Retrospective Cancellation of Registration of Purchasing Dealer does not affect Right of Selling dealer for Deduction: Rajasthan HC [Read Order]

The Rajasthan High Court held that the retrospective cancellation of registration of Purchasing Dealer does not affect the right of selling dealer for deduction.

Mr. Ayush Singh Advocate on behalf of Mr. Punit Singhvi, counsel for the revenue is that in cases where the registered seller is found to have obtained a forged registration as dealer and it is found that such person has not paid any tax to the department, recovery could always be made from the buyer. According to him, not only tax but interest and penalty is also leviable.

Further submission is that Input Tax Credit could not be claimed by the assessee as the same is raised on false/forged VAT invoices issued by the dealer, who never deposited the tax and where registration itself has been cancelled.

The issue raised was Whether the Rajasthan Tax Board was justified in law in holding that the respondent cannot be hold responsible for the amount not deposited by the selling dealer and allowed the benefit of Input Tax Credit which ultimately will amount to double jeopardy to the State as the selling dealer has not deposited the tax whereas subsequent dealer has claimed benefit of Input Tax Credit.

The division bench of Justice Birendra Kumar and Justice Manindra Kumar Shrivastava relied upon the judgement of the High Court of Delhi in the case of Arise India Limited & Others Versus Commissioner of Trade & Taxes, Delhi and Others, W.P.(C) No.2106/2015, decided on 26.10.2017.

The court held that retrospective cancellation of registration of purchasing dealers does not affect the right of selling dealers for deduction.

Assistant Commissioner, Commercial Taxes Department vs M/s Asha Oil Traders A-11

CITATION: 2022 TAXSCAN (HC) 194

To Read the full text of the Order CLICK HERE

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