Input credit on bills with invalid/cancelled tin

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Supriya Kalwar (Querist)
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01 July 2012 Dear Sir/Mam,

My Client has got a Demand from Sales Tax to pay amounts claimed as Input Credit on basis of Purchase Invoices of Vendors with Invalid or cancelled tins. My client was ignorant of the fact that the TIN no was invalid/cancelled. He has made payments of all bills on which he claims credit.

Is there a legal provision which can save my client from paying this demand???

Please help.

C.A. Supriya Kalwar

CA CS Pawan Jajoo

CA CS Pawan Jajoo (Expert)
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02 July 2012 Recently there was a case law in which it was determined that Purchasing Dealer can not be held liable for cancellation of Suppling dealer

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CA UMESHKUMAR R. ACHARYA

CA UMESHKUMAR R. ACHARYA (Expert)
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02 July 2012
Yes there is clear provision and judgment under Vat where Input credit cannot be denied to purchaser because he has purchased from Party who has invalid TIN or cancelled TIN at time of purchase.

If from whom you have purchased had a valid Number at the time of purchase but subsequently cancelled then it is not your fault.

But If when you purchased and at that time purchaser had no TIN Number or Bogus Number/Invalid Number or cancelled /Ineffective Number then department can recover the tax from you.

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Supriya Kalwar

Supriya Kalwar (Querist)
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03 July 2012 Sir,

Thanks for your speedy reply. Can you please provide me with the relevant provision and judgement details.

CA UMESHKUMAR R. ACHARYA

CA UMESHKUMAR R. ACHARYA (Expert)
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03 July 2012
It will take some days to find the judgement.

In gujarat there were number of similar cases as mentioned in your quarry and Department imposed Int and Penalty also but

Court favoured registered dealer on the ground that he has done what he is expected to do as a purchaser at time of purchase.
If seller has not paid the tax then purchaser cannot be made liable .

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