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Through: Mr. A.K. Babbar, Advocate.

CORAM:

MR. JUSTICE S. RAVINDRA BHAT MR. JUSTICE R.V. EASWAR MR. JUSTICE S.RAVINDRA BHAT
1. The present judgment will dispose of six appeals preferred under Section 81 of the Delhi Value Added Tax Act, 2004 (hereafter called "VAT Act") challenging a common order of the Value Added Tax Appellate Tribunal ("VAT Tribunal") dated 05.01.2012. The question of law urged in the present case is:
"Whether in the facts and circumstances, the VAT authorities were justified in disallowing the input credit claimed by the appellant, a purchasing dealer."

2. The brief facts necessary for deciding the case are that the appellant trades in electrical goods and is a registered dealer under the VAT Act. It purchases goods from dealers registered under the said Act on the basis of ST.APPL. 34-39/2012 Page 1 tax invoices issued by them and on the payment of VAT at applicable rates. The appellant received notices for assessment of tax and interest under Section 32 of the VAT Act and for penalty assessment under Section 33. These were for various periods between 2007 and 2008 and apparently premised on the audit of its accounts by the VAT Department for the period 01.04.2007 to 31.03.2008. The VAT Officer (VATO) by assessment orders disallowed the input claimed on account of purchases from two dealers - M/s. Balaji Enterprises and M/s. R.S. International (hereafter referred to as the "selling dealers"). The VATO was of the opinion that the selling dealers operated for short periods and their turn-over was high in comparison to the tax deposited by them. Consequently by the orders, the VATO demanded tax, interest and penalty for the periods in question. Arguing that the VATO's orders were not justified in law, the appellant moved the Objection Hearing Authority (OHA) under Section 74. These appeals/objections were dismissed by order dated 29.01.2010. The OHA confirmed the VATO's order.

3. Appeals were consequently preferred the VAT Act to the Tribunal, which, by the impugned order, dismissed them, upholding the disallowance of the input credit and also upholding the penalties imposed. The Tribunal was of the view that Section 9(1) permits tax credit to a purchasing dealer to the extent the tax is actually deposited by the selling dealer. In doing so, the VAT Tribunal also took into consideration the amendment to Section 9(2) which was brought into force on 01.04.2010, i.e. after the appeals were preferred. That amendment inserted clause (g) to Section 9(2), clarifying that input tax credit is admissible to purchasing dealer only when tax is actually deposited by the selling dealer.

5. Reliance was placed on behalf of the Appellant on decision reported as State of Maharashtra v. Suresh Trading Company 1998 (109) STC 439 (SC) where the Supreme Court had rejected the Revenue's contention in a similar factual setting. Learned counsel also relied upon the decision of the Madras High Court reported as Althaf Shoes Pvt. Ltd. v. Assistant Commissioner (CT) VSTI 2012 B-380. Lastly, it was urged that the necessary ingredients enabling the tax administrators in this case to impose penalty, i.e. where a tax deficiency arose in terms of Section 86(1), did not occur. Consequently there was no warrant for penalty. It was also submitted that the purchasing dealer could not ascertain the selling dealers' ST.APPL. 34-39/2012 Page 3 registration certificates had been cancelled as they were not notified at the relevant time. In fact, the dates of the cancellation order were unknown. The appellant became aware of the cancellation only after the VATOs order, and could obtain information through applications made under the Right to Information Act. Counsel submitted that data confidentiality in such matters is mandated by virtue of Section 28 of the VAT Act, emphasizing that there was no mechanism for such information dissemination.