Input tax credit cannot be denied solely due to retrospective seller registration cancellation where invoices and tax payment are proved.

Input tax credit could not be reversed merely for alleged non-production of documents or because selling dealers' registrations were retrospectively cancelled. The petitioner had produced tax invoices, accounts and return particulars, and the assessment was found unsustainable because the authority relied on the same material for cross-verification yet denied credit without giving a proper opportunity to clarify the documents. Retrospective cancellation of the sellers' registrations did not by itself defeat the purchaser's entitlement where the transactions were supported by invoices and tax payment. The reversal was set aside and the matter remitted for fresh assessment with personal hearing and reconsideration of the documents in accordance with law.

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Issues: Whether input tax credit could be reversed under Section 19(13) of the Tamil Nadu Value Added Tax Act, 2006 for alleged non-production of documents and on the ground that some selling dealers' registrations were cancelled retrospectively.

Analysis: The petitioner had produced original tax invoices, accounts and return particulars, and had sought supply of purchase-wise details to enable reconciliation. The assessment was found unsustainable because the authority accepted the very same documents while dealing with the cross-verification issue, yet reversed input tax credit for want of clarity without affording a proper opportunity to clarify the material. Retrospective cancellation of the selling dealers' registrations could not defeat the purchaser's entitlement where the transactions were supported by invoices and payment of tax, and the legal position already stood settled by binding precedent.

Conclusion: The reversal of input tax credit was set aside. The assessee succeeded on this issue, and the matter was remitted for fresh assessment after granting personal hearing and reconsidering the documents in accordance with law.

Final Conclusion: The writ petitions were allowed in part by nullifying the disallowance of input tax credit and directing a de novo assessment on that issue.

Ratio Decidendi: Retrospective cancellation of a seller's registration does not by itself extinguish the purchaser's right to input tax credit where the purchase is supported by tax invoices, payment through banking channels and the assessment is made without proper consideration of the relevant documents and opportunity of clarification.

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