Mandatory hearing before input tax credit reversal leads to setting aside of orders and fresh adjudication

Before denying input tax credit under section 19(13) of the Tamil Nadu Value Added Tax Act, 2006, the assessing authority must conduct the enquiry it considers fit and afford a reasonable opportunity of hearing. The impugned reversal orders were unsustainable because no personal hearing was given to the assessee or its authorised representative before the reversal was confirmed. The orders were therefore set aside and the matter was remitted for fresh adjudication after granting personal hearing.

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Issues: Whether reversal of input tax credit could be sustained when the assessee was not given a reasonable opportunity of being heard before the impugned orders were passed.

Analysis: Section 19(13) of the Tamil Nadu Value Added Tax Act, 2006 mandates that, before denying input tax credit, the assessing authority must make such enquiry as it thinks fit and give a reasonable opportunity of being heard. The impugned orders disclosed no personal hearing to the assessee or its authorised representative before confirming reversal of input tax credit.

Conclusion: The impugned orders were unsustainable for breach of the mandatory requirement of hearing and were set aside with a direction for fresh adjudication after granting personal hearing.

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