Works-contract valuation, input tax credit mismatch, and fixed-asset sale all required fresh factual verification before tax could be sustained.

Tax liability under the TNVAT framework in works-contract cases must rest on a proper factual inquiry into the stage of construction, flats sold or unsold, and the basis for valuing deemed sale of goods; because the record was incomplete, the assessment on this issue was set aside and remanded. Input tax credit reversal on cross-verification mismatch requires proof of purchases, payment details, and reconciliation with seller returns; as the factual foundation was not fully verified, that assessment was also remanded. Deletion of assets in the balance sheet cannot by itself sustain tax on sale of fixed assets without examining the supporting documents and actual nature of the transaction; this issue too was sent back for fresh consideration.

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Issues: (i) Whether the assessed turnover relating to deemed sale value in the works contract was correctly computed under the TNVAT framework; (ii) whether input tax credit could be reversed on the basis of cross-verification mismatch between buyer and seller returns; and (iii) whether the deletion of assets in the balance sheet justified assessment of tax on sale of fixed assets.

Issue (i): Whether the assessed turnover relating to deemed sale value in the works contract was correctly computed under the TNVAT framework.

Analysis: The dispute turned on the correct method for valuing the transfer of property in goods involved in execution of works contracts. The applicable legal principle is that tax is attracted on the value of goods at the point of incorporation in the works, and the factual exercise must establish the actual stage of construction, the flats sold or unsold, and the basis adopted for arriving at the deemed sale value. The material before the authority was found insufficient for a final adjudication on these facts.

Conclusion: The assessment on this head was set aside and remanded for fresh consideration, in favour of the assessee.

Issue (ii): Whether input tax credit could be reversed on the basis of cross-verification mismatch between buyer and seller returns.

Analysis: The issue depended on proof of the underlying purchases, payment details, and reconciliation of the dealer's records with the seller's statutory returns. The initial burden remained on the assessee to establish genuineness of the purchases and entitlement to credit. As the factual foundation was incomplete, the authority's conclusion on mismatch could not be sustained without further verification.

Conclusion: The assessment on this head was set aside and remanded for fresh consideration, in favour of the assessee.

Issue (iii): Whether the deletion of assets in the balance sheet justified assessment of tax on sale of fixed assets.

Analysis: The question required examination of whether the entries in the balance sheet reflected an actual sale or were attributable to theft, transfer to a group company, or other stated reasons supported by documents. The factual matrix had not been properly evaluated, and the records produced by the assessee required reconsideration before any final tax liability could be confirmed.

Conclusion: The assessment on this head was set aside and remanded for fresh consideration, in favour of the assessee.

Final Conclusion: The writ petitions succeeded only to the extent of the three contested issues, and the matter was sent back to the assessing authority for a de novo decision on those heads after affording opportunity and considering the documents and applicable legal principles.

Ratio Decidendi: In disputes involving works contracts and related input tax credit or asset-sale issues, a final tax determination cannot be sustained without a proper factual inquiry and verification of records; where the factual foundation is incomplete, remand for fresh adjudication is appropriate.

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