ground that the selling dealers had not deposited the tax with the Government or had not properly disclosed the transactions. The denial was based on Section 9(2)(g) of the DVAT Act. Petitioners contended that they had complied with all statutory requirements and could not control the conduct of selling dealers. Court Decision:The High Court held Section 9(2)(g) unconstitutional to the extent it denies ITC to bona fide purchasing dealers. The Court held that the provision fails to distinguish between genuine purchasers and those involved in fraud or collusion, thereby violating Article 14 of the Constitution. It was held that a purchasing dealer who has taken all reasonable steps, such as verifying registration and obtaining valid tax invoices, cannot be denied ITC due to default of the selling dealer. However, ITC can be denied where fraud, collusion, or lack of genuineness is established. Cases Referred by Court:• K.T. Moopil Nair v. State of Kerala • State of Kerala v. Haji and Haji • Shri Ram Krishna Dalmia v. Justice S.R. Tendolkar • Budhan Choudhry v. State of Bihar • Gheru Lal Bal Chand v. State of Haryana • Shanti Kiran India Pvt. Ltd. v. Commissioner, Trade and Tax Department • Rajbala v. State of Haryana • Binoy Viswam v. Union of India • Shayara Bano v. Union of India • Mahalaxmi Cotton Ginning Pressing & Oil Industries v. State of Maharashtra • Jayam & Co. v. Assistant Commissioner
On Quest Merchandising India Pvt. Ltd. v. Government of NCT of Delhi & Ors. 16-10-2017
Facts :The petitioners, registered dealers under the DVAT Act, claimed Input Tax Credit on purchases supported by valid tax invoices from registered selling dealers. The tax authorities denied ITC on the ground that the selling dealers had not deposited the tax with the Government or had not properly disclosed the transactions. The denial was based on Section 9(2)(g) of the DVAT Act. Petitioners contended that they had complied with all statutory requirements and could not control the conduct of selling dealers. Court Decision:The High Court held Section 9(2)(g) unconstitutional to the extent it denies ITC to bona fide purchasing dealers. The Court held that the provision fails to distinguish between genuine purchasers and those involved in fraud or collusion, thereby violating Article 14 of the Constitution. It was held that a purchasing dealer who has taken all reasonable steps, such as verifying registration and obtaining valid tax invoices, cannot be denied ITC due to default of the selling dealer. However, ITC can be denied where fraud, collusion, or lack of genuineness is established. Cases Referred by Court:• K.T. Moopil Nair v. State of Kerala • State of Kerala v. Haji and Haji • Shri Ram Krishna Dalmia v. Justice S.R. Tendolkar • Budhan Choudhry v. State of Bihar • Gheru Lal Bal Chand v. State of Haryana • Shanti Kiran India Pvt. Ltd. v. Commissioner, Trade and Tax Department • Rajbala v. State of Haryana • Binoy Viswam v. Union of India • Shayara Bano v. Union of India • Mahalaxmi Cotton Ginning Pressing & Oil Industries v. State of Maharashtra • Jayam & Co. v. Assistant Commissioner
Facts :Petitioner deposited ₹34,67,438 as pre-deposit for filing appeal against stamp duty demand.The original demand order was set aside and matter remanded; ultimately no demand survived.Despite this, refund was delayed for several years and only principal amount was returned without interest.Petitioner filed writ seeking interest on the delayed refund amount.Court Decision:Retention of petitioner’s money after setting aside demand was unauthorised.Even in absence of statutory provision, interest is payable based on principles of restitution.State cannot retain money without compensating the party for deprivation of its use.Non-payment of interest while charging interest from assessee is discriminatory.Directions:Petitioner entitled to simple interest @ 8% per annum.Interest payable from date of deposit (15.12.2005) till date of refund (29.05.2014).Respondents directed to pay interest within stipulated time.General mandamus issued to State to pay interest on refunds in similar cases.Cases Referred by Court:Union of India v. Tata Chemicals Ltd.Hello Minerals Water (P) Ltd. v. Union of IndiaUnion of India v. Oriental EnterprisesSecretary, Irrigation Dept. v. G.C. RoySham Lal Narula v. CITSouth Eastern Coalfields Ltd. v. State of M.P.Sandvik Asia Ltd. v. CITGhaziabad Development Authority v. Balbir SinghONGC Ltd. v. Commissioner of CustomsHari Chand v. State of U.P.
Ansal Housing and Construction Ltd. v. State of U.P. & Ors. 19-09-2014
Facts :Petitioner deposited ₹34,67,438 as pre-deposit for filing appeal against stamp duty demand.The original demand order was set aside and matter remanded; ultimately no demand survived.Despite this, refund was delayed for several years and only principal amount was returned without interest.Petitioner filed writ seeking interest on the delayed refund amount.Court Decision:Retention of petitioner’s money after setting aside demand was unauthorised.Even in absence of statutory provision, interest is payable based on principles of restitution.State cannot retain money without compensating the party for deprivation of its use.Non-payment of interest while charging interest from assessee is discriminatory.Directions:Petitioner entitled to simple interest @ 8% per annum.Interest payable from date of deposit (15.12.2005) till date of refund (29.05.2014).Respondents directed to pay interest within stipulated time.General mandamus issued to State to pay interest on refunds in similar cases.Cases Referred by Court:Union of India v. Tata Chemicals Ltd.Hello Minerals Water (P) Ltd. v. Union of IndiaUnion of India v. Oriental EnterprisesSecretary, Irrigation Dept. v. G.C. RoySham Lal Narula v. CITSouth Eastern Coalfields Ltd. v. State of M.P.Sandvik Asia Ltd. v. CITGhaziabad Development Authority v. Balbir SinghONGC Ltd. v. Commissioner of CustomsHari Chand v. State of U.P.
BACKGROUNDThe assessee, a manufacturer of CTD/Round bars, was subjected to simultaneous searches at its premises and at the premises of its associate concern. Three note-books and one pen-drive were recovered allegedly containing details of illicit clearances. A further search at the premises of a transporter yielded parallel invoices purportedly issued by the assessee. Statements of several persons connected with the manufacturing activities were recorded, but all were retracted almost immediately after recording. On the basis of this material, a Show Cause Notice was issued demanding Central Excise duty of Rs.1,93,26,138/-, comprising approximately Rs.1.85 Crores based on data in the note-books and pen-drive, and approximately Rs.8.25 lakhs based on parallel invoices recovered from the transporter's premises. The Order-in-Original confirmed the entire demand. The Commissioner (Appeals) also confirmed the demand and imposed matching penalties. The assessee approached CESTAT, which set aside the demand of Rs.1.85 Crores while confirming the demand of Rs.8.25 lakhs along with penalties under Section 11(c) of the Central Excise Act. The Revenue challenged the CESTAT order before the High Court. FACTSThe CESTAT, while dealing with the demand of Rs.1.85 Crores, found that the entire basis for the same rested only on retracted confessional statements and data in the note-books/pen-drive recovered from the associate concern's premises, without any independent corroborating evidence in the form of excess raw material purchases, shortage of finished goods, excess electricity consumption or cash seizure. Further, the opportunity of cross-examination of the person in-charge of records of the associate concern was not made available by the Department. In contrast, for the demand of Rs.8.25 lakhs, the parallel invoices recovered from the transporter's premises were confirmed not only by the proprietor of the transporter but also by independent evidence, and hence this demand was sustained by the CESTAT. The Revenue's appeals before the High Court challenged the CESTAT's decision to set aside the larger demand. COURT OBSERVATIONS (Verbatim)"The Tribunal rightly concluded that in the case of clandestine removal of excisable goods, there needs to be positive evidences for establishing the evasion, though contended by the Revenue.""In absence of any material reflecting the purchase of excessive raw material, shortage of finished goods, excess consumption of power like electricity, seizure of cash, etc., the Tribunal noted and held that there was nothing to bank upon except the bare confessional statements of the proprietor and of some of the persons connected with the manufacturing activities and such statements were retracted within no time of their recording.""not permitting the cross examination of a person in-charge of records of M/s. Sunrise Enterprises and absence of other cogent and positive evidences, would not permit it to sustain the demand of Rs. 1.85 Crores raised in the Demand notice and confirmed by both the authorities below.""Confessional statements solely in absence of any cogent evidences cannot make the foundation for levying the Excise duty on the ground of evasion of tax, much less the retracted statements.""Appeals since do not raise any question of law, much less substantial question of law, deserves no consideration." FINAL VERDICTAll Tax Appeals filed by Revenue were dismissed. The High Court upheld the CESTAT order setting aside the demand of Rs.1.85 Crores (based on note-books and pen-drive) for want of positive corroborating evidence. The confirmed demand of Rs.8.25 lakhs (backed by independent evidence from the transporter's premises) was upheld.👍 IN FAVOUR OF ASSESSEE
Commissioner of Central Excise vs. Saakeen Alloys Pvt. Ltd. 06-03-2014
BACKGROUNDThe assessee, a manufacturer of CTD/Round bars, was subjected to simultaneous searches at its premises and at the premises of its associate concern. Three note-books and one pen-drive were recovered allegedly containing details of illicit clearances. A further search at the premises of a transporter yielded parallel invoices purportedly issued by the assessee. Statements of several persons connected with the manufacturing activities were recorded, but all were retracted almost immediately after recording. On the basis of this material, a Show Cause Notice was issued demanding Central Excise duty of Rs.1,93,26,138/-, comprising approximately Rs.1.85 Crores based on data in the note-books and pen-drive, and approximately Rs.8.25 lakhs based on parallel invoices recovered from the transporter's premises. The Order-in-Original confirmed the entire demand. The Commissioner (Appeals) also confirmed the demand and imposed matching penalties. The assessee approached CESTAT, which set aside the demand of Rs.1.85 Crores while confirming the demand of Rs.8.25 lakhs along with penalties under Section 11(c) of the Central Excise Act. The Revenue challenged the CESTAT order before the High Court. FACTSThe CESTAT, while dealing with the demand of Rs.1.85 Crores, found that the entire basis for the same rested only on retracted confessional statements and data in the note-books/pen-drive recovered from the associate concern's premises, without any independent corroborating evidence in the form of excess raw material purchases, shortage of finished goods, excess electricity consumption or cash seizure. Further, the opportunity of cross-examination of the person in-charge of records of the associate concern was not made available by the Department. In contrast, for the demand of Rs.8.25 lakhs, the parallel invoices recovered from the transporter's premises were confirmed not only by the proprietor of the transporter but also by independent evidence, and hence this demand was sustained by the CESTAT. The Revenue's appeals before the High Court challenged the CESTAT's decision to set aside the larger demand. COURT OBSERVATIONS (Verbatim)"The Tribunal rightly concluded that in the case of clandestine removal of excisable goods, there needs to be positive evidences for establishing the evasion, though contended by the Revenue.""In absence of any material reflecting the purchase of excessive raw material, shortage of finished goods, excess consumption of power like electricity, seizure of cash, etc., the Tribunal noted and held that there was nothing to bank upon except the bare confessional statements of the proprietor and of some of the persons connected with the manufacturing activities and such statements were retracted within no time of their recording.""not permitting the cross examination of a person in-charge of records of M/s. Sunrise Enterprises and absence of other cogent and positive evidences, would not permit it to sustain the demand of Rs. 1.85 Crores raised in the Demand notice and confirmed by both the authorities below.""Confessional statements solely in absence of any cogent evidences cannot make the foundation for levying the Excise duty on the ground of evasion of tax, much less the retracted statements.""Appeals since do not raise any question of law, much less substantial question of law, deserves no consideration." FINAL VERDICTAll Tax Appeals filed by Revenue were dismissed. The High Court upheld the CESTAT order setting aside the demand of Rs.1.85 Crores (based on note-books and pen-drive) for want of positive corroborating evidence. The confirmed demand of Rs.8.25 lakhs (backed by independent evidence from the transporter's premises) was upheld.👍 IN FAVOUR OF ASSESSEE
Facts :The appellant, a registered dealer, purchased goods from registered selling dealers against valid tax invoices and claimed input tax credit. The VAT authorities disallowed ITC on the ground that selling dealers had deposited disproportionately low tax and their registrations were later cancelled. The assessment orders, objection orders, and Tribunal upheld denial of ITC and imposed tax, interest, and penalty. The appellant challenged these findings before the High Court. Court Decision:The High Court held that denial of ITC was not justified in the absence of any statutory provision (during the relevant period) requiring the purchasing dealer to ensure that the selling dealer deposited tax. It held that Section 9(2) did not contain such a condition prior to insertion of clause (g), and the Tribunal’s interpretation was erroneous. The Court allowed the appeals and directed grant of input tax credit to the appellant after verification. Cases Referred by Court:• State of Maharashtra v. Suresh Trading Company • Althaf Shoes Pvt. Ltd. v. Assistant Commissioner (CT) • V.M. Salgaocar & Bros. Pvt. Ltd. v. Commissioner of Income Tax • Shyam Sunder v. Ram Kumar • Bihar State Council of Ayurvedic and Unani Medicine v. State of Bihar • R.S. Joshi v. Ajit Mills • Shree Sajjan Mills Ltd. v. Commissioner of Income Tax • George Oakes (Private) Ltd. v. State of Madras • Commissioner of Central Excise v. Hari Chand Shri Gopal • State of Jharkhand v. Govind Singh • J.P. Bansal v. State of Rajasthan
Shanti Kiran India Pvt. Ltd. v. Commissioner, Trade & Tax Department 04-01-2013
Facts :The appellant, a registered dealer, purchased goods from registered selling dealers against valid tax invoices and claimed input tax credit. The VAT authorities disallowed ITC on the ground that selling dealers had deposited disproportionately low tax and their registrations were later cancelled. The assessment orders, objection orders, and Tribunal upheld denial of ITC and imposed tax, interest, and penalty. The appellant challenged these findings before the High Court. Court Decision:The High Court held that denial of ITC was not justified in the absence of any statutory provision (during the relevant period) requiring the purchasing dealer to ensure that the selling dealer deposited tax. It held that Section 9(2) did not contain such a condition prior to insertion of clause (g), and the Tribunal’s interpretation was erroneous. The Court allowed the appeals and directed grant of input tax credit to the appellant after verification. Cases Referred by Court:• State of Maharashtra v. Suresh Trading Company • Althaf Shoes Pvt. Ltd. v. Assistant Commissioner (CT) • V.M. Salgaocar & Bros. Pvt. Ltd. v. Commissioner of Income Tax • Shyam Sunder v. Ram Kumar • Bihar State Council of Ayurvedic and Unani Medicine v. State of Bihar • R.S. Joshi v. Ajit Mills • Shree Sajjan Mills Ltd. v. Commissioner of Income Tax • George Oakes (Private) Ltd. v. State of Madras • Commissioner of Central Excise v. Hari Chand Shri Gopal • State of Jharkhand v. Govind Singh • J.P. Bansal v. State of Rajasthan
