Input tax credit reversal cannot be applied retrospectively, and ignoring the dealer's reply violates natural justice.

Input tax credit reversal under the amended Tamil Nadu VAT provision could not be applied to assessment year 2012-13, because the amended Section 19(2)(v) came into force only on 11.11.2013 and was not available for that earlier period. The assessment was also vulnerable because the dealer's reply was acknowledged but not considered before the order was passed, which breached the requirement of fair hearing. The assessment order was therefore set aside and the matter remitted for fresh consideration after giving due opportunity, with the ITC reversal issue to be decided again in accordance with law.

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Issues: (i) Whether reversal of input tax credit could be made for the assessment year 2012-13 under Section 19(2)(v) of the Tamil Nadu Value Added Tax Act, 2006 when the amended provision came into force only from 11.11.2013. (ii) Whether the impugned assessment order was liable to be interfered with for non-consideration of the dealer's reply and denial of due opportunity.

Issue (i): Whether reversal of input tax credit could be made for the assessment year 2012-13 under Section 19(2)(v) of the Tamil Nadu Value Added Tax Act, 2006 when the amended provision came into force only from 11.11.2013.

Analysis: The assessment related to 2012-13, whereas the amended power to reverse input tax credit under Section 19(2)(v) became operative only from 11.11.2013. The impugned demand sought to apply that provision to a period preceding its commencement. The statutory basis for reversal was therefore unavailable for the relevant assessment year.

Conclusion: The reversal of input tax credit for the assessment year 2012-13 under Section 19(2)(v) was not sustainable and is held against the Revenue.

Issue (ii): Whether the impugned assessment order was liable to be interfered with for non-consideration of the dealer's reply and denial of due opportunity.

Analysis: The dealer's explanation was stated to have been filed and acknowledged, but it was not considered before passing the impugned order. The failure to consider the reply and to afford due opportunity offended the requirement of fair hearing in the assessment process.

Conclusion: The impugned order was vitiated for violation of natural justice and is held against the Revenue.

Final Conclusion: The assessment order was set aside and the matter was remitted for fresh consideration after granting due opportunity, with the dispute on input tax credit reversal for 2012-13 left to be decided afresh in accordance with law.

Ratio Decidendi: A taxing authority cannot invoke an amended reversal provision for a prior assessment year before the amendment came into force, and an assessment made without considering the dealer's explanation is liable to be set aside for breach of natural justice.

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