The State of Karnataka Vs M/s Ecom Gill Coffee Trading Private Limited

Order Date – 13 March 2023

Facts –

• The Respondent, M/s Ecom Gill Coffee Trading Private Limited, purchased green coffee bean from other dealers for the purposes of further sale in exports and in domestic market.
• Some irregularities were found in Input Tax Rebate claimed by the respondent for Assessment Year 2010-2011, the Assessing Officer issued notice under section 39 of the KVAT Act, 2003 seeking furnishing of accounts, books, tax invoices etc. Re-assessment order came to be passed.
• Initially the refund was allowed partly, however, the Tribunal allowed the second appeal on the ground that the purchasing dealer purchased the coffee from the registered dealer under genuine tax invoices and consequently allowed the ITC claimed. 

Issue –

• Whether ITC can be allowed to the respondent?

Order –

• The Divisional Bench of Hon’ble Supreme Court observed that 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. 
• In the absence of any further cogent material like 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. and the actual physical movement of the goods by producing the cogent materials, the Assessing Officer was absolutely justified in denying the ITC, which was confirmed by the first Appellate Authority.
• As the respondent failed to prove the genuineness of the transactions and failed to discharge the burden of proof as per section 70 of the KVAT Act, 2003, the orders passed by the Assessing Officer denying the ITC to the concerned purchasing dealers, confirmed by the first Appellate Authority are restored. 
• Revenue appeal allowed.