Input Tax Credit cannot be denied to a purchaser who holds valid invoices from a registered seller during the relevant period.

Input Tax Credit under the Tamil Nadu VAT Act was held to be available where the purchasing dealer produced the prescribed tax invoices and showed that the supplier was a registered dealer during the relevant period. The record did not show that the seller was fictitious, non-existent, or issuing false invoices, so the purchaser's burden stood discharged. The Revenue could not reverse credit or impose penalty merely because it had not proceeded against the vendor. The appellate order setting aside the assessment was therefore upheld, and no ground for judicial interference was found.

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Issues: Whether the reversal of Input Tax Credit and levy of penalty were justified when the purchases were supported by tax invoices from a registered dealer whose registration was shown as active, and whether interference with the appellate order was warranted.

Analysis: Input Tax Credit under Section 19(1) of the Tamil Nadu Value Added Tax Act, 2006 is available to a registered dealer who satisfies the prescribed requirements, including production of the original tax invoice under Rule 10(2) of the Tamil Nadu Value Added Tax Rules, 2007. The purchasing dealer had furnished the seller's taxpayer identification number and invoices showing payment of tax. The record did not show that the seller was fictitious, non-existent, or issuing false invoices, and the registration of the selling dealer was not shown to have been cancelled during the relevant period. In such circumstances, the burden cast on the purchaser stood discharged, and the Revenue could not deny credit merely because it did not proceed against the vendor.

Conclusion: The reversal of Input Tax Credit and the consequential penalty were unsustainable, and the appellate order setting aside the assessment was upheld.

Final Conclusion: The revision was found to raise no manifest error or ground for judicial interference, and the assessee's entitlement to Input Tax Credit was sustained.

Ratio Decidendi: A purchasing dealer cannot be denied Input Tax Credit when it produces the prescribed tax invoice and establishes purchase from a registered seller during the currency of that registration; any failure by the Revenue to proceed against the seller does not, by itself, justify reversal against the purchaser.

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