Input tax credit reversal set aside for breach of natural justice in assessment based on undisclosed grounds.

Input tax credit reversal cannot be sustained where the assessment is completed on grounds not disclosed in the pre-revision notice and without seeking the further particulars later relied on. The dealer had filed objections and supporting documents, but the authority reversed credit for alleged absence of bank statements, commodity details and other particulars not put to the dealer in advance. The HC held that, if the existing material was found insufficient, the authority should have called for clarification before finalising the assessment. Proceeding on a different footing denied a fair opportunity and breached natural justice, so the assessment orders were quashed and the matters remanded.

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Issues: Whether the assessment orders reversing input tax credit were liable to be quashed for having been made on grounds not put to the dealer in the pre-revision notice and without calling for the additional particulars relied on in the assessment.

Analysis: The dealer had responded to the pre-revision notices with objections and supporting documents. The assessment orders, however, proceeded to reverse input tax credit on the basis of want of bank statements, commodity details and other particulars, although those deficiencies were not the stated basis of the notices and no specific requisition for such further materials had been made. When the authority was not satisfied with the documents already filed, it ought to have sought further clarification before completing the assessment. Completing the assessments on a different footing from that disclosed in the notices amounted to denial of fair opportunity and violated principles of natural justice.

Conclusion: The challenge succeeded. The impugned assessment orders were quashed and the matters were remanded for fresh consideration in accordance with law.

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