During one assessment & in cross check it was found that XYZ purchased goods from ABC in 2006-07 & purchase payment of was clear by XYZ against Tax Invoice Bill. Now, in ABC VAT return he has not shown the XYZ sale as Tax Invoice in 201A & hence, the disallowance of Input Tax Credit arise in Assessment of XYZ & ultimately demand of the said ITC with Interest, Penalty order given by the officer to XYZ.
Query: Why should XYZ suffer if ABC not paid VAT to the said government account? Why department is not taking steps against this type of entity? Is there any case study that department can recover the whole amount from the ABC instead of XYZ?
Pl give your esteemed suggestions or advise on the said issue it’s urgent.