VAT refund Defaulters

I have a querry and would request you to help me out. I am a small time trader. I had purchased some material and the party has given me bills of some other names stating they are his own bills. At the time of submitting bills in my account they were active ( VAT TIN) with the Sales Tax. I had also claimed my MVAT refund. Now the Sales Tax officer came to my office and says that the bills in my account are that of hawala dealer and I have to pay the full Vat amount of 12.5%. They also asked for confirmation from the dealer but since I dont deal with them anymore they are not providing me the confirmation. Now how do I know whether the bills that party has given me are genuine or not. Why should I pay the VAT amount along with the interest and penalty when the person who is a defaulter (or not, not known) moving freely at large. I have made the entire payment through cheque. Kindly give your advice and suggest as to what steps should be taken.