Introduction

In a recent landmark judgment, the Andhra Pradesh High Court addressed the pivotal question of whether a purchasing dealer should be held accountable for the business dealings of the seller. The case, Arhaan Ferrous and Non-Ferrous Solution Pvt Ltd vs Deputy Assistant Commissioner, sheds light on the obligation of the purchasing dealer to verify their own credentials rather than those of the seller.

Facts of the Case

Writ Petition Nos. 15481, 15482, 15486, 15487 of 2023, dated 3rd August 2023, presented a compelling scenario where goods and vehicles were detained due to the absence of a business address for the supplier. The Purchasing Dealer, facing the brunt of the situation, questioned the confiscation of goods by the Proper Officer, arguing against the justification of such actions.

Issue

The crux of the matter revolved around the legality of confiscating goods solely based on the absence of a business premise for the supplier. The central inquiry focused on whether the Proper Officer acted justly in seizing the goods belonging to the petitioner.

Held

The judgment delivered by the Andhra Pradesh High Court elucidated a critical distinction. While acknowledging the authority of the Proper Officer to initiate proceedings against the supplier for his absence at the provided address, the court underscored that confiscation of goods from the purchaser was unjustified on this ground alone.

The ruling emphasized that the purchasing dealer bears the responsibility of substantiating the mode of payment and receipt of goods through authenticated documents. However, the onus does not extend to verifying the business activities or the legitimacy of the supplier’s GST registration.

In essence, the judgment reaffirmed that the burden of establishing credentials lies with the purchasing dealer, relieving them from the obligation of vetting the supplier’s business operations.