Mismatch assessment procedure under VAT must be followed; revised orders were set aside for non-compliance and fresh reassessment directed.

Madras HC set aside revised assessment orders under the Tamil Nadu Value Added Tax Act, 2006 because the Assessing Authority did not follow the mandated procedure for mismatch cases. The additions based on input tax credit claims and purchase mismatches were sustained on inspection data without first carrying out the required verification and correlation exercise under the binding mechanism. The Court treated that non-compliance as fatal to the assessments and directed that the matters be reassessed afresh after the new methodology or module was put in place.

---

---

Issues: Whether the revised assessment orders could be sustained when they were passed without following the procedure mandated for mismatch cases and whether the orders were liable to be set aside and the matter remitted for fresh assessment.

Analysis: The writ petitions arose from assessments under the Tamil Nadu Value Added Tax Act, 2006 for multiple assessment years. The dispute concerned additions made on the basis of ITC claims and purchase mismatch, where the Assessing Authority relied upon data gathered after inspection without first undertaking the verification and correlation exercise contemplated in the earlier binding procedure. The Court treated the absence of compliance with that procedure as fatal to the impugned assessments and held that the orders could not stand when the prescribed mechanism for dealing with mismatch cases had not been followed.

Conclusion: The impugned assessment orders were set aside for violation of the mandated mismatch-assessment procedure, and the respondent was directed to redo the assessments afresh after the new methodology or module was put in place.

---