Input tax credit denial cannot stand when binding precedent is ignored and no effective personal hearing is granted.

Input tax credit under the Tamil Nadu Value Added Tax framework cannot be denied mechanically where the assessing authority ignores binding precedent and fails to grant a meaningful personal hearing. The court noted that the authority should have applied the settled position in prior decisions and allowed the taxpayer to explain the factual position and produce supporting records before finalising the assessment. The impugned assessment was therefore unsustainable, set aside, and remitted for fresh consideration in accordance with law after personal hearing and consideration of the relevant material.

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Issues: Whether the assessment order denying input tax credit could be sustained when the assessing authority failed to apply the binding precedents on the issue and did not afford an effective opportunity of personal hearing.

Analysis: The petitioner had claimed input tax credit on the strength of Form I returns and the governing provisions under the Tamil Nadu Value Added Tax Act, 2006 and the Tamil Nadu Value Added Tax Rules, 2007. The assessment was challenged as inconsistent with the earlier decision in C.K.G. Agencies, which had been relied upon in a subsequent similar case and held that input tax credit could not be arbitrarily restricted once the turnover crossed the relevant threshold. The Court held that the assessing authority ought to have taken note of the settled legal position and also given the petitioner an opportunity to explain the factual position and produce the relevant documents before completing the assessment.

Conclusion: The impugned assessment could not be sustained and was liable to be set aside; the matter required fresh consideration after granting personal hearing.

Final Conclusion: The writ petition succeeded, the assessment was annulled, and the matter was remitted to the assessing authority for a de novo decision in accordance with law after considering the binding decisions and the petitioner's explanation.

Ratio Decidendi: An assessment order denying input tax credit without considering binding precedent and without affording a meaningful opportunity to place relevant material cannot be sustained and must be remitted for reconsideration.

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