Input tax credit reversal on alleged discounts may turn on concrete evidence and fresh assessment after hearing.

Input tax credit reversal on alleged post-invoice discounts depended on concrete evidence before the assessing authority, and the circular was read as requiring proof of excess credit or abnormal pricing on material available to the officer. A dealer also had to place supporting documents at assessment stage, so the objection to invocation of Section 19(20) was not accepted on the existing record. Because the dispute was fact-intensive and documentary proof had not been fully examined, the assessee was allowed to file evidence, treat the assessment orders as show cause notices, and obtain fresh assessment after personal hearing.

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Issues: (i) Whether input tax credit was liable to be reversed on the alleged discounts and whether Section 19(20) of the Tamil Nadu Value Added Tax Act, 2006 could be invoked on the material before the assessing authority; (ii) Whether the assessee should be given a further opportunity to produce documents and have the assessment redone.

Issue (i): Whether input tax credit was liable to be reversed on the alleged discounts and whether Section 19(20) of the Tamil Nadu Value Added Tax Act, 2006 could be invoked on the material before the assessing authority.

Analysis: The assessment was proposed on the basis that the dealer had received discounts after issuance of tax invoices and had not reversed the corresponding input tax credit. The assessee relied on the departmental circular stating that Section 19(20) would apply only to reversal of excess input tax credit and that cases of abnormal sales below market price would require action under Section 24 on the basis of concrete evidence. The Court held that the dealer also had a duty to place the necessary documents and evidence before the assessing authority, and that the circular itself contemplated reliance on concrete evidence available to the assessing authority.

Conclusion: The objection based on the circular was not accepted, and the assessment could not be interfered with on that ground.

Issue (ii): Whether the assessee should be given a further opportunity to produce documents and have the assessment redone.

Analysis: Although the assessee had not established the factual claim by documentary proof before the assessing authority, the controversy was factual in nature and required consideration of supporting materials. The Court therefore considered it to permit the assessee to place the relevant evidence and to have the assessments reconsidered after a personal hearing, without setting aside the orders outright.

Conclusion: The assessee was granted a further opportunity to treat the impugned assessment orders as show cause notices, file objections with evidence, and obtain a fresh assessment after personal hearing.

Final Conclusion: The challenge to the assessment was not allowed on merits, but the matter was sent back for reconsideration with liberty to adduce evidence and a direction for fresh assessment in accordance with law.

Ratio Decidendi: Where the taxpayer's factual claim affecting tax liability is unsupported by material at the assessment stage, the authority is not bound to accept it, but in a fact-intensive dispute the assessee may be granted a further opportunity to produce evidence and the matter may be reconsidered afresh after hearing.

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