Allahabad High Court
M/S Shree Siddhbali Agro Food Products vs The Commissioner Commercial Tax on 10 October, 2025
Author: Piyush Agrawal
Bench: Piyush Agrawal
HIGH COURT OF JUDICATURE AT ALLAHABAD Reserved on 7.10.2025 Delivered on 10.10.2025 HIGH COURT OF JUDICATURE AT ALLAHABAD Sales / Trade Tax Revision No. 340 of 2019 M/s Shree Siddhbali Agro Products ..Revisionist(s) Versus The Commissioner Commercial Tax ..Opposite Party(s) Counsel for Revisionist(s) : Suyash Agrawal Counsel for Respondent(s) : CSC Court No. - 7 HONBLE PIYUSH AGRAWAL, J.
1. Heard Mr. R.R. Agrawal, learned Senior Advocate assisted by Mr. Suyash Agrawal for the revisionist and Mr. B.K. Pandey, learned ACSC for the opposite party.
2. The present revision has been filed against the order dated 19.7.2019 passed by the Commercial Tax Tribunal in Second Appeal No. 87/2019 (A.Y. 2016-17) U/s 28 (2) (ii) of UP VAT Act, 2008.
3. The present revision has been admitted vide order dated 27.9.2019 on the substantial questions of law framed in the memo of revision.
4. Learned Senior Counsel for the revisionist submits that the revisionist is engaged in the business of manufacture and sale of Atta, Maida, Suji and Choker from Wheat. He submits that for manufacture of aforesaid goods, the revisionist purchased the raw material i.e. wheat from inside the State of UP as well as outside the State of UP after paying due tax thereof. He submits that the revisionist disclosed the purchases of wheat from Delhi through Form 38 E-Sancharan valuing Rs. 10,59,10,067/- and the said purchases of wheat were dispatched by the selling dealers after booking the same with the transporter. He submits that on 24.8.2016 a survey was conducted by the SIB at the business premises of the revisionist and four allegations were made i.e. (i) stock register pertaining to raw material and finished goods, manufacturing register, purchase invoice, cash book were not found, (ii) stock register with respect to wheat, entry was made upto 22.8.2016 (iii) on physical verification there was difference in stock of Atta, Maida, Suji and Choker (iv) in the disclosed purchase of wheat from outside state of UP, the vehicle number pertains to Jeep, Motorcycle, Tractor, Bulldozer etc. He submits that on the aforesaid allegations a show cause notice was issued to the revisionist on 10.11.2016 to which the revisionist has submitted reply but being not satisfied with the same, the assessing authority passed the assessment order dated 20.6.2018 estimating the purchase of wheat from within the State of UP as suppressed purchases at Rs. 4,60,24,006/- and imposed tax liability of Rs. 18,40,960/- against which the revisionist preferred an appeal before the Additional Commissioner which was partly allowed to the extent that the turnover of the suppressed purchase was reduced to the tune of Rs. 2,30,00,000/- and imposed the tax liability of Rs. 9,20,000/- vide order dated 5.12.2018. Aggrieved to the said order, the revisionist filed a second appeal before the Commercial Tax Tribunal which was also allowed in part vide order dated 19.7.2019 and the Tribunal has fixed the suppressed purchase of wheat from Delhi at Rs. 1,50,00,000/- and imposed tax liability of Rs. 6,00,000/-.
5. Learned Senior Counsel further submits that purchases of wheat made from Delhi were duly disclosed, after issuing Form 38 and further the transactions were made through banking channel, therefore, the authorities were not justified in drawing adverse inference against the revisionist. He further submits that the goods i.e. wheat when purchased, due Mandi Parchis were issued on which vehicle number was mentioned, which is not in dispute but in spite of allowing the appeal in toto, the appellate court has partly allowed the appeal. He submits that proceedings against the revisionist has been drawn only on the ground that vehicle numbers mentioned are related to Tractor, Jeep, Bulldozer, Motorcycle etc. but on the said premise, the purchases made by the revisionist cannot be disputed.
6. In support of his argument, learned Senior Counsel has relied upon the judgment of the Apex Court in the case of Tata Engineering and Locomotive Company Ltd. Vs. Assistant Commissioner of Commercial Tax, 1970 UPTC 265 and submitted that each and every transaction was required to be examined independently.
7. Per contra, learned ACSC supports the impugned order and submits that not only a detailed show cause notice was issued against revisionist but also the assessing authority while passing the assessment order has given detailed chart of selling dealer, e-way bill number, invoice number, value of the goods and make of vehicle, in which the vehicle numbers were found to be of Jeep, Tractor, Motorcycle, Bulldozer etc. but no contrary material has been brought on record by the revisionist to rebut the same. He submits that it is a duty of the revisionist to supply the cogent material in its favour. He further submits that the revisionist is claiming the benefit of exemption of tax paid on purchase, therefore, it was its duty to discharge the burden; if it was the case of re-assessment then the burden shifts upon the revenue to prove otherwise. He prays for dismissal of the revision.
8. After hearing learned counsel for the parties, the Court has perused the records.
9. It is not in dispute that the revisionist being engaged in the business of production of Atta, Maida, Suji, Choker etc, for which the basic raw material is wheat. The revisionist has shown the purchase of wheat from Delhi to which Form 38 was issued and payments were made through banking channel. The record shows that the purchases of wheat which were transported, were made from the vehicles found to be Jeep, Tractor, Motorcycle, Bulldozer etc to which no cogent material has been brought on record by the revisionist to rebut the same. Further nothing has been brought on record to show the actual movement of goods from Delhi to the place of business of the revisionist. Further at the time of survey, certain adverse material was found and on the said premise, the inference has been drawn that the purchase of wheat disclosed as interstate purchase, was made from unregistered dealer within the State to which the liability has been fasten by the assessing authority. The first appeal was filed, which was partly allowed and further second appeal was filed in which further relief was granted to the revisionist. Merely the disclosure on the part of the revisionist that the goods were purchased and handed over to transporter for transportation of the same by the selling dealer, will not absorb its liability to prove the actual movement of the goods.
10. The record shows that show cause notice was issued in which details of make of vehicle was given, which was used for transportation of wheat from Delhi but no material was brought on record to rebut the same up to the stage of this Court. Only submission has been made that seller handover the wheat to the transporter who deliver the wheat at the business place of revisionist. Thus, merely by the said submission, actual physical movement of wheat from Delhi to UP, which can show the genuineness of the transaction, cannot be proved.
11. This Court in the case of The Commissioner, Commercial Tax Vs. M/s Ramway Foods Ltd. (Neutral Citation No. 2023:AHC:169366) has held as under:
11. The opposite party has also submitted the detail of vehicles which were used for the transportation of the said purchases, along with registration numbers. On verification of the registration numbers of the said vehicles, it was found that some of the vehicle numbers were not in the official website of the Motor Vehicle Department and some of the vehicle numbers were found to be of two-wheeler, small three-wheeler, passenger vehicles, etc. The contention of the learned counsel for the opposite party - dealer cannot be accepted merely on production of invoices or payments made through banking channel or forms issued by the Mandi Parishad. For claiming the benefit, the dealer was also required to prove beyond doubt that actual movement of goods was there. Once most of the vehicle numbers provided by the opposite party - dealer were found to be fictitious, the movement of goods cannot be accepted.
12. Section 16 of the UP VAT Act reads as under:-
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.
13. From perusal of the aforesaid provision, it is evidently clear that the burden of proof lies upon the dealer/opposite party. In other words, the burden of claim of ex U.P. purchases is squarely upon the opposite party, who has to discharge the said burden and not the Department. Merely showing the purchases through invoices from the registered dealer, will not enough and sufficient to proof that the purchases have been made bona fidely.
14. The Apex Court in the case of The State of Karnataka Vs. M/s Ecom Gill Coffee Trading Private Limited (Civil Appeal No. 230 of 2023, decided on 13.03.2023), while considering the pari materia of section 70 of the Karnataka Value Added Tax Act, 2003, where the burden was upon the dealer to prove beyond doubt its claim of exemption and deduction of ITC, has observed as under:
9.1 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.
10. 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 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, acknowledgment 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.
15. The Apex Court has held that the primary responsibility of claiming the benefit is upon the dealer to prove and establish the actual physical movement of goods, genuineness of transactions, etc.
16. In the case in hand, from the verification of the registration numbers of the trucks provided by the dealer, it was found that some of them are of two-wheeler, passenger vehicles, small three-wheeler and some of them could not be found. Therefore, the dealer has miserably failed to prove the actual physical movement of goods which deemed to have been purchased from ex UP dealers. Once the dealer failed to establish the said purchases and the physical movement of the same, the claim for non-taxability cannot be accepted.
12. The case is hand is squarely covered with the decision of this Court passed in M/s Ramway Foods Ltd. (supra) and this Court finds no reasonable justification to defer the same, therefore, the case law relied upon by the learned Senior Counsel for the revisionist is of no aid to the revisionist.
13. In view of above, no interference is called for in the impugned order.
14. The revision is dismissed accordingly.
15. The substantial question of laws are answered in favour of the revenue and against the revisionist.
(Piyush Agrawal, J.) October 10, 2025 Rahul Dwivedi/-