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Case Title | Honeywell Automation India Ltd vs Commissioner of Trade & Taxes. |
Court | Delhi Bench |
Honorable Judges | Justice Narinder Kumar |
Citation | 2021 (8) GSTPanacea 43 HC Delhi 08-11/ATVAT/2019 |
Judgement Date | 13-August-2021 |
Council for Petitioner | Dharmendra Anand |
Council for Respondent | NA |
Section | Section 50 |
In Favour of | In Favour of Assessee |
The Delhi Bench of Member Narinder Kumar has held that that denial of ITC would be justified where the purchasing dealer has acted without diligence, but denial of ITC to a bona-fide to a purchasing dealer who has taken all the necessary precaution fails to distinguish such a diligence purchasing dealer from the one that has not acted bonafide dealer is not justifiable.
Hence the appellant is entitled to claim ITC, which has been rejected by the Assessing officer and also by the learned SOHA.
FACTS OF THE CASE
The appellant, a limited company, registered vide Tin No. 07690186090 has filed present 04-appeals against orders dated25/03/2019, passed by learned Special Objection Hearing Authority (in shortSOFIA).
In the notice of the default assessment of tax and interest for the 1 st quarter, u/s 32 of the Act,AVATO observed in the manner as “That cross checking of the purchase related data filed by the dealer online inAnnexure-2A with, the Annexure-2B filed by respective selling dealer revealsthat more input tax credit has been claimed than the corresponding output Tax,if any, reported by the selling dealer. The dealer has thus claimed excess Input Tax Credit in violation of the provisions of clause (g of sub section (2) of section 9 of Delhi Value Added Tax Act, 2004 and is therefore liable for default assessment per clause (c) and (d) of sub section (1) of section 32 of Delhi Value Added Tax Act, 2004.
In the notice of assessment of penalty u/s33 DVAT Act, Assessing Officer-AVATO directed the appellant-dealer to pay a sum of Rs. 8,40,420/-,by way of penalty on the aforesaid ground.
While disposing of the objections filed byappellant-objector vide impugned orders, learned OITA observed that purchasewas confirmed from M/s D.R,N. Technology, whereas purchases from other differentdealers remained unverified, and as such, he disallowed the ITC claim of theappellant regarding the other purchases. As a result, amount of penalty wasreduced to Rs. 5,58,765/-from Rs, 8,40,420/-.
Hence,these appeals.
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COURT HELD
Considering the facts as recorded, held that applying the ratio in Suvasini Charitable Trust’scase (supra) that denial of ITC would be justified where the purchasing dealer has acted without diligence, but denial of ITC to a bona-fide to a purchasing dealer who has taken all the necessary precaution fails to distinguish such a diligence purchasing dealer from the one that has not acted bonafide dealer is not valid.
To the facts and circumstances of present case, it is held that the appellant is entitled to claim ITC, which has been rejected by the Assessing officer and also by the learned SOHA.
For the aforesaid reasons, it is held that learned Assessing officer should not have imposed penalty on the afore said ground of mismatch, and that learned SOHA fell in error in upholding imposition of penalty to the tune of Rs. 5,58,765/-on the said ground.
In view of the above discussion, all the four appeals are allowed and the impugned orders passed by learned SOHA are here by set aside so far as levy of tax, interest for the 1st 3rd. & 4th quarter,2014 and imposition of penalty for the tax period annual 2014, are concerned. Revenue to take consequential steps in accordance with law as regards refund, while taking into consideration the claim of the appellant-dealer as regards the ITC allowed vide this judgment.
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ANALYSIS OF THE JUDGEMENT
To be eligible for ITC, the purchasing dealer who, apart from being registered under the DVAT Act, has to take care to verify that the selling dealer is also a registered dealer and has a valid registration under the DVAT Act.
The second condition is that such registered selling dealer has to issue to the purchasing dealer a “tax invoice” in terms of Section 50 of the DVAT Act. Such tax invoice would obviously set out the TIN number of the selling dealer.
The purchasing dealer can check on the web portal of the Department if the selling dealer is a fictitious person or a person whose registration stands cancelled.
As long as the purchasing dealer has taken all these steps, he cannot be expected to keep track of whether the selling dealer has in fact deposited the tax collected with the Government or has lawfully adjusted it against his output tax liability. The purchasing dealer can, of course, ascertain if there is any mismatch of Annexures 2A and 2B but, assuming it is on account of the seller’s default, there is little he can do about it.
To the facts and circumstances of present case, it is held that the appellant is entitled to claim ITC, which has been rejected by the Assessing officer and also by the learned SOHA
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