Input tax credit mismatch disputes require original invoice proof and a fair, coordinated enquiry before reversal.

Input tax credit under the Tamil Nadu Value Added Tax Act, 2006 cannot be reversed merely because the purchaser's returns mismatch with the seller's returns when the original tax invoices are produced and no further statutory condition is established. The High Court also required a fresh, holistic enquiry before liability is fastened, including coordination with the other end dealer's assessing officers, and set aside the assessment orders for reconsideration after proper notice and verification.

---

---

Issues: (i) Whether input tax credit could be reversed merely on the basis of a mismatch between the purchaser's returns and the seller's returns when the original tax invoices were produced; (ii) whether the assessment orders calling for reversal of input tax credit required to be set aside and the matter remanded for a fresh enquiry in a holistic manner.

Issue (i): Whether input tax credit could be reversed merely on the basis of a mismatch between the purchaser's returns and the seller's returns when the original tax invoices were produced.

Analysis: Section 19(10)(a) of the Tamil Nadu Value Added Tax Act, 2006 requires the registered dealer to possess and produce original tax invoices issued by the selling dealer as the statutory basis for claiming input tax credit. The original invoices were admittedly produced, and no additional statutory condition was shown to justify reversal solely on the basis of a website report or mismatch in the seller's returns.

Conclusion: Reversal of input tax credit on that ground alone was not sustainable.

Issue (ii): Whether the assessment orders calling for reversal of input tax credit required to be set aside and the matter remanded for a fresh enquiry in a holistic manner.

Analysis: The mismatch issue required verification through a proper enquiry, including consultation with the assessing officers of the other end dealer. The Court followed the approach indicated in the earlier decision relied upon and held that the Department must adopt a fair and coordinated mechanism before fastening liability, so that the matter is examined comprehensively rather than on a one-sided basis.

Conclusion: The assessment orders were set aside and the matters were remanded for fresh consideration after proper enquiry.

Final Conclusion: The petitioner succeeded in obtaining setting aside of the impugned assessment and a remand for reconsideration, with directions for a fresh notice and a coordinated enquiry before any adverse decision is taken.

Ratio Decidendi: Input tax credit cannot be reversed merely because of a mismatch in the seller's returns when the purchaser has produced the original tax invoice and no further statutory condition justifying reversal is established; such cases require a proper fresh enquiry before liability is fastened.

---