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5. The law on this aspect has been settled by the Division https://www.mhc.tn.gov.in/judis Bench of this Court, rendered in the case of Sahyadri Industries Ltd. vs. State of Tamil Nadu1. In paragraphs 100 to 109, it has been held as under:-
“100. To an extent we are in agreement with the view of the learned Single Judge in Vinayaga Agencies v. CCT [Vinayaga Agencies v. CCT, (2013) 60 VST 283 : 2013 SCC OnLine Mad 323] . However, the view cannot be applied universally where the selling dealer continued to exist where there was no transaction of “sale” or that the registration was obtained only for the purpose of facilitating credit of tax being availed without a transaction of sale. We cannot uphold the view in Vinayaga Agencies v. CCT [Vinayaga Agencies v. CCT, (2013) 60 VST 283 : 2013 SCC OnLine Mad 323] in all cases merely because the registration of the selling dealer was not cancelled if indeed the registration was obtained to create paper transaction without actual sale. The burden to prove that there was indeed a transaction of sales is with the registered dealer availing credit. Till such burden is proved, the credit availed under the proviso to Section 19(1) of the T.N. Vat Act, 2006 can be denied.
101. We have to state that ratio of this Court both in Jinsasan Distributors v. CTO [Jinsasan Distributors v. CTO, (2013) 59 VST 256 1 2023 SCC Online Mad 7905 https://www.mhc.tn.gov.in/judis : 2012 SCC OnLine Mad 4633] and Vinayaga Agencies v. CCT [Vinayaga Agencies v. CCT, (2013) 60 VST 283 : 2013 SCC OnLine Mad 323] are no longer a good law in the light of the recent decision of the court in State of Karnataka v.

Ecom Gill Coffee Trading (P) Ltd. [State of Karnataka v. Ecom Gill Coffee Trading (P) Ltd., (2023) 111 GSTR 1 : 2023 SCC OnLine SC 248] , dated 13-3-2023 in Civil Appeal. No. 230 of 2023. We shall deal with the same in due course of discussion.

102. The ratio in Vinayaga Agencies v. CCT [Vinayaga Agencies v. CCT, (2013) 60 VST 283 :