# The Commissioner. Commercial Tax, U.P. Lko v. S/s Soma Entp. Ltd

- **Citation:** (2024) 3 ILRA 1780
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-02-29
- **Case number:** Sale/Trade/ Tax Revision No. 110 of 2023
- **Bench:** Shekhar B. Saraf
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/the-commissioner-commercial-tax-u-p-lko-v-s-s-soma-entp-ltd-51617
- **Pages:** 5

## Headnote

Uttar Pradesh Value Added Tax Act, 2008
- Section 58 - Input Tax Credit (I.T.C.) -
burden of proof upon the assessee - Section 16
- mere production of invoices or payment made
by cheques/RTGS not enough - genuineness of
transactions - actual physical movement of
goods - Tribunal granted I.T.C. merely on the
basis of invoices and payment details - ratio
contrary to the judgment of the Apex Court -
nature of burden of proof pari materia - order
of Tribunal quashed and set-aside - matter
remanded - questions of law answered in
favour of the Department and against the
assessee .

Revision Petition allowed. (E-9)

Cases Cited:

## Text

1780 INDIAN LAW REPORTS ALLAHABAD SERIES
dated February 12, 2024 and this order be
treated as part and partial of the said
judgment and order.

4. The Registrar Compliance of this
Court is directed to communicate this order
to the parties.
----------
(2024) 3 ILRA 1780
REVISIONAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 29.02.2024

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.

Sale/Trade/ Tax Revision No. 110 of 2023

The Commissioner. Commercial Tax, U.P.
Lko. ...Petitioner
Versus
S/s Soma Entp. Ltd. ...Respondent

Counsel for the Petitioner:
Sri Bipin Kumar Pandey (Addl. C.S.C.)

Counsel for the Respondent:
Sri Ved Prakash Singh

Uttar Pradesh Value Added Tax Act, 2008
- Section 58 - Input Tax Credit (I.T.C.) -
burden of proof upon the assessee - Section 16
- mere production of invoices or payment made
by cheques/RTGS not enough - genuineness of
transactions - actual physical movement of
goods - Tribunal granted I.T.C. merely on the
basis of invoices and payment details - ratio
contrary to the judgment of the Apex Court -
nature of burden of proof pari materia - order
of Tribunal quashed and set-aside - matter
remanded - questions of law answered in
favour of the Department and against the
assessee .

Revision Petition allowed. (E-9)

Cases Cited:
1. State of Karnataka v. M/s Ecom Gill Coffee
Trading Private Limited, 2023 SCC Online SC
248.

(Delivered by Hon'ble Shekhar B. Saraf, J.)

1. This is a revision petition filed
under Section 58 of the Uttar Pradesh
Value Added Tax Act, 2008 (hereinafter
referred to as 'the Act') wherein the
following questions of law have been
admitted by this Court:-

"1. Whether on the facts and
circumstances of the case the Commercial
Tax Tribunal as well as the 1st Appellate
Authority was legally justified in dismissing
the appeal filed by the department only on
the basis of invoices and bank transactions
inasmuch as the transactions have not been
proved
as
a
bonafide
and
genuine
transactions otherwise establishing the
actual transportation of goods?"
2. Whether on the facts and
circumstances of the case the Commercial
Tax Tribunal was legally justified in
allowing the claim of I.T.C. especially
when the finding of fact has been recorded
against the dealer and the benefit has been
allowed only on the basis of tax invoices
and bank transactions?"

2. The primary issue in the present
writ petition is with regard to availmentof
Input Tax Credit (hereinafter referred to as
"the I.T.C.") by the respondent/assessee.

3. Mr. Bipin Kumar Pandey,
learned Additional Chief Standing Counsel
appearing on behalf of the revisionist, has
submitted that the burden of proof is upon
the assessee to show the correctness of the
claim of the I.T.C. He relies upon Section
16 of the Act to indicate that such burden is
upon the assessee specially with matters,
3 All. The Commissioner. Commercial Tax, U.P. Lko. Vs. S/s Soma Entp. Ltd.
1781
which are within the knowledge of
the assessee. Section 16 of the Act is
delineated below for better reference:-

"16. Burden of proof
In any assessment proceedings
where any fact is specially within the
knowledge of the assessee, the burden of
proving that fact shall lie upon him, and in
particular, the burden of proving the
existence of the circumstances bringing the
case within any of the exemptions,
exceptions or reliefs under any provisions
of this Act including claim of any amount
as input tax credit, shall lie upon him and
assessing authority shall presume the
absence of such circumstances."

5.

He
further
relies
upon
paragraphs 23, 24 and 25 of the Apex Court
judgment penned by Justice M.R. Shah in
the case of the State of Karnataka vs. M/s
Ecom Gill Coffee Trading Private
Limited reported in 2023 SCC Online SC
248. The relevant paragraphs of the said
judgment are set forth below:-

"23. Thus, the provisions of Section
70, quoted hereinabove, in its plain terms
clearly stipulate that the burden of proving
that the ITC claim is correct lies upon the
purchasing dealer claiming such ITC.
Burden of proof that the ITC claim is
correct is squarely upon the assessee who
has to discharge the said burden. Merely
because the dealer claiming such ITC
claims that he is a bona fide purchaser is
not enough and sufficient. The burden of
proving the correctness of ITC remains
upon the dealer claiming such ITC. Such a
burden of proof cannot get shifted on the
revenue. Mere production of the invoices or
the payment made by cheques is not enough
and cannot be said to be discharging the
burden of proof cast under section 70 of
the KVAT Act, 2003. The dealer claiming
ITC has to prove beyond doubt the actual
transaction which can be proved by
furnishing the name and address of the
selling dealer, details of the vehicle which
has delivered the goods, payment of freight
charges,
acknowledgement
of
taking
delivery of goods, tax invoices and payment
particulars etc. The aforesaid information
would be in addition to tax invoices,
particulars of payment etc. In fact, if a
dealer claims Input
Tax
Credit
on
purchases, such dealer/purchaser shall
have to prove and establish the actual
physical movement of goods, genuineness
of transactions by furnishing the details
referred above and mere production of tax
invoices would not be sufficient to claim
ITC. In fact, the genuineness of the
transaction has to be proved as the burden
to prove the genuineness of transaction as
per
section 70 of
the KVAT
Act,
2003 would be upon the purchasing dealer.
At the cost of repetition, it is observed and
held that mere production of the invoices
and/or payment by cheque is not sufficient
and cannot be said to be proving the
burden as per section 70 of the Act, 2003.
24. Even considering the intent of
section 70 of the Act, 2003, it can be seen
that the ITC can be claimed only on the
genuine transactions of the sale and
purchase and even as per section 70(2) if a
dealer knowingly issues or produces a false
tax
invoice,
credit
or
debit
note,
declaration, certificate or other document
with a view to support or make any claim
that a transaction of sale or purchase
effected by him or any other dealer, is not
liable to be taxed, or liable to take at a
lower rate, or that a deduction of input tax
is available, such a dealer is liable to pay
the
penalty.
Therefore,
as
observed
hereinabove, for claiming ITC, genuineness
of the transaction and actual physical
1782 INDIAN LAW REPORTS ALLAHABAD SERIES
movement of the goods are the sine qua
non and the aforesaid can be proved only
by furnishing the name and address of the
selling dealer, details of the vehicle which
has delivered the goods, payment of freight
charges,
acknowledgement
of
taking
delivery of goods, tax invoices and payment
particulars etc. The purchasing dealers
have to prove the actual physical movement
of the goods, alleged to have been
purchased from the respective dealers. If
the
purchasing
dealer/s
fails/fail
to
establish and prove the said important
aspect of physical movement of the goods
alleged to have been purchased by it/them
from the concerned dealers and on which
the ITC have been claimed, the Assessing
Officer is absolutely justified in rejecting
such ITC claim.
25. In the present case, the
respective purchasing dealer/s has/have
produced either the invoices or payment by
cheques to claim ITC. The Assessing
Officer has doubted the genuineness of the
transactions by giving cogent reasons on
the basis of the evidence and material on
record. In some of the cases, the
registration of the selling dealers have
been cancelled or even the sale by the
concerned dealers has been disputed
and/or denied by the concerned dealer. In
none
of
the
cases,
the
concerned
purchasing dealers have produced any
further supporting material, such as,
furnishing the name and address of the
selling dealer, details of the vehicle which
has delivered the goods, payment of freight
charges,
acknowledgement
of
taking
delivery of goods, tax invoices and payment
particulars etc. and therefore it can be said
that the concerned purchasing dealers
failed to discharge the burden cast upon
them under Section 70 of the KVAT Act,
2003. At the cost of repetition, it is
observed and held that unless and until the
purchasing dealer discharges the burden
cast under Section 70 of the KVAT Act,
2003 and proves the genuineness of the
transaction/purchase
and
sale
by
producing the aforesaid materials, such
purchasing dealer shall not be entitled to
Input Tax Credit."

6. The relevant paragraphs of the
impugned order of the Tribunal have also
been placed before this Court by the
learned counsel for the revisionist to
indicate the contradictory stand taken by
the Tribunal. It is to be noted that in
paragraph 16 of the Tribunal's order the
Tribunal has indicated that certain persons,
who had sold the goods to the assessee
were not entitled to issue tax invoice as
they were following the compounding
scheme. Furthermore, a few of the dealers'
registration had been cancelled and in
certain cases the dealers have not shown in
the return any sale made to the present
assessee.
However,
from
perusal
of
paragraph 18 of the judgment of the
Tribunal, it appears that the Tribunal taking
note of the fact that these firms have not
sold goods to the assessee went on to hold
that since payment has been made via
RTGS and invoices have been submitted by
the assessee, these transactions were
genuine and the assessee was rightful in
claiming the I.T.C.

7. Counsel on behalf the assessee
has vehemently argued that it was the
Department that went up in appeal before
the Tribunal and could not produce any
documents that were detrimental to the
assessee. In fact, the Tribunal records the
same at paragraph 19 of the judgment. He
further submits that the fact of payment
having been made by him is undisputed and
the fact that invoices were submitted is also
undisputed. He submits that there was
3 All. The Commissioner. Commercial Tax, U.P. Lko. Vs. S/s Soma Entp. Ltd.
1783
nothing further for the assessee to show for
claiming the I.T.C. He also submits that the
assessee was carrying out the work on
contract from the Government agency and
all these purchases were used in the said
work
contract
and
verified
by
the
independent evaluator appointed by the
Government.

8. I have heard counsel appearing
on behalf of the parties and perused the
materials on record.

9. It is clear from the factual
matrix that the respondent/assessee made
payment and also submitted invoices.
However, upon reading the judgment of the
Apex Court in the case of M/s Ecom Gill
Coffee Trading Private Limited (supra), it
is clear that mere production of the invoices
or the payment made by cheques/RTGS is
not enough to discharge the burden of proof
upon the assessee. Upon perusal of Section
17 of the Karnataka Value Added Tax Act,
2003, I find that the nature of burden of
proof is pari materia to the Uttar Pradesh
Value Added Tax, 2008, and accordingly,
the judgment of the Apex Court would
squarely apply in the present case. In the
aforesaid judgment, the Apex Court has
further gone on to state that the dealer
claiming the I.T.C. has to prove beyond
doubt the actual transaction which can be
proved by furnishing the name and address
of the selling dealer, details of the vehicle
which has delivered the goods, payment of
freight charges, acknowledgement of taking
delivery of goods, tax invoices and
payment of particulars. The aforesaid
information would be in addition to tax
invoices, particulars of payment etc.

10. In the present case, counsel on
behalf of the revisionist has submitted that
the
documents
in
relation
to
the
transportation of goods were also provided
to the authorities below. However, the
same do not find reflection in the order
passed by the first appellate authority and
the Tribunal. It is also true that the Tribunal
has recorded finding that the Department
has not been able to show any adverse
document against the revisionist. The ratio
of the decision of the Tribunal is contrary
to the judgment of the Apex Court in M/s
Ecom Gill Coffee Trading Private
Limited (supra) as the Tribunal has
granted the I.T.C. merely on the basis of
invoices and payment details.

11. In light of the above, I am of
the view that the order passed by the
Tribunal is required to be quashed and setaside with a direction to the Tribunal to
hear the matter afresh allowing the
revisionist to produce documents in relation
to the transactions including transportation
documents
and
any
other
relevant
document which the petitioner wishes to
place. The Department may also be allowed
to adduce further evidence, if it so desires.

12. Accordingly, the order of
Tribunal dated May 18, 2023 is quashed
and set-aside. The Tribunal to decide the
matter afresh as directed above. The entire
process should be concluded within a
period of six months from date. The
questions of law are answered in favour of
the Department and against the assessee.

13. The revision petition is,
accordingly, allowed.

14. I make it clear that the
observations made above with regard to
findings of the Tribunal are tentative in
nature and the Tribunal shall not be
influenced by the same while hearing the
matter afresh.
1784 INDIAN LAW REPORTS ALLAHABAD SERIES
----------
(2024) 3 ILRA 1784
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 05.02.2024

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.

Writ Tax No. 141 of 2023

M/s Globe Panel Indus. India Pvt. Ltd.
 ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Shubham Agrawal

Counsel for the Respondent:
Sri Rishi Kumar,Addl. C.S.C.

The Goods and Services Tax (GST) Act,
2017 - Section 129(3) - Expired E-Way Bill -
vehicle accompanied by two e-Invoices and two
E-Way Bills - goods matched description,
quantity and value - no dispute regarding
consignor or consignee - only one E-Way Bill
found expired at the time of detention -
explanation of vehicle breakdown supported by
mechanic's
letter
and
FASTag
movement
records
-
documents
not
considered
by
authorities - no material to establish mens rea
or intention to evade tax - technical violation by
itself not sufficient to impose penalty - penalty
cannot be levied merely for non-compliance with
procedural requirements in absence of tax
evasion - reliance placed on earlier High Court
decisions holding mens rea to be essential for
levy of penalty under Section 129(3) - orders
passed on surmises and conjectures - penalty
order and appellate order unsustainable in law -
orders quashed - refund of tax and penalty
directed.

Writ petition allowed. (E-9)

Cases Cited:

1. M/s Hindustan Herbal Cosmetics v. State of
U.P. and Others, Writ Tax No. 1400 of 2019,
decided on 02.01.2024 (Allahabad High Court).

2. M/s Falguni Steels v. State of U.P. and
Others, Writ Tax No. 146 of 2023, decided on
25.01.2024 (Allahabad High Court).

3. M/s Pepsico India Holdings Limited, Lucknow
v. Commissioner of Trade Tax, 2003 U.P.T.C.
856.

4. Jain Shudh Vanaspati Limited, Ghaziabad and
Others v. State of U.P. and Others, 1983
U.P.T.C. 198.

(Delivered by Hon'ble Shekhar B. Saraf, J.)

1. This is a writ petition under Article
226 of the Constitution of India wherein the
petitioner is aggrieved by the penalty order
dated January 16, 2023 passed by the
respondent No.3/Assistant Commissioner,
State Tax Department, Sector 1, Mobile
Squad, Deoria under Section 129(3) of the
Uttar Pradesh Goods and Services Tax Act,
2017 (hereinfater referred to as "the Act")
and the appellate order dated January 30,
2023
passed
by
the
respondent
No.2/Additional Commissioner, Grade-2
(Appeal)-I, State Tax, Judicial Division,
Gorakhpur.

2. Learned counsel appearing on
behalf of the petitioner submitted that the
particular vehicle was accompanied by two
e-Invoices and two E-Way Bills. He further
submitted that the goods matched the
description in the e-Invioices and the EWay Bills. The only descrpency that was
found at the time of detention was that one
of the E-Way Bills had expired. Apart from
this discrepancy, there is no other finding
with regard to intention of the petitioner to
evade tax. He relied upon the documents to
indicate that the vehicle had broken down.
The same is evidenced by the letter of the