Delhi District Court
Siddharth Gupta vs M/S Cine Laxmi Electricals on 28 May, 2025
IN THE COURT OF DISTRICT JUDGE-05,
CENTRAL DISTRICT, TIS HAZARI COURTS, DELHI
Presided by:-
Sh. Abhishek Srivastava, DHJS
CS (COMM) No. 15/2018
CNR No:- DLCT01-002815-2018
Sh. Siddharth Gupta,
S/o Sh. Pawan Gupta,
R/o 8637, East Park Road,
New Delhi-110005
Proprietor of M/s Aarya Traders .......Plaintiff
Vs.
M/s Cine Laxmi Electricals,
Through Sh. Rajesh Kumar (Proprietor)
1674, Bhagirath Palace,
Delhi-110006. ......Defendant
Date of Institution:- 27.02.2018
Date of conclusion of
final arguments:- 01.05.2025
Date of Judgment:- 28.05.2025
JUDGMENT
1. The plaintiff has filed this Suit against the defendant seeking recovery of Rs. 6,61,920/- (Rupees Six Lakh Sixty One Thousand Nine Hundred Twenty CS (COMM) No. 15/2018 Siddharth Gupta Vs. M/S Cine Laxmi Electricals Judgment dated 28.05.2025 Page No. 1 of 23 Only), together with pendente-lite and future interest @ 18% per annum and costs of this Suit.
2. The facts of the case, as pleaded by the plaintiffs in the plaint, in brief, are as under:-
(a) That the plaintiff is engaged in the trading business of LED lights of KPAR Brand, operating under the name and style of M/s Aarya Traders, a proprietorship Concern, registered with the Tax Department vide TIN No. 07527115325.
(b) That the defendant is engaged in the similar trade and is operating under the name and style of M/s Cine Laxmi Electricals, a Proprietorship Concern, registered with the Tax Department vide TIN No. 07760274370.
(c) That the defendant approached the plaintiff during the month of March, 2016 to purchase LED lights from the Plaintiff with an unequivocal promise to clear the invoices within 15 days of the same becoming due.
(d) That believing the words and the promises made by the defendant, the plaintiff herein assented to the proposal made by the defendant and started supplying LED lights to the defendant with effect from 1st April, 2016.
(e) That the plaintiff used to sell goods to the defendant on credit against receiving/ acknowledgment on the bills as it is the customary trade practice prevailing in the market. That the defendant after duly inspecting the goods to his satisfaction, so delivered, would append his signatures upon the invoices as due CS (COMM) No. 15/2018 Siddharth Gupta Vs. M/S Cine Laxmi Electricals Judgment dated 28.05.2025 Page No. 2 of 23 acknowledgment of the receipt of the goods and the invoices, thereby, assuring the plaintiff of the timely payments of the same.
(f) That initially to gain the confidence of the plaintiff, the defendant used to make the payments on time, or within a reasonable time, however, as the time passed, the defendant started making excuses about the payment and managed a huge credit from the plaintiff.
The plaintiff, at request of the defendant, kept supplying the LED lights to the defendant till March 2017 despite defendant's failure to clear the outstanding bills/invoices within the agreed and stipulated time period believing the false assurances given by the defendant that the outstanding payments against the invoices shall be duly made within a short period of time as he was under the process to clear all the outstanding dues.
(g) That during April 2016 to March 2017, LED lights worth Rs.
12,33,778/- (Rupees Twelve lakhs Thirty Three Thousand Seven Hundred and Seventy Eight Only) were supplied to the defendant by the plaintiff and raised various invoices for the same, however, most of them remained unpaid and have not been made good by the defendant till date despite repeated reminders. It is submitted that against the total outstanding payment of Rs. 12,33,778/- (Rupees Twelve lakhs Thirty Three Thousand Seven Hundred and Seventy Eight Only), only Rs. 5,35,712/- (Rupees Five Lakhs Thirty Five Thousand Seven Hundred and Twelve Only) have been paid by the defendant and as such the defendant is liable to pay the remaining amount to the plaintiff alongwith the interest.
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(h) That despite repeated reminders and personal visits by the plaintiff, no payment was made by the defendant and with no option left the plaintiff got served the defendant with a legal notice dated 17.11.2017. The defendant replied to the said legal notice thereby disputing his liability.
(i) Hence, the present suit.
3. Upon service of summons for settlement of issues of this Suit, appearance was put on behalf of the defendant. Thereafter, a written statement was filed on behalf of the defendant.
4. In the written statement, the defendant took the following preliminary objections:-
(a) That the suit of the plaintiff is liable to be dismissed under Order 7 Rule 11 CPC as the same is without any cause of action.
(b) That the suit of the plaintiff is liable to be dismissed as the plaintiff has concealed the material facts from this Court.
(c) That the suit of the plaintiff is based on surmises and conjectures, hence the same is liable to be dismissed.
5. On merits, the defendant, in his written statement, inter alia pleaded that;
(a) That the defendant approached the plaintiff to purchase LED lights, however, no such promise was made by the defendant to clear the amount of invoices within 15 days. The defendant used to make the payment at the time of delivery of the goods (as and when the goods were supplied against the bills /invoices).
(b) That the defendant did not receive any goods against invoice Nos.
54, 59, 60 and 64 and the signature on these invoices are forged and CS (COMM) No. 15/2018 Siddharth Gupta Vs. M/S Cine Laxmi Electricals Judgment dated 28.05.2025 Page No. 4 of 23 fabricated (as are not of the defendant). The ledger account filed by the plaintiff is forged and has been manipulated by the plaintiff.
(c) That the plaintiff had given an assurance to the defendant that the defective goods under warranty/guarantee period would be replaced. The defendant sent various goods, which were found faulty/ defective, for replacement, but those goods were never replaced by the plaintiff.
(d) That the defendant had made a payment of Rs.1,31,785/- (Rupees One Lakh Thirty One Thousand Seven Hundred Eighty Five Only) in advance to the plaintiff to supply the goods, but the plaintiff did not supply the goods for the said amount. The defendant as such is entitled to recover this amount from the plaintiff.
(e) That the suit of the plaintiff is liable to be dismissed with costs.
6. Plaintiff thereupon filed the replication to the written statement of the defendant wherein the plaintiff denied the case of the defendant and reaffirmed the contents of the plaint.
7. On the basis of pleadings of the parties, following issues were framed by the Ld. predecessor of this Court vide Order dated 11.10.2018:-
1. Whether the plaintiff is entitled to recovery of the suit amount with interest, as prayed ? OPP
2. Whether the suit of the plaintiff is liable to be dismissed under Order 7 rule 11 CPC ? OPD
3. Whether the plaintiff has concealed the material facts from the court? OPD
4. Whether the suit of the plaintiff is based on conjectures and surmises? OPD
5. Relief.CS (COMM) No. 15/2018
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8. During the trial of this Suit, two witnesses viz; PW1 Sh. Siddharth Gupta (plaintiff) and PW2 Sh. Praveen Kumar Nirman (from the department of Trade & Taxes) were examined in support of the case of the plaintiff.
9. During the examination-in-chief, PW1 Sh. Sidharth Gupta had deposed in line with the plaint of this suit and has tendered his evidence by way of affidavit Ex.P-1/A alongwith the following documents:-
(i) Ex.PW1/A (Colly): Copies of Invoices along with Certificate U/s 65- B of the Indian Evidence Act,1872
(ii) Ex.PW1/B: Copy of the Ledger Account/ Running Account of the defendant maintained in due course of business along with Certificate U/s 65-B of the Indian Evidence Act, 1872
(iii) Ex.PW1/C: Copy of Legal Notice dated 17.11.2017
(iv) Ex.PW1/D: Copy of reply dated 29.11.2017 of the Legal Notice
(v) Ex.PW1/E: Reply received from the VAT department in response to RTI filed by the plaintiff
(vi) Ex.PW1/F: Copy of the bank statement of plaintiff maintained with HDFC Bank.
10. PW1 was thereafter cross-examined by the Ld. counsel for the defendant. During cross-examination of PW1, a document/ settlement dated 23.01.2018 is marked as Mark A.
11. Sh. Praveen Kumar Nirman, Jr. Assistant from the department of Trade & Taxes, IP Estate, Vyapar Bhawan, ITO, New Delhi has been examined as PW2. He has brought the summoned record i.e. the record of TIN No. 07760274370 in the name of Dealer- Cine Lakshmi Electricals- 1674, Bhagirath Palace, Delhi- 06 (defendant) for period for 01.07.2016 to 31.03.2017 alongwith certificate 65- CS (COMM) No. 15/2018 Siddharth Gupta Vs. M/S Cine Laxmi Electricals Judgment dated 28.05.2025 Page No. 6 of 23 B of Indian Evidence Act, 1872, dealer profile and DP-1, which are Ex.PW2/A (Colly). PW2 has been cross examined on behalf of the defendant.
12. No other PW was examined. PE was accordingly closed vide order dated 01.06.2023 and thereafter suit was posted for DE.
13. On behalf of the defendant, two witnesses were examined viz. Sh. Ajesh Kumar, Civil Nazir, Record Room, North-West District, Rohini Courts, Delhi as DW1 and Sh. Rajesh Kumar, proprietor of the defendant, as DW2.
14. Sh. Ajesh Kumar, Civil Nazir, Record Room, North-West District, Rohini Courts, Delhi has been examined as DW1. He has brought the summoned record i.e. original records pertaining to CC No. 5358/2018 titled as "M/s Aarya Traders V/s KPAR Led Pvt. Ltd. & Ors" having a Goshwara No. 686. He compared the document already marked as Mark A in this suit with a document marked as Mark A in CC No. 5358/2018 and deposed that both the documents are the same.
15. During the examination-in-chief, DW2 Sh. Rajesh Kumar had deposed in line with the written statement of this suit and has tendered his evidence by way of affidavit Ex.DW2/A.
16. Both the witnesses were cross-examined on behalf of the plaintiff. No other DW was examined. DE was accordingly closed vide order dated 21.12.2024 and thereafter suit was listed for the final arguments.
17. In order to adjudicate upon this suit, this court had heard the counsels for the parties, on 15.04.2025, 16.04.2025, 26.04.2025 and 01.05.2025. Ld. Counsels for the plaintiff and the defendant filed Written submission in support of their respective arguments.
18. I have heard the contentions of both sides and also gone through the record carefully. My issue-wise findings are as under:-
CS (COMM) No. 15/2018Siddharth Gupta Vs. M/S Cine Laxmi Electricals Judgment dated 28.05.2025 Page No. 7 of 23 ISSUE NO. 2
2. Whether the suit of the plaintiff is liable to be dismissed under Order 7 rule 11 CPC ? OPD
19. Onus to prove issue No. 2 was on the defendant.
20. Defendant has taken a preliminary objection that the plaint is liable to be rejected under Order VII Rule 11 CPC as the plaint does not disclose any cause of action. To say that the plaint does not disclose any cause of action is different than to come to the conclusion that there is no cause of action. For the first situation, we have to look only the plaint and nothing else. In the second situation, only after the parties have produced oral and documentary evidence, the court, after consideration of all materials, comes to the conclusion as to whether there is any cause of action or not (against the defendant/s). This, in the considered view of this Court, is no stage to decide the issue as to whether the plaint discloses a cause of action or not or whether the plaint is liable to be rejected under Order VII Rule 11 CPC. Anyway, from a perusal of the plaint in the instant case and documents placed on record, it is noted that that the plaintiff has raised several contentious issues, inter alia, about supplying of goods to the defendant, failure on the part of the defendant to make the payment to the plaintiff after receiving of the goods and eventually about sending legal notice to the defendant demanding making of the payment. From careful reading of the instant plaint, several issues for determination have arisen in the instant case. As such, this issue is decided in favour of the plaintiff and against the defendant.
ISSUE NOS. 1, 3 AND 41. Whether the plaintiff is entitled to recovery of the suit amount with interest, as prayed ? OPP CS (COMM) No. 15/2018 Siddharth Gupta Vs. M/S Cine Laxmi Electricals Judgment dated 28.05.2025 Page No. 8 of 23
3. Whether the plaintiff has concealed the material facts from the court? OPD
4. Whether the suit of the plaintiff is based on conjectures and surmises? OPD
21. These issues are taken up together as they involve common discussion. Onus to prove, issue No. (1) was on the plaintiff and issue Nos. (3) and (4) was on the defendant.
22. The case of the plaintiff is that the defendant had the business dealing with the plaintiff, and the defendant over the time (from 1st April 2016 till March 2017) had purchased the goods from the plaintiff. That, as per statement of account/ ledger account of the defendant maintained by the plaintiff, as on date of filing of the suit, a sum of Rs. 6,61,920/- (Rupees Six Lakh Sixty One Thousand Nine Hundred Twenty Only) was found due and payable by the defendant to the plaintiff. Thus, for the recovery of Rs. Rs. 6,61,920/- (Rupees Six Lakh Sixty One Thousand Nine Hundred Twenty Only), the present suit has been instituted.
23. Further case of the plaintiff is that the plaintiff used to maintain the ledger account of the defendant, and all the sales via different invoices formed a part of the same transaction. The Statement of account/ Ledger account Ex.PW1/B shows that when goods were delivered by the plaintiff to the defendant through certain bills/vouchers, same have been reflected in the said statement of account and a corresponding debit entry equivalent to the value of goods is made in the said statement of account and as and when payments were received, a credit entry has been made. The difference is continuously struck in the column for the balance.
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24. In the Statement of account/ Ledger account Ex.PW1/B, a sum of Rs. 6,87,015 (Rupees Six Lakh Eighty Seven Thousand Fifteen Only) is reflected as due and payable by the defendant to the plaintiff. The plaintiff however has filed the present Suit for recovery of Rs. 6,61,920/- (Rupees Six Lakh Sixty One Thousand Nine Hundred Twenty Only). It was submitted on behalf of the plaintiff that before filing of the suit, when some talks are going on between the plaintiff and the defendant regarding making the remaining payment, the defendant raised a dispute qua invoice No. 64 dated 24.01.2017 for an amount of Rs. 25,095/-, the plaintiff as such is not claiming the said amount. The plaintiff has filed the present suit only for Rs. 6,61,920/- (Rs. 6,87,015 - Rs. 25,095/-).
25. The plaintiff in order to prove his case has examined PW1 and PW2 and has relied primarily on following documents viz. bills/invoices (Ex.PW1/A (colly)), the Statement of account/ Ledger account for the period from 01.04.2016 to 31.03.2017 (Ex.PW1/B), and a reply received from the VAT department in response to RTI filed by the plaintiff (Ex.PW1/E). The plaintiff has filed all the eighteen invoices (invoice Nos. 26, 27, 28, 33, 34, 43, 45, 46, 48, 49, 50, 51, 52, 53, 54, 59, 60 and 64, Ex.PW1/A (colly)). All the invoices are duly reflected in the Statement of account/ Ledger account for the period from 01.04.2016 to 31.03.2017 (Ex.PW1/B) filed by the plaintiff.
26. The defendant concedes that there was a business relation between the defendant and the plaintiff. However, his case is that the defendant used to make the payment to the plaintiff at the time of delivery of the goods (as and when the goods were supplied against the bills /invoices). The defendant admits all the invoices except invoice No. 54, 59, 60 and 64. Case of the defendant is that the defendant did not receive any goods against invoice Nos. 54, 59, 60 and 64 and the signatures on these invoices are forged and fabricated (as are not of the CS (COMM) No. 15/2018 Siddharth Gupta Vs. M/S Cine Laxmi Electricals Judgment dated 28.05.2025 Page No. 10 of 23 defendant). The ledger account filed by the plaintiff is forged and has been manipulated by the plaintiff. The defendant had made a payment of Rs.1,31,785/- (Rupees One Lakh Thirty One Thousand Seven Hundred Eighty Five Only) in advance to the plaintiff to supply the goods, but the plaintiff did not supply the goods for the said amount. The defendant as such is entitled to recover this amount from the plaintiff.
27. The suit of the plaintiff is based on ledger which is an account book maintained by the plaintiff. It is Section 28 of the Bharatiya Sakshya Adhiniyam, 2023 (Section 34 of the Indian Evidence Act, 1872) which makes entries in books of account regularly kept in the course of business relevant in all proceedings in a court of law. These entries are, however, not by themselves sufficient to charge any person with liability.
28. From a plain reading of the Section it is manifest that to make an entry relevant thereunder it must be shown that it has been made in a book, that book is a book of account and that book of account has been regularly kept in the course of business. From the above Section it is also manifest that even if the above requirements are fulfilled and the entry becomes admissible as relevant evidence, still, the statement made therein shall not alone be sufficient evidence to charge any person with liability. It is thus seen that while the first part of the section speaks of the relevancy of the entry as evidence, the second part speaks, in a negative way, of its evidentiary value for charging a person with a liability. It will, therefore, be necessary to first ascertain whether the entries in the documents fulfil the requirements of the above section so as to be admissible in evidence and if this question is answered in the affirmative then only its probative value need be assessed.
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29. Plaintiff has filed the Statement of account/ Ledger account for the period from 01.04.2016 to 31.03.2017 along with Certificate U/s 65-B of the Indian Evidence Act, 1872 (Ex.PW1/B). The plaintiff has further filed invoices/ bills duly reflected in the Ex.PW1/B along with Certificate U/s 65-B of the Indian Evidence Act, 1872. The plaintiff, in the considered opinion of this court, as such has been able to prove the Ex.PW1/B, making them admissible in evidence. Liability, however, can not be fastened on the basis of the ledger account only unless there is corroborative evidence in support of entries in the ledger account.
30. Section 28 of the Bharatiya Sakshya Adhiniyam, 2023 (Section 34 of the Indian Evidence Act, 1872) however does not require any particular form of evidence in addition to entries in books of account and any relevant fact which can be treated as evidence within the meaning of the Evidence Act, would be sufficient corroborative evidence furnished by the entries in books of account. In Balmukand V/s Jagan Nath reported in AIR 1963 Raj. 212, the Hon'ble Rajasthan High Court held that Section 34 of the Evidence Act does not require any particular form of corroborative evidence. Even a witness, in support of entries made in the books of account, would be sufficient compliance with Section 34 of the Evidence Act. The question is whether in the present case there is any such corroboration.
31. It was submitted on behalf of the plaintiff that in accordance with the provisions of the Delhi Value Added Tax Act, 2004, the firm of the plaintiff i.e. Aarya Traders discharged its statutory obligation;
(a) by issuing tax invoices as per Section 50 of DVAT Act, which mandates every registered dealer making a taxable sale to issue a tax invoice to the purchaser, CS (COMM) No. 15/2018 Siddharth Gupta Vs. M/S Cine Laxmi Electricals Judgment dated 28.05.2025 Page No. 12 of 23
(b) by depositing the VAT collected on such sales into the government treasury as per the requirement of Section 3 (4) and Section 27 (1) of the DVAT Act,
(c) by filing timely VAT returns under Section 26 of the DVAT Act showing the output tax liability arising from these sales transactions. Output tax liability return has been filed quarterly through Annexure 2B under DVAT 31- 'Summary of Sale/ Outward Branch Transfer Register'.
32. The statement of account/ Ledger account Ex.PW1/B was filed on 27.02.2018 alongwith the plaint. As per the statement of account/ Ledger account Ex.PW1/B, the plaintiff, in the third quarter (for October, November and December 2016), sold goods to the defendant worth Rs. 9,69,943 vide invoice Nos. 48-54, 59 and 60. Further, as per Ex.PW1/B, the plaintiff has filed VAT return for an amount of Rs. 9,43,955. So, there is a difference of an amount of Rs. 25988 (9,69,943 - 9,43,955). Incidentally, invoice No. 52 is for an amount of Rs. 25988/-. It seems that the plaintiff has not included invoice No. 52 in the VAT return. But, then, there is no dispute about invoice No. 52. For all other invoices i.e. invoice Nos. 48-54, 59 and 60 (except invoice No. 52), the plaintiff has filed VAT return.
33. As already noted, the defendant is disputing liability for three invoices viz. invoice No. 54 dated 02.11.2016 for a sum of Rs. 2,79,838, invoice No. 59 dated 27.11.2016 for a sum of Rs. 1,22,577 and invoice No. 60 dated 19.12.2016 for a sum of Rs. 3,91,290. All the three invoices are reflected in the Statement of account/ Ledger account Ex.PW1/B.
34. Plaintiff's case is that under Section 9 (1) of the DVAT Act, a purchasing dealer (say defendant in this case) is eligible to claim input tax credit on the tax CS (COMM) No. 15/2018 Siddharth Gupta Vs. M/S Cine Laxmi Electricals Judgment dated 28.05.2025 Page No. 13 of 23 paid by them on purchases subject to condition that the purchases are made from a registered dealer (say plaintiff in this case). Furthermore, as per Rule 7 of the DVAT Rules, 2005, the purchaser must have a valid tax invoice to claim such input tax. That the defendant being a registered dealer under DVAT Act has claimed the Input Tax Credit (ITC) on the purchases made from the plaintiff. Input Tax Credit has been claimed by the defendant by filing of quarterly returns through Annexure 2A (summary of purchase/ inward branch transfer register) under DVAT.
35. The plaintiff has filed a reply received from the VAT department in response to RTI filed by the plaintiff Ex.PW1/E. Plaintiff also examined Sh. Praveen Kumar Nirman, Jr. Assistant from the department of Trade & Taxes, IP Estate, Vyapar Bhawan, ITO, New Delhi as PW2. He has brought the document Ex.PW2/A (Colly). Amongst the documents brought by PW2, there was/ is a document "summary of purchase/ inward branch transfer register (Annexure 2A) of the defendant". As per summary of purchase/ inward branch transfer register (Annexure 2A) of the defendant, the defendant, in the third quarter, purchased goods worth Rs. 9,43,955/- from the plaintiff and claimed Input Tax Credit to the tune of Rs. 44,950/-.
36. The plaintiff has shown the same amount of Rs. 9,43,955 in the statement of account/ Ledger account Ex.PW1/B. So, summary of purchase/ inward branch transfer register (Annexure 2A) of the defendant (forming part of Ex.PW2/A) corroborates the statement of account/ Ledger account Ex.PW1/B filed by the plaintiff. Further, claiming Input Tax Credit to the tune of Rs. 44,950/- by the defendant confirms the fact that the defendant purchased the goods from the plaintiff against invoice Nos. 48-54, 59 and 60 (except invoice No. 52).
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37. Here, one thing may also be noted. The defendant on the one hand is alleging that he used to make the payment to the plaintiff at the time of delivery of the goods (as and when the goods were supplied against the bills /invoices), and on the other hand, he is stating that he had made a payment of Rs.1,31,785/- in advance to the plaintiff to supply the goods (but the plaintiff did not supply the goods for the said amount). It clearly corroborates the case of the plaintiff that the defendant was not obliged to make the payment to the plaintiff at the time of delivery of the goods (as and when the goods were supplied against the bills /invoices). Rather, the defendant purchased the goods on credit sale and for that a statement of account/ Ledger account of the defendant was maintained by the plaintiff.
38. Further, the defendant has not placed on record any document showing the making of payment of Rs. 1,31,785 to the plaintiff. Rather, a bare perusal of statement of account/ Ledger account Ex.PW1/B shows that, as on 25.10.2016, an amount of Rs. 1,31,784 of the defendant was lying with the plaintiff. Thereafter, sales took place vide invoice No. 54 dated 02.11.2016, invoice No. 59 dated 27.11.2016 and invoice No. 60 dated 19.12.2016. It corroborates the statement of account/ Ledger account Ex.PW1/B filed by the plaintiff.
39. In this connection, I am referring to the relevant cross-examination of DW2 Sh. Rajesh Kumar, proprietor of the defendant to highlight the fact that how evasive this witness was in his cross-examination;
"...At this stage, witness is shown the invoices. There are total 18 invoices on record, collectively exhibited as Ex PW1/A. After seeing the same witness submits that on the initial fourteen invoices (invoice no. 26, 27, 28, 33, 34, 43, 45, 46, 48, 49, 50, 51, 52 and 53), his signature is appearing. He submits that however, it is not his signature on invoice no. 54, 59, 60 and 64. He further submits that the signature CS (COMM) No. 15/2018 Siddharth Gupta Vs. M/S Cine Laxmi Electricals Judgment dated 28.05.2025 Page No. 15 of 23 appearing on invoice no. 54,59, 60 and 64 is not of anyone from his office. Vol. It is me who used to sign on the invoices. During the transaction period, I was using TIN number but I do not recollect my TIN number. It is correct that when I made a sale or purchase, we claim input and output from the concerned Tax department. I cannot bring the TIN number now. It is wrong to suggest that I am deliberately denying to bring the TIN number as I had claimed input from the department w.r.t invoice number 54, 59, 60 and 64. Ques. I put it to you that you have received input from the Tax department w.r.t invoice number 54, 59, 60 and 64. What do you want to say?.
Ans. I do not remember today that whether I have received input from the Tax department w.r.t 54, 59, 60 and 64 or not. However, so far as remember I have not claimed the input from the Tax Department w.r.t 54, 59, 60 and 64.
Ques. Can you confirm this fact after confirming the same from your C.A or after checking your records?
Ans. My records have already been destroyed. Even my C.A is no more associated with me.
Ques. I put it to you that when any associate/ C.A leaves the job from me, the record w.r.t the Tax/Accounts remains with you? Ans. Records were there when my C.A left the office, however, the same has been destroyed now (by Rats). It has been destroyed 4-5 years back.
Ques. Can you tell when the records were with you (when the same was not destroyed by the rats), why did you not file the same along with your WS?CS (COMM) No. 15/2018
Siddharth Gupta Vs. M/S Cine Laxmi Electricals Judgment dated 28.05.2025 Page No. 16 of 23 Ans. Today, I cannot say why did I not file the same along with my WS. Ques. Whether you have made any advance payment to the plaintiff firm during the entire transaction? Ans. I have advanced certain payments to the plaintiff firm which I have to receive from the plaintiff firm.
I have not issued any legal notice to the plaintiff firm for the recovery of the advanced amount. Vol. I have orally made request for the same. It is wrong to suggest that there is no advance payment that is why I had not issued any legal notice or filed any complaint against the plaintiff.
XXXXX Ques. I put it to you that after received the invoices 27, 28, 33, 34 and 43, you have made consolidated part payment of Rs. 2,50,000/- on 31.08.2016. What you have to say ?
Ans. Mai iske bare me reply nahi kar sakta..."
40. From above discussion this Court concludes that the plaintiff has proved the statement of account/ Ledger account Ex.PW1/B and invoice Nos. 54, 59 and 60 (forming part of Ex.PW1/A) on record which are further corroborated by summary of purchase/ inward branch transfer register (Annexure 2A) of the defendant (forming part of Ex.PW2/A). Further, as discussed in paras 37 & 38 supra, even the stand taken by the defendant (that he has made an advance payment of Rs. 1,31,785/- to the plaintiff) corroborates the case of the plaintiff.
41. Now, coming to the defence(s) put forward by the defendant to dispute his liability for the invoice Nos. 54, 59 and 60. Defendant has raised following defences;
(a) Invoices are forged.
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(b) The plaintiff has not proved how the goods were supplied to the defendant as the vehicle number is not appearing on these invoices. No delivery note has been filed.
(c) Once the defendant denied his signature on the invoices in question, it was obligatory on the plaintiff to prove the signature of the defendant.
(d) Goods supplied by the plaintiff to the defendant were defective and the plaintiff failed to replace those goods.
(e) The plaintiff settled the dispute with M/s KPAR Ltd. vide a document dated 23.01.2018. M/s KPAR Ltd. paid the amount to the plaintiff equivalent to value of defective goods which the plaintiff was to take back from the defendant (and other wholesalers).
42. It may be noted that the stands taken by the defendant are mutually destructive. First three grounds (a), (b) and (c) relate to proof of invoice Nos. 54, 59 and 60. Ground (d) and (e) talks about supply of defective goods to the defendant by the plaintiff which the plaintiff failed to replace. Lastly, the care of the defendant is that in any case, the company M/s KPAR Ltd. (company manufacturing LED light) has reimbursed the plaintiff company equivalent to value of the defective goods supplied to it which the plaintiff in turn further sold to the defendant.
43. Ld. Counsel for the defendant has relied on a decision in The State of Karnataka V/s M/s Ecom Gill Coffee Trading Private Limited; Civil Appeal No. 230 of 2023 (decided by Hon'ble Supreme Court on 13.03.2023) to contend that actual movement of goods is necessary to show purchase of goods, and invoices and reference of purchase in VAT/ GST is not sufficient to prove that the goods have been supplied. Invoices must be supported with the delivery notes.
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44. Before the Hon'ble Supreme Court, respondents were all purchasing dealers who had claimed Input Tax Credit on purchases made from the respective dealers. The Assessing Officer in the matters under appeal, on appreciation of evidence, doubted the genuineness of the purchases and denied the credit. The Appellate authority dismissed the appeal filed by the purchasing dealers. However, Karnataka Appellate Authority on the ground that the purchasing dealer should not suffer due to the default of seller, reversed the orders passed by the Assessing Officer as well as the first appellate authority. Hon'ble High Court of Karnataka dismissed the revision petitions preferred by revenue department/ State of Karnataka. So, the issue before the Hon'ble Supreme Court was whether the Second appellate authority as well as Hon'ble High Court were justified in allowing the Input Tax Credit. To decide said question, the Hon'ble Supreme Court was required to analyse the scope of Section 70 of the KVAT Act which provides that the claim to credit is correct lies upon purchasing dealer claiming such credit. In these facts, the Hon'ble Supreme Court held as under
"9...[M]ere 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, CS (COMM) No. 15/2018 Siddharth Gupta Vs. M/S Cine Laxmi Electricals Judgment dated 28.05.2025 Page No. 19 of 23 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."
(Underlined by me)
45. So, the dispute before the Hon'ble Supreme Court in Ecom Gill supra was between the assessing authority/ revenue department/ State and purchasing dealers and the Hon'ble Supreme Court was to interpret the Section 70 of the KVAT Act, 2003. Here, in the present suit, the dispute is between the selling dealer (plaintiff) and purchasing dealer (defendant). And, the plaintiff has proved on record that the defendant, for the third quarter, has already claimed the Input Tax Credit to the tune of Rs. 44,950/- which confirms the receiving of goods by the defendant from the plaintiff. As such, the plaintiff, in the considered view of this court, has been able to prove delivery of goods to the plaintiff against invoice Nos. 54, 59 and 60.
46. The defendant has failed to bring on record any evidence to prove that the goods supplied by the plaintiff were defective. The relevant cross-examination of DW2 Sh. Rajesh Kumar, proprietor of the defendant is reproduced herein below;
"...I had received defective goods and replacement from the customers. However, I can not say that those goods were received by me under which invoice from the plaintiff firm. It is correct that I had not filed any photograph to show that the defective goods are lying in my office CS (COMM) No. 15/2018 Siddharth Gupta Vs. M/S Cine Laxmi Electricals Judgment dated 28.05.2025 Page No. 20 of 23 or shop. It is wrong to suggest that I had not filed the photographs of defective goods as there is no defective goods with you. Vol. Some of defective goods are still lying with me..."
47. Last contention of the defendant was that the plaintiff had settled the dispute with M/s KPAR Ltd. vide a document dated 23.01.2018, and M/s KPAR Ltd. paid the amount to the plaintiff equivalent to the value of defective goods which the plaintiff was to take back from the defendant. However, this contention of the defendant is liable to be rejected outrightly as the defendant, at the first place, has failed to bring on record any proof showing that the plaintiff supplied defective goods to the defendant. Even otherwise, there is nothing in document viz. Full and final settlement dated 23.01.2018 Mark A justifying the submission made on behalf of the defendant. Also, the defendant has failed to summon M/s KPAR Ltd. as a witness to prove its case.
48. So far as the issue whether the plaintiff has suppressed the material facts, or that the suit is based on surmises or conjectures, the relevant cross- examination of DW2 Sh. Rajesh Kumar, proprietor of the defendant, is reproduced herein below;
"Ques:- I put it to you that you have written in para No. 2 of your evidence affidavit Ex.DW2/A that the suit of the plaintiff is liable to be dismissed as the plaintiff has suppressed the material facts and not come with clean hands. What do you want to convey by this ? Ans. The replacement fact has been suppressed by the plaintiff. The replacement fact, and no goods have been received by me on credit. Ques:- I put it to you that you have written in para No. 5 of your evidence affidavit Ex.DW2/A that the suit of the plaintiff is liable to be dismissed as the suit of the plaintiff is based on surmises and conjectures. What do you want to convey by this ?CS (COMM) No. 15/2018
Siddharth Gupta Vs. M/S Cine Laxmi Electricals Judgment dated 28.05.2025 Page No. 21 of 23 Ans. When I say the present suit of the plaintiff is liable to be dismissed as the suit of the plaintiff is based on surmises and conjectures, I want to convey that the plaintiff has not disclosed the true and correct facts and has filed this suit on false facts."
49. This court is of view that the defendant has failed to show that the plaintiff has suppressed any material fact or that he has not come with clean hands. The defendant has also failed to prove that the suit of the plaintiff is based on surmises or conjectures.
50. In view of the above discussion and for reasons stated above, in the considered opinion of this court, the plaintiff has been able to prove, on preponderance of probabilities, the transaction of supply of goods to the defendant against invoice Nos. 54, 59 and 60. The defendant, on the other hand, has failed to controvert the case of the plaintiff. Resultantly, it is held that the plaintiff is entitled to the decree for recovery of money Rs. 6,61,920/- (Rupees Six Lakh Sixty One Thousand Nine Hundred Twenty Only).
51. In view of the finding given that the plaintiff is entitled to recover from the defendant Rs. 6,61,920/-, it is clear that the plaintiff is entitled to recover interest from the defendant. In the facts of the present case, in the considered view of this court, the interest of justice would be served if the plaintiff is granted pendente lite interest and future interest at the rate of 9% per annum.
52. Hence, issue No. (1) is decided in favour of the plaintiff and against the defendant. Issue Nos. (3) and (4) are decided against the defendant and in favour of the plaintiff.
RELIEF
53. As a net result of the aforesaid, this suit is decreed in favour of the plaintiff and against the defendant, for a sum of Rs. 6,61,920/- (Rupees Six Lakh CS (COMM) No. 15/2018 Siddharth Gupta Vs. M/S Cine Laxmi Electricals Judgment dated 28.05.2025 Page No. 22 of 23 Sixty One Thousand Nine Hundred Twenty Only) along with costs as well as pendente lite and future interest at the rate of 9% per annum.
54. After preparation of the decree sheet by the Reader, the file shall be consigned to the record room.
(Announced in the open court on this 28th day of May, 2025 This Judgment consists of Twenty Three signed pages).
(Abhishek Srivastava) District Judge-05, Central, THC, Delhi Digitally signed by ABHISHEK ABHISHEK SRIVASTAVA SRIVASTAVA Date:
2025.05.28 16:20:02 +0530 CS (COMM) No. 15/2018 Siddharth Gupta Vs. M/S Cine Laxmi Electricals Judgment dated 28.05.2025 Page No. 23 of 23