MILAN PLYWOOD SUPPLIERS Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) These revision petitions are filed challenging the order passed by the Karnataka Appellate Tribunal remanding the matter to the Assessing Authority for re-examination of the claim of input tax on the purchases from the three dealers and for concluding the assessment afresh in accordance with law and in keeping with the observations made in the order. The assessee is a dealer registered under the Karnataka Value Added Tax Act, 2003. The assessee is a dealer in plywoods, veneers, laminated sheets etc. The assessee purchase plywood from several local registered dealers and also from outside the State. Amongst the registered dealers from whom the assessee has purchased the plywood during the year 2005-2006, three dealers namely Vijaya Traders, Bangalore, India Plywood and Granite, Bangalore and Kavery Distributors, Bangalore, have not filed the returns and paid the tax in respect of the sales of plywood effected to the assessee during the four tax periods. The Assessing Authority tried to ascertain as to whether the aforesaid three selling dealers of plywood of the assessee are genuine and they have remitted the tax shown to have been collected in the tax invoices from the assessee to the State. It transpired that none of the three dealers were existing and doing business at the time the Assessing Authority was concluding the assessment in the assessee's case. Therefore, the Assessing Authority held that these three dealers were bogus dealers and therefore, to that extent, the benefit of input tax deduction was denied to the assessee. Aggrieved by the said order, the assessee preferred an appeal before the Joint Commissioner of Commercial Taxes, the First Appellate Authority, who declined to entertain the appeal. Aggrieved by the said order, the assessee preferred an appeal to the Karnataka Appellate Tribunal.

(2.) The Tribunal, after considering the entire case on merits, was of the view that the Assessing Authority has not conducted necessary investigations before coming to the conclusion that the said three dealers are bogus for the sole reason that they had stopped the business or for the reason of their not remitting the tax collected by the buyers to the State. Therefore,' the order passed by both the authorities was held to the unsustainable. But the Tribunal held that the Assessing Authority could have conducted necessary investigation to find out as to whether there was really supply of goods from the selling dealers to the assessee. Mere existence of tax invoice does not ipso facto lead one to the conclusion that the goods had been sold to the assessee. There is no mention in the assessment records about the verification of books of accounts of the assessee to find out if freight charges incurred for the goods received for his business place is debited in the accounts of the assessee. The purchases for which input tax is denied are all made from local registered dealers as could be seen from the tax invoices. But the goods vehicle number mentioned in the tax invoices are all mostly Tamil Nadu registration. Whether they are really goods vehicles or otherwise has not been ascertained by the Assessing' Authority. In the facts and circumstances of the assessee's case, investigation about genuineness of the transportation with reference to trip sheet was necessary before coming to any conclusion. Though certain photocopies of the tax invoice particulars are produced, the originals of these documents which may have been ultimately transferred to the Assessing Authority are not forthcoming in the assessment records and therefore, the Assessing Authority did not have the opportunity to have the genuineness verified. Therefore, the Assessing Authority should have properly appreciated the entire material on record and should have established that the selling dealers were really bogus or the assessee was in connivance with the selling dealers to defraud the State of its revenue. The Assessing Authority has not properly appreciated the facts of the case and has not ascertained the genuineness of the tax invoices raised and has not ascertained as to whether the goods stated to have been sold have actually been delivered to the assessee and whether the goods vehicle mentioned in the tax invoices are really goods vehicles and whether the inward expenditure incurred by the assessee for receiving the goods is debited in their books of accounts by causing appropriate investigation. As this exercise has not been made by the Assessing Authority, the Tribunal has set aside the order of the Assessing Authority and remanded the matter back to the Assessing Authority for completing investigation in the lines suggested above and to conclude the assessment order thereafter afresh in accordance with law.

(3.) The grievance of the revision petitioner is that having set aside the impugned order, the Tribunal ought not to have remanded the matter back as nearly nine years have lapsed and it may not be possible for the assessee to produce any evidence. It is nothing but a harassment. We do not see any substance in the said contention. The assessee has claimed deduction of input tax on the basis of three invoices showing purchase of goods from three dealers. Admittedly, these dealers have not remitted the tax recovered from the assessee. Their whereabouts are not known. As rightly pointed put by the Tribunal, mere existence of invoices is no proof that under the said invoices, materials are purchased and tax is paid. The Assessing Authority was not justified in drawing the inference that the said three dealers are bogus merely on this fact. He should have made an enquiry to find out the genuineness of the transaction as set out by the Tribunal. It is only after such enquiry if the Assessing Authority is satisfied that the transaction in question is genuine one, the assessee has paid the money, he has received the goods and necessary entries are made in the books of accounts of the assessee, then merely because of the dealer has not remitted the tax would not enable the Assessing Authority to deny the benefit to the assessee. As the said exercise had not been done, after setting aside the order, the Tribunal was justified in directing the Assessing Authority to undertake that exercise as suggested by the Tribunal. In the facts and circumstances of this case, we are satisfied that the approach of the Tribunal is just and proper and is in accordance with law. In that view of the matter, we do not see any merit in this revision petition. Accordingly, these petitions are dismissed.