No liability can be fastened on the purchasing registered dealer for non-payment of tax by the selling registered dealer unless fraudulent, collusion, or connivance is established.

Ajay Kumar Mittal, J

1. By this order a bunch of twenty six writ petitions, viz. Civil Writ Petition Nos.6573, 6888, 6913, 6932, 6933, 7015, 7031 and 7107 of 2007, 9350 and 18345 of 2008, 4259 and 11581 of 2009, 2296, 2297, 3340, 8275 and 23400 of 2010, 9633, 10007, 11712, 11713, 14142, 14150, 14220, 14224 and 14248 of 2011 is being disposed of as questions of law involved are common in all these petitions. The common issue raised in these petitions is with regard to denial of Input Tax Credit by the Assessing Authority on the ground that the dealers from whom the petitioners have purchased goods, have not deposited full tax in the State Treasury. The petitioners have not been held entitled for deduction of Input Tax Credit in terms of the provisions of Section 8 of the Haryana Value Added Tax Act, 2003 (for brevity, 'the Act'). The facts have been extracted from Civil Writ Petition No.6573 of 2007.

2. The prayer made in these petitions filed under Articles 226/227 of the Constitution of India is for issuance of a writ of mandamus for declaring Section 8(3) of the Act as ultra vires on the ground that the same is arbitrary and unreasonable, inasmuch as it violates the Articles 14 and 19 (1)(g) of the Constitution and confer excessive powers on the State Government to frame Rules. Further writ of mandamus has been prayed for declaring Rules 20(1) and 20(4) of the Haryana Value Added Tax Rules, 2003 (for brevity, 'the Rules') to be unreasonable and arbitrary as the same are hit by the rigors of Article 14 of the Constitution. The petitioner also seeks a writ in the nature of certiorari for quashing the order dated 15.3.2007, Annexure P5, passed by the Excise and Taxation Officer-cum-assessing authority, Sirsa on the ground that the same is unconstitutional and has been passed by ignoring the principles of natural justice raising a demand of Rs.2,12,720/-.

3. The facts necessary to appreciate the controversy, as reflected in the petition are that the petitioner is a partnership firm under the name and style of M/s Gheru Lal Bal Chand, engaged in the business of sale and purchase of cotton. The petitioner procures material from different persons and sells the same in terms of the provisions of the relevant Act and the Rules and the tax which is paid by the dealer after deduction of Input Tax Credit is paid in the treasury. The firm is registered under the provisions of Act as well as the Central Sales Tax Act, 1956 (in short, the 'Sales Tax Act'). As per the petitioner, the scheme under the Act is that on the sale of goods, tax calculated would be treated as “output tax”. But if the purchases are made from within the State of Haryana, the tax paid on such purchases is to be set off from the out-put liability and resultant tax liability is paid by the selling dealer. The assessing authority observed that the petitioner was not entitled for deducting input tax credit as per provisions of Section 8 of the Act, because the Value Added Tax (VAT) dealers from whom the petitioner had purchased certain goods had not deposited the full tax in the State Treasury. The stand of the dealer, however, is that it made bona fide purchases from the selling dealers who were duly registered by the Assessing Authority under the Act and irrespective of the fact, whether they paid full tax or not, he should be allowed the necessary input Tax Credit. The said selling dealers discharged their tax liability and deposited the tax payable by them by deducting the input tax credit available to them.

4. The case of the petitioner is that when a registered dealer makes sales and issues tax invoice in terms of Section 8 of the Act to the purchasing dealer, the latter is entitled to claim Input Tax Credit. The person making purchases is, thus, required to ensure that the dealer selling the goods is a registered dealer and he has issued the tax invoice as per provisions of the Act. As per the mandate of Section 8(3) of the Act, in the eventuality of a clai