Input tax credit reversal set aside where assessment went beyond the show-cause notice and denied prior opportunity to respond.

Reversal of input tax credit under the Tamil Nadu VAT Act could not be sustained where the pre-revisional notice proposed only revision of turnover for non-production of C Forms. The dealer produced the C Forms, the assessing authority accepted them and applied the concessional tax rate, but the assessment order still directed credit reversal on a ground not put to the dealer in notice. A demand that travels beyond the notice is invalid because the assessee must have an opportunity to meet the specific basis of the proposed action. The credit reversal was quashed, while the assessment was otherwise sustained.

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Issues: Whether the reversal of input tax credit under Section 19(2)(v) and Section 19(5)(a) of the Tamil Nadu Value Added Tax Act, 2006 could be sustained when the show-cause notice proposed only revision of turnover for non-production of C Forms.

Analysis: The notices issued to the dealer proposed only revision of turnover on the footing that C Forms had not been produced. The dealer produced the C Forms, and the assessing authority accepted them and granted concessional rate of tax. The assessment orders then proceeded to direct reversal of input tax credit, although that consequence had not been put to the dealer in the pre-revisional notice. A demand of this nature cannot be sustained when it travels beyond the proposal in the notice, since the assessee must be given an opportunity to meet the specific basis of the proposed action.

Conclusion: The direction reversing input tax credit under Section 19(2)(v) and Section 19(5)(a) of the Tamil Nadu Value Added Tax Act, 2006 was quashed, while the assessment was otherwise sustained.

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