Input tax credit mismatch cannot by itself justify reversal without enquiry, particulars, and fair opportunity to the dealer.

Writ jurisdiction was held maintainable against reversal of input tax credit based on mismatch/web report data, because the challenge concerned the legality and fairness of the procedure adopted, not merely an alternate factual dispute. A mismatch in departmental returns was treated only as a trigger for enquiry, not a sufficient basis for reversing credit. The assessing authority was required to conduct proper invoice-wise verification, supply particulars to the dealer, and afford a fair opportunity to respond before coercive action. Reversal of input tax credit on mismatch data alone, without thorough enquiry and procedural fairness, was held unsustainable, and the notices and orders were set aside with remand for fresh consideration.

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Issues: (i) Whether the writ petitions challenging reversal of input tax credit on mismatch/web report grounds were maintainable despite the availability of an appellate remedy. (ii) Whether input tax credit could be reversed solely on the basis of mismatch between seller and purchaser returns without a proper enquiry, invoice-wise particulars, and an opportunity to the dealer, and whether the impugned notices/orders were valid.

Issue (i): Whether the writ petitions challenging reversal of input tax credit on mismatch/web report grounds were maintainable despite the availability of an appellate remedy.

Analysis: The existence of an alternate remedy does not by itself oust writ jurisdiction. The challenge in these cases was directed not to individual factual determinations alone, but to the legality of the procedure adopted by the assessing authorities and the fairness of the process followed before reversing input tax credit. The Court held that such a challenge could be examined in writ jurisdiction.

Conclusion: The writ petitions were held to be maintainable.

Issue (ii): Whether input tax credit could be reversed solely on the basis of mismatch between seller and purchaser returns without a proper enquiry, invoice-wise particulars, and an opportunity to the dealer, and whether the impugned notices/orders were valid.

Analysis: The Tamil Nadu Value Added Tax Act, 2006 confers power to enquire before denying input tax credit, making best judgment assessments, or reopening assessments for wrong availment of credit. The Court held that a mismatch in departmental web data is only a starting point for enquiry and cannot, by itself, justify reversal of credit. The dealer must be supplied with invoice-wise particulars and given a fair opportunity to explain, consistent with the Department's own Circular No. 10 of 2015 dated 01.04.2015. The assessing authority is required to conduct a thorough enquiry, including consultation with the other end dealer's assessing officer, before taking coercive action.

Conclusion: Reversal of input tax credit solely on mismatch data without proper enquiry and procedural fairness was held unsustainable.

Final Conclusion: The impugned notices and orders were set aside and the matters were remanded for fresh consideration after a thorough enquiry in accordance with law and fair procedure.

Ratio Decidendi: A mismatch in departmental return data is only a trigger for enquiry and cannot, without a fair and reasoned verification process and opportunity to the dealer, be the sole basis for reversing input tax credit or reopening a concluded assessment.

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