IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE SIXTEENTH DAY OF FEBRUARY TWO THOUSAND AND TEN PRESENT THE HON'BLE SRI JUSTICE V. ESWARAIAH AND THE HON'BLE SRI JUSTICE VILAS V. AFZULPURKAR WRIT PETITION Nos: 10043, 10044, 10027, 10116, 10030, 10061, 10068, 10035, 10036, 10059, 10058, 10023 and 10884 of 2009 BETWEEN M/s. Sujana Universal Industries Limited and others. ... PETITIONERS AND Commercial Tax Officer, Vengalrao Nagar Circle, Panjagutta Division and others. ...RESPONDENTS Counsel for the Petitioners: MR. S.R. ASHOK, Senior Counsel For MR. A. SUDERSHAN REDDY MR. G. MADHUSUDHAN REDDY Counsel for the Respondents: GP FOR COMMERCIAL TAX GP FOR REVENUE The Court made the following order: COMMON ORDER: (per Hon’ble Sri Justice Vilas V. Afzulpurkar) This batch of writ petitions arises under the Andhra Pradesh Value Added Tax Act, 2005 (for short ‘the APVAT Act’) and relate to the assessment for the year 2005-2006. The facts and circumstances are similar to WP.No.4801 of 2009 and batch, which is separately dealt with and disposed of on 29.01.2010. 2. For the sake of brevity, therefore, all those facts and circumstances on behalf of either side are not repeated herein. 3. The only difference in this batch of cases is that while the former batch was under the Andhra Pradesh General Sales Tax Act, the present batch is under the APVAT Act. While under the former batch the point regarding second sales of iron and steel, which are exempted under the APGST Act is involved, in this batch, arising under the APVAT ACT, the claim of the assessee to seek entitlement to Input Tax Credit (ITC) under Section 13(1) of the APVAT Act is involved. Section 13(3) of the APVAT Act provides that a VAT dealer is entitled to claim ITC by satisfying four conditions as under: i) Seller and purchaser must be VAT dealers, ii) Goods purchased must be taxable goods, iii) Tax must be charged on the sale of such goods and iv) Goods purchased must be for use in the business. 4. The petitioners/assessees in each of these cases contend that they have furnished tax invoices and registration numbers of selling dealers and they discharged their burden whereas the respondents contend that furnishing of such details does not amount to fully discharging the burden on the assessee in the absence of proof of payment of tax form the dealer, who has sold. The controversy involved in this batch of cases centers round the interpretation of Section 13(3)(a) of the APVAT Act. For convenience Section 13(3)(a) and (b) are extracted hereunder: “13. Credit for Input tax. – (1)… (2)… (3) A VAT dealer shall be entitled to claim: - (a) input tax credit under sub-section (1), on the date the goods are received by him, provided he is in possession of a tax invoice; (b) input tax credit or sales tax credit under sub-section (2), on the date of registration, provided he is in possession of documentary evidence therefor.” 5. According to the learned Special Government Pleader the wordings in Section 13(3)(a) show that for a dealer to claim ITC under sub-section (1) of Section 13, he must prove the date the goods are received by him provided he is in possession of the tax invoice. Emphasis, therefore, is laid on the words ‘goods are received’ and it is contended by the learned Special Government Pleader that there must be physical delivery of goods from one dealer to the other and only on establishing the same, the other dealer would be entitled to claim ITC with respect to VAT already suffered on the said goods at the hands of the first seller. It is contended that in all these cases, the respective assessee/writ petitioner is unable to establish the receipt of goods by him inasmuch as the vehicle numbers through which the delivery is said to have been made have been verified by the department and it is claimed by the assessing authority that the said vehicle numbers do not relate to the category of vehicles, which are capable of carrying the goods in question viz. steel. It is also claimed that the vehicle numbers are of either three wheelers or two wheelers and consequently the receipt of goods as contemplated under Section 13(3)(a) of the APVAT Act above is not satisfied and consequently the claim of the assessee for ITC was rightly rejected. 6. Learned senior counsel, however, contends that there may be variety of sales in normal transaction where it is not necessary that there should be movement of goods from the place of seller to the place of purchaser and there can be a sale without effecting delivery of goods. It is, therefore, contended that the burden on the second seller stands discharged when the second seller furnishes invoice and particulars of VAT dealers from whom he has purchased and as such, ITC cannot be denied on the grounds on which the assessment order proceeds. In this batch of cases also there are successive orders passed against all the subsequent purchasers claiming VAT from all of them without giving them benefit of ITC. 7. In this batch of cases also the respondents have raised similar contentions of circular trading among the group companies and each one claiming ITC without establishing the first seller as having paid VAT and consequently, therefore, in each of these cases the claim of the assessee for ITC was rejected. 8. As has already been held in the former batch of cases referred to above that identification and determination of the first dealer is essential, as liability cannot be imposed on each and every subsequent purchaser on the ground that he has not produced proof of payment of tax by the first seller. The assessment orders impugned herein also, therefore, suffer from the same vice as has been determined in the former batch of cases. Consequently, therefore, this batch of cases also stands allowed and assessment orders are set aside by remitting each of the assessment orders to the respective assessing authority for fresh assessment after giving due opportunity to the assessees and the department to identify and establish the first seller to enable the department to assess, levy and recover tax from the first seller and consequently, so that the subsequent dealers will be entitled to claim ITC under the scheme of the APVAT Act. The writ petitions are accordingly allowed. There shall be no order as to costs. ______________ V. ESWARAIAH, J _____________________ VILAS V. AFZULPURKAR, J February 16, 2010 DSK