Input tax credit mismatch and penalty limits under VAT law cannot justify reversal or penalty without statutory basis.

Input tax credit reversal could not be sustained merely because departmental website data did not match the assessee's returns, as mismatch alone was insufficient without a legally supportable basis. Penalty under Section 27(3) of the Tamil Nadu Value Added Tax Act, 2006 could not be imposed in isolation and required the case to fall within Section 27A. The impugned assessment orders were set aside, and the matters were left open for fresh assessment in accordance with law after giving the assessee an opportunity of hearing.

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Issues: (i) Whether input tax credit could be reversed solely because of a mismatch between the departmental website data and the returns filed by the assessee. (ii) Whether penalty could be levied under Section 27(3) of the Tamil Nadu Value Added Tax Act, 2006 without the case falling within Section 27A of that Act.

Issue (i): Whether input tax credit could be reversed solely because of a mismatch between the departmental website data and the returns filed by the assessee.

Analysis: The challenge was confined to the reversal of input tax credit made only on the basis of a mismatch between the information available on the departmental website and the figures in the returns filed by the assessee. The governing principle applied was that such mismatch, by itself, was not a sufficient basis for sustaining the reversal when the matter was otherwise governed by the settled legal position relied upon before the Court.

Conclusion: The reversal of input tax credit on this ground was not sustained.

Issue (ii): Whether penalty could be levied under Section 27(3) of the Tamil Nadu Value Added Tax Act, 2006 without the case falling within Section 27A of that Act.

Analysis: The levy of penalty was examined on the footing that Section 27(3) could not be invoked in isolation. The relevant statutory scheme required the case to satisfy the conditions under Section 27A before penalty could be imposed under Section 27(3).

Conclusion: Penalty under Section 27(3) was not sustainable unless the case fell within Section 27A.

Final Conclusion: The impugned assessment orders were set aside and the matters were left open for a fresh assessment in accordance with law after giving the assessee due opportunity.

Ratio Decidendi: Reversal of input tax credit cannot be founded merely on a mismatch between departmental data and the assessee's returns, and penalty under Section 27(3) is permissible only when the case satisfies Section 27A.

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