Input tax credit reversal applies when goods are short or lost, and a wrong sub-clause citation does not defeat liability.

Input tax credit must be reversed where goods on which credit was taken are not sold because of shortage or loss, as Section 19(9)(i) of the Tamil Nadu Value Added Tax Act, 2006 bars credit in cases of theft, loss or destruction and requires reversal if credit was already availed. The reference to Section 19(9)(ii), which concerns destroyed inputs in manufacture, did not alter the position because the factual basis for reversal was established under Section 19(9)(i). The reversal was therefore upheld and the revisions failed.

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Issues: Whether input tax credit was liable to be reversed where the goods were found short and not sold, and whether the reference to the wrong sub-clause affected the validity of the reversal.

Analysis: The assessment and appellate records showed that input tax credit had been availed on goods that were not fully sold because of shortage in stock. Section 19(9)(i) of the Tamil Nadu Value Added Tax Act, 2006 expressly bars input tax credit where goods are not sold because of theft, loss or destruction for any reason, and requires reversal if credit has already been availed. On the facts, the case fell under that provision. Section 19(9)(ii) applied to destroyed inputs in manufacture and was not the governing clause, but the incorrect citation did not assist the assessee because the factual basis for reversal was made out under Section 19(9)(i).

Conclusion: The reversal of input tax credit was upheld and the revisions failed.

Ratio Decidendi: Where goods on which input tax credit has been taken are not sold because of shortage or loss, reversal is mandatory under Section 19(9)(i) of the Tamil Nadu Value Added Tax Act, 2006, and a wrong reference to another sub-clause does not invalidate the substantive liability.

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