Incomplete factual verification on input tax credit reversal led to remand, while penalty failed for lack of wilful suppression or tax evasion.

On remand of the stock transfer issue, the dealer produced revised statements and supporting records in the format sought by the assessing authority, but the assessment was completed without further clarification on that corrected material despite an identical later-year transaction having been accepted. The factual verification was therefore incomplete, and the assessment on input tax credit reversal was set aside for fresh consideration. Penalty under Section 27(4) of the Tamil Nadu Value Added Tax Act, 2006 could not stand because the records did not show wilful suppression of assessable turnover or any intent to evade tax. The penalty was set aside in full.

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Issues: (i) Whether the reversal of input tax credit on stock transfer required fresh consideration on the facts and records produced; (ii) Whether penalty could be sustained under Section 27(4) of the Tamil Nadu Value Added Tax Act, 2006.

Issue (i): Whether the reversal of input tax credit on stock transfer required fresh consideration on the facts and records produced.

Analysis: The assessment had earlier been set aside and remanded after the stock transfer issue was noticed. In the remand proceedings, the dealer produced records and revised statements in the format sought by the assessing authority. The order under challenge was passed without seeking further clarification on the corrected material, though the record showed that an identical transaction for a later year had been accepted by the department. The factual verification, therefore, was held to be incomplete.

Conclusion: The impugned assessment on this issue was set aside and the matter was remanded for fresh consideration.

Issue (ii): Whether penalty could be sustained under Section 27(4) of the Tamil Nadu Value Added Tax Act, 2006.

Analysis: Penalty under Section 27(4) was found to require wilful failure to disclose assessable turnover or conduct showing an intent to evade tax. The materials did not show any such deliberate suppression or evasion. The dealer had furnished the books and the details called for, and no foundation existed for invoking the penal provision.

Conclusion: The levy of penalty was held unsustainable and was set aside in full.

Final Conclusion: The writ petitions succeeded in part, the assessment was remanded for fresh adjudication, and the penalty component was conclusively annulled.

Ratio Decidendi: Penalty under Section 27(4) of the Tamil Nadu Value Added Tax Act, 2006 cannot be imposed unless wilful suppression or an intent to evade tax is established.

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