JUDGMENT : The Assessee M/s. Bhavani Enterprises, Bangalore, has filed the present Appeal under Section 66 of Karnataka Value Added Tax Act, 2003, aggrieved by the Order of the Revisional Authority, namely, the Additional Commissioner of Commercial Taxes, Zone III, Bangalore, on 26.03.2012 restoring the penalty under Section 70[2][a] of the Karnataka Value Added Tax Act, 2003 [‘Act’, for short], which was imposed by the Assessing Authority vide Order dated 30.04.2009, but the same was set aside by the first Appellate Authority vide Order dated 23.10.2009. 2. The learned Revisional Authority in the facts briefly stated below, restored the said penalty following the Judgment of the Division Bench of this Court in the case of ‘Microqual Techno Private Limited Vs. Additional Commissioner of Commercial Taxes, Zone 1, Bangalore’ [(2012) 52 VST 362 (Karn)], in which the Division Bench of this Court, almost in similar circumstances, upheld the order passed by the Revisional Authority restoring the similar penalty under Section 70[2] of the Act, with the following observations: “9. It is not in dispute that, a showcause notice as contemplated under section 3(3) of the Act had been issued and the assessee had given his written reply. Now, the only question is, whether the assessee had knowingly produced a false tax invoice to support a deduction of input tax, which is available to him under law. The revisional authority has clearly set out the adverse materials justifying imposition of penalty. they have clearly set out number of invoices raised by the four suppliers with invoice number, date, quantity, value of goods and VIT and IRG numbers. The total input tax credit claimed by the assessee is Rs. 3,85,183. From the dates of the invoice, it is clear that the supply is neither occasional nor stray cases. It is continuous and it is for three months from October 2005 to December 2005. The format of tax invoices of these fraudulent suppliers is almost similar and common. The payments towards these supplies and purchases on the basis of tax invoices are also made by the assessee on his own terms, i.e., he has not made the payments immediately and the payments are accumulated as due and made at the end of the respective financial years of 2005-06 and 2006-07. The aforesaid facts are not disputed in the sense, that the assessee has not answered the queries of the assessing authorities. The aforesaid facts are not disputed in the sense, that the assessee has not answered the queries of the assessing authorities. The aforesaid material makes it very clear that in order to claim benefit of refund of input-tax, the assessee has produced these invoices, which do not reflect a genuine transaction. The very fact that the assessee was not able to answer any one of the fact makes it clear that he knew the truth, he knew what he was doing. Therefore, it is clear that the assessee knowingly produced invoices, which are not genuine in support of his claim of input-tax refund on the basis that he had paid input tax. It is a clear case of evasion of tax. It is not a bona fide act of the assessee. On proper appreciation of the entire material on record, the revisional authority is justified in holding that the first appellate authority committed a serious error in setting aside the penalty on the assessee.” 3. The penalty in question was imposed by the Assessing Authority under Section 70[2] of the Act, on the ground that input tax credit availed by the Appellant-Assessee was on the basis of fake and false invoices of the selling dealers who actually did not exist and upon investigation and enquiry, it was found that these dealers did not exist and therefore the input tax credit could not be allowed in the hands of the purchasing dealer, the present Appellant-Assessee and therefore the Appellate Authority was not justified in setting aside the penalty under Section 70[2] of the Act which was imposed by the Assessing Authority. 4. The relevant findings and observations of the learned Additional Commissioner of Commercial Taxes in the impugned Order dated 26.03.2012 are also quoted below for ready reference: “The objections filed have been perused but the same cannot be accepted for the reason that in the instant case the FAA is of the opinion that the input tax claim cannot be allowed for reason that purchases are on false invoices and had rejected the input tax claim, once purchase invoices are considered as false and input tax claimed is found to be incorrect, penalty U/s 70(2)(a) of the KVAT Act is attracted. Further, in similar circumstances the appellate authority had confirmed the order of disallowing input tax credit and set aside the penalty imposed on the ground that if the registered dealer who collected tax from the assessee had not paid the tax to the department it cannot be said that the assessee knowingly produced invoices which are not genuine and penalty was set aside. The Revisional authority set aside the order of FAA and restored the penalty. On appeal before the Hon’ble High Court by M/s Microqual Techno Pvt. Ltd., in STA No.1/2010 the Hon’ble High Court in its judgment dated 06-08-2010 has upheld the levy of penalty U/s 70(2)(a) of the Act by the revisional authority. Therefore the objection are rejected and following order is made. ORDER UNDER SECTION 64(1) OF THE KARNATAKA VALUE ADDED TAX ACT, 2003 Since the objection filed are found to be not acceptable, the appeal dated 23-10-2009 is set aside in respect of penalty levied under Section 70(2)(a) of the KVAT Act, 2003 and order passed by assessing authority dated 30-04-2009 are restored.” 5. Learned Counsel for the Appellant-Assessee Mr. Atul K. Alur, submitted before us that the Appellant-Assessee was a bonafide purchasing dealer and Section 70[2] of the Act is attracted only if a dealer, on ‘knowingly issues or produces false invoice etc.,’. He submitted that the Assessing Authority had undertaken the process of cross examining the Appellant-Assessee as well as the selling dealer and therefore the burden of proof of showing that the selling dealers existed stood discharged by the Appellant-Assessee and therefore Section 70[2] of the Act was not attracted. He drew the attention of the Court towards the relevant extract of the Assessment Order AnnexureA dated 30.04.2009, wherein the learned Assessing Authority on 06.02.2009 examined one Mr. Chhatar Singh Kathotia, Proprietor of M/s. T D & Co., and the Proprietor of the Appellant-Assessee, M/s. Bhavani Enterprises Mr. S.P. Agarwal. In the said cross examination, Mr. Chhatar Singh Kathotia stated before the Assessing Authority that he obtained registration in the name of the selling dealer firms at the instance of one Mr. Goutham Chand, Proprietor of M/s. Riddhi Siddhi Metals and registration charges were met by him through Sales Tax Practitioner Mr. Pehlaz and the invoices of the said concern were being used by said Mr. Goutham Chand. Goutham Chand, Proprietor of M/s. Riddhi Siddhi Metals and registration charges were met by him through Sales Tax Practitioner Mr. Pehlaz and the invoices of the said concern were being used by said Mr. Goutham Chand. However, the Assessing Authority found, upon investigation of the selling dealers and their addresses given in the registration certificates, that information of these selling dealers existed at the given addresses vide Paragraph 10[i] of the Assessment Order which is also quoted below for ready reference: (i) The place of business of the following persons claimed as suppliers for the assessee were visited by the investigating officers and noticed that none of these dealers were doing business in the address furnished since beginning as evident from the statement given by the land lords and on local enquiry. Sl. No. Name of the proprietor Trade name Inv. Officer 1. Sri B.L. Ravindranath M/s Nanjundeshwara Traders TIN:29620758308/065 CTO (INV4) 2. Sri Chhatar Sing S. Kathotia M/s T D & Co. (Y D Wire Netting Industries) TIN:29400402439/150 ACCT (INV1) 3. Sri Kamal Sharma M/s SLV Enterprises TIN:29800496891/065 ACCT (ISIC) 4. Sri Akshay Kumar Das M/s Sree Vishnu Traders TIN:29240749690/065 ACCT (INV1) 6. The Joint Commissioner of Commercial Taxes [Appeals]3, Bangalore, the first Appellate Authority, however, set aside the said penalty imposed upon the Assessee by his Order dated 23.10.2009 shifting the burden of proof on the Department to prove the existence of circumstances which justifies the penalization of Assessee for commission of offence of producing false and fake invoices on the basis of which penalty under Section 70[2] of the Act is imposed. The relevant portion of his order from paragraph 25 is quoted below for ready reference: ‘Ultimately the burden is on the department to prove the existence of circumstances which justifies the penalization of an assessee for the commission of an offence. It is totally another thing as to how far or to what extent to depend and proceed on the basis of affidavits or statements given by the suppliers who are themselves bill traders or benami’s when such bill traders or benami’s themselves are engaged in fraudulent and unlawful activities. Accordingly, in view of these facts and circumstances and the position of law, the penalty levied under Section 70(2) of the KVAT Act, 2003 for the tax periods under appeal does not stand the test of law in this case.” 7. Accordingly, in view of these facts and circumstances and the position of law, the penalty levied under Section 70(2) of the KVAT Act, 2003 for the tax periods under appeal does not stand the test of law in this case.” 7. Against the said Order of Appellate Authority, the Revisional Authority, namely, Additional Commissioner of Commercial Taxes, passed the impugned Revisional Order vide Annexure-H dated 26.03.2012 and restored the aforesaid penalty on the Assessee and being aggrieved by the same, the Assessee has come up before this Court in Appeal under Section 66 read with Section 65 of the Act, which provides for revisional jurisdiction to this Court and provisions of Section 65[6] & [12] apply mutatis mutandis to appeals under Section 66 of the Act. 8. Learned Counsel for the Revenue supported the impugned Order and has submitted before the Court that this case is covered by the Judgment of the Division Bench of this Court in Microqual’s case [supra]. 9. Having heard the learned Counsel for the parties, we are of the opinion that no question of law arises in the present appeal for consideration by this Court and essentially it is a finding of fact arrived at by the Assessing Authority as well as the Revisional Authority in the present case that the Appellant-Assessee claimed input tax credit on the basis of invoices issued by the non existent dealers. We do not find any force in the submission made by learned Counsel for the Appellant-Assessee and as held by the first Appellate Authority that the burden of proof gets shifted on the Revenue to establish that the circumstances exist for imposition of penalty under Section 70[2] of the Act. The provisions of Section 70 quoted below in 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. “70. Burden of proof.(1) For the purposes of payment or assessment of tax or any claim to input tax under this Act, the burden of proving that any transaction of a dealer is not liable to tax, or any claim to deduction of input tax is correct, shall lie on such dealer. “70. Burden of proof.(1) For the purposes of payment or assessment of tax or any claim to input tax under this Act, the burden of proving that any transaction of a dealer is not liable to tax, or any claim to deduction of input tax is correct, shall lie on such dealer. (2) Where a dealer knowingly issues or produces a false tax invoice, credit or debit note, declaration, certificate or other document with a view to support or make any claim that a transaction of sale or purchase effected by him or any other dealer, is not liable to be taxed, or liable to tax at a lower rate, or that a deduction of input tax is available, the prescribed authority shall, on detecting such issue or production, direct the dealer issuing or producing such document to pay as penalty: (a) in the case of first such detection, three times the tax due in respect of such transaction or claim; and (b) in the case of second or subsequent detection, five times the tax due in respect of such transaction or claim. (3) Before issuing any direction for the payment of the penalty under this Section, the prescribed authority shall give to the dealer the opportunity of showing cause in writing against the imposition of such penalty.” 10. The penalty imposable under Section 70[2] of the Act using the words ‘knowingly issues or produces a false tax invoice’ does not shift the burden on the Revenue, merely because the dealer claiming such input tax credit claims that he is a bonafide purchaser and knowingly he has not produced a false and fake invoice in question. The burden of proving the correctness of input tax credit remains upon the dealer claiming such input tax credit. Such a burden of proof does not get shifted on to the Revenue. Even the findings of fact arrived at by the Assessing Authority after process of cross examination of one of the persons, Mr. Chhatar Singh Kathotia indicates that he obtained the registrations in the name of other firms at the instance of a third party Mr. Goutham Chand and he never claimed himself to be genuine Selling Dealers actually selling goods in question to the Appellant-Assessee. Chhatar Singh Kathotia indicates that he obtained the registrations in the name of other firms at the instance of a third party Mr. Goutham Chand and he never claimed himself to be genuine Selling Dealers actually selling goods in question to the Appellant-Assessee. Therefore, mere his production before the Assessing Authority and his cross examination recorded by the Assessing Authority does not dispel the fact that the tax invoices produced by the Assessee for claiming input tax credit emanates from the genuinely existing selling dealers. 11. Thus, burden of proving that the claim of input tax credit is correct, is squarely upon the Assessee who never discharged the said burden in the present case. The first Appellate Authority was absolutely wrong in setting aside the penalty assuming such burden of proof to be on the Revenue. The Revisional Authority, was therefore, perfectly justified and within his jurisdiction to restore the order of penalty in these circumstances. We also find that at least two of the dealers from whom input tax credit invoices were claimed in the present case were for consideration before this Court in Microqual’s case also [supra], namely, M/s. S.L.V. Enterprises and M/s. T.D. and Company. Therefore, the same or similar bogus selling dealers registered without actual dealers existing appears to be forming the chain of producing false and fake invoices, on the basis of which, such input tax credit was claimed by the purchasing dealers. 12. It cannot be said, in these circumstances, that the Appellant-Assessee did not ‘knowingly’ produce such invoices, knowing them to be false or fake. A dealer entering into a genuine transaction of purchase always knows the existence and identity of selling dealer. Essentially, two parties must actually exist to enter into a valid contract of sale or purchase and therefore, it cannot be said, in these circumstances, that the Appellant-Assessee did not ‘knowingly’ produce the tax invoices which were false or fake. 13. We are therefore, satisfied that it remains a finding of fact, not giving rise to any question of law for our consideration under Section 66 of the Act and we do not find any perversity in the order passed by the Revisional Authority in the present case and he has rightly relied upon the Division Bench decision of this Court in Microqual’s case [supra] and has restored the penalty in question. There is no merit in the present appeal filed by Assessee and the same deserves to be dismissed. The Appeal is accordingly dismissed. No costs.