S. Sujatha, J.-

1. This Sale Tax Appeal is filed under section 66(1) of the Karnataka Value Added Tax Act, 2003 (for short, ' the') challenging the order passed by the 2nd respondent- Additional Commissioner of Commercial Taxes exercising the powers under section 64(1) of the Act, dated 12-12-2018 relating to tax periods 2010-11.

2. The appellant is a private limited company engaged as a developer of SEZ units, maintenance and operation of infrastructure facility. The appellant had filed monthly returns in VAT-100 for the tax periods 2010-11. On verification of the same, the Prescribed Authority noticed that the appellant had claimed input tax credit for the purchase of materials from their sub-contractors, M/s. Kanmani Constructions Private Limited, Bengaluru and M/s. Dev Structural India Private Limited, Llelagavi. The 4th respondent vide his order dated 15-9-2014 after hearing the appellant proceeded to deny the refund of input tax credits claimed on supplies by the aforestated vendors on the ground that the purchase invoices related to the year 2009-10 and that the vendors had not paid the tax collected from the appellant to the Revenue. The appellant preferred an appeal before the 3rd respondent whereby the 1st Appellate Authority had set-aside the order dated 15-9-2014 passed by the 4th respondent- Assistant Commissioner of Commercial Taxes, Belagavi and allowed the appeal. Thereafter, the 2nd respondent initiated the revisionary proceedings in terms of section 64(1) of theand has set-aside the order of the 1st Appellate Authority restoring the order of the prescribed Authority. Hence, the present appeal.

3. Learned counsel for the appellant submitted that the 2nd respondent-Additional Commissioner of Commercial Taxes has failed to establish the reasons for invoking suo-moto revision power under section 64 of the. The Appellate Authority appreciating the factual aspects qua well established law inasmuch as refund of input tax credit has rightly allowed the appeal. Hence, the revisional Authority ought not to have taken a different opinion on the ground of non-payment of tax collected from the appellant by the sub-contractors to deny the refund of input tax credit. It was argued that the non-payment of tax collected by the vendors,/sub-contractors is not a ground to deny the input tax credit to which the appellant is legally entitled to in terms of section 10 of theread with section 20 of the.

4. Learned counsel in support of his arguments has placed reliance on the following judgments:

(i) State of Maharashtra v. Suresh Trading Co. 1998 taxmann.com 1747 (SC).

(ii) Mukand Ltd. v. State of Karnataka [STRP No. 100006 of 2016, dated 22-1-2018].

(iii) State of Karnataka v. Rajesh Jain [STRP No. 171 & 313-316 of 2016, dated 7-12-2016].

5. Learned Additional Advocate General representing the Revenue submitted that the prescribed Authority considering the factual aspects has rightly denied the input tax credit claimed by the appellant. The appellant had claimed input tax credit of Rs. 15,92,055/- on purchases of Rs. 12,37,36,580 from Kanmani Constructions Private Limited, Bengaluru and input tax credit of Rs.24,29,300/- on purchases of Rs. 1,94,34,400/- from Dev Structural India Private Limited. But the said sub-contractors, in VAT-100 of June-2010 have declared less output tax than the input tax claimed by the assessee. The assessee was given adequate opportunity to prove that the subcontractors have declared output tax corresponding to the input tax claimed by the appellant. Despite providing ample opportunity, the appellant has failed to demonstrate the payment of output tax by the sub-contractors relating to these transactions. Hence, the input tax credit claimed by the appellant has been rightly denied by the prescribed authority. The Appellate Authority without considering these aspects has grossly erred in allowing the appeal. The said order of the Appellate Authority being erroneous and prejudicial to the interest of the Revenue, the 2nd respondent-Revisional Authority has initiated the revision proceedings and has rightly set-aside the order of the Appellate Authority restoring the order of the prescribed Authority.

6. Learned Additional Advocate General in support of her arguments has placed reliance on the following judgments:

(a) M/s. Bagadia Brothers v. Addl. Commr. of Commercial Taxes [ST Appeal No. 4 of 2018, dated 29-1-2020].

(b) M/s. Microqual Techno (P.) Ltd. v. Addl. Commr. of Commercial Taxes [STA No. 1 of 2010, dated 6-8-2010].

(c) Nav Bharat Steel v. State of Karnataka [2016] 69 taxmann.com 299/55 GST 697 [LQ/KarHC/2016/1391] (Kar.).

7. We have given our thoughtful consideration to the arguments advanced by the learned counsel for the parties and perused the material on record.

8. The dictums laid down in the judgments referred to by both the parties in the context of section 10 of theare that the burden lies on the assessee to claim the input tax credit. The purchasing dealer having paid the amount of VAT to the registered selling dealer, his entitlement to claim input tax credit need not be tagged with the registered selling dealer depositing the said collected tax amount in full or a part thereof and this principle would be applicable in case of genuine transaction or where there is no allegation of fraud having been perpetrated on the assessee, inasmuch as fraud vitiates all proceedings. As held in M/s. Microqual Techno Private Limited (supra), the assessee should satisfy that the transaction is valid and genuine so as to qualify itself to claim the benefit of input tax credit.

9. The co-ordinate Bench of this Court in the case of Bhavani Enterprises v. Addl. Commr. of Commercial Taxes [STA No. 71 of 2013, dated 13-6-2018] while examining the issue of burden of proof has observed that the provision of section 70 of thein its plain terms clearly stipulates that the burden of proving that input tax claim is correct lies upon the dealer claiming such input tax credit.

10. Yet another co-ordinate Bench of this Court in the case of Bagadia Brothers (supra) has held that the factual finding arrived under re-assessment order which had been set-aside by the 1st Appellate Authority without scrutiny or foundational facts being disturbed resulted in Revisional Authority upsetting the said finding recorded by the 1st Appellate Authority since burden which was upon the assessee as prescribed under section 70 of the Act, having not been discharged, Revisional Authority was fully justified in allowing the revision and setting aside the order of the 1st Appellate Authority.

11. In the case of Rajesh Jain (supra), the cognate Bench of this Court has observed that the finding of fact has been recorded by the Tribunal that the Assessee has fully discharged the burden of proof to claim the deduction of input tax as per the tax invoices. It was held that once the purchasing dealer-assessee satisfactorily demonstrates that while purchasing the goods, he has paid the amount of VAT to the selling dealer, the matter should end so far as his entitlement to claim input tax credit. If the selling dealer has not deposited the amount in full or a part thereof, it would be for the Revenue to proceed against the selling dealer. But thereby the benefit of input tax credit cannot be deprived to the purchasing dealer.

12. In the case of Mukand Limited (supra), the Division Bench of this Court while considering VAT-100 returns filed by the selling dealers not being traceable under EFS has observed that it is trite that the revenue can be at a loss in allowing the input tax credit to a dealer, who deals with a bogus transaction, for example, a selling dealer who is not in existence or a de-registered dealer, in such circumstances, it is not in dispute that unless the purchasing dealer establishes the genuineness of the invoices issued by the selling dealer, no input tax credit can be allowed.

13. In the light of the judgments referred to above, the factual finding given the prescribed Authority as well as the Appellate Authority requires to be examined by the Revisional Authority. The Revisional Authority proceeded to set-aside the order of the first Appellate Authority on the ground that the issue is not relating to the question whether the assessee is not a developer of SEZ but the issue relates to the claim of input tax credit made by the assessee on the basis of the invoices issued by the sub-contractors who have not at all deposited the tax to the extent of input tax credit claimed by the assessee. At internal page-7 of the order of the Appellate Authority, it is observed that on 29.07.2011, the concerned LVO-380, Belagavi has drawn another proceedings and allowed ITC of Rs.24,35,825-00 pertaining to the purchases from M/s. Dev Structural India Private Limited, Belagavi and disallowed ITC of Rs. 15,92,085-00 pertaining to the purchases from M/s. Kanmani Constructions Private Limited, Bengaluru. Again on 05.11.2011, the concerned LVO-380, Belagavi has allowed ITC of Rs. 12,56,983-00 out of Rs. 12,93,653-00 claimed by the appellant in respect of purchases from M/s. Kanmani Constructions Private Limited, Bengaluru. These proceedings are available from page Nos.77 to 87 in the assessment records respectively. Thus, the concerned LVO-380, Belagavi has allowed and refunded the input tax paid on the purchases from M/s. Dev Structural India Private Limited, Belagavi and M/s. Kanmani Constructions Pvt. Limited, Bengaluru after due verification of all the documentary evidence.

14. Whether allowing of the input tax credit as aforesaid would preclude the prescribed Authority in denying the input tax credit claimed by the assessee requires to be examined by the Addl. Commissioner of Commercial Taxes. It is not the case of the respondents that the sub-contractors are not in existence or invoices issued by such contractors are fake or any fraud has been played by the appellant. In such circumstances, denial of input tax credit relating to the refund of input tax paid, eligible for the appellant under section 20(2) of therequires to be further examined by the Revising Authority with reference to section 10 of the.

15. Though the appellant-assessee has raised many questions of law, we do not find any reason to answer the same in view of our decision to remit the matter to the Revisional Authority for fresh consideration.

16. For the foregoing reasons, we proceed to pass the following:

ORDER

(i) The appeal is partly allowed.

(ii) The order of the 2nd respondent-Additional Commissioner of Commercial Tax dated 12-12-2018 at Annexure-A is set-aside.

(iii) The proceedings are restored to the file of the 2nd respondent-Additional Commissioner of Commercial Taxes to reconsider the matter in the light of the aforesaid legal aspects.

(iv) The 2nd respondent shall take a decision in accordance with law after providing an opportunity of hearing to the appellant-assessee.

(v) The appellant-assessee is at liberty to file additional documents, if any, to substantiate his claim.

(vi) Compliance shall be made in an expedite manner, in any event, not later than twelve weeks from the date of receipt of certified copy of this order.

(vii) All rights and contentions of the parties are kept open.

In view of disposal of the main appeal, pending applications, if any, do not survive for consideration, hence, stand dispose of.