Bona fide purchaser protection defeats reassessment based only on seller default under Tamil Nadu VAT.

A reassessment under the Tamil Nadu VAT Act was held unsustainable where the purchaser had disclosed the purchases, produced invoices, and claimed input tax credit on the strength of those invoices, but the seller had failed to report the corresponding sales. The recorded principle is that default by the seller in disclosing sales or remitting tax cannot, on these facts, be fastened on a bona fide purchaser when the purchase transactions and invoices are undisputed. The matter was directed to be reconsidered after personal hearing, and the reassessment order was quashed to that extent.

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Issues: Whether the reassessment under Section 27 of the Tamil Nadu Value Added Tax Act, 2006 could be sustained against a purchaser who had reported the purchases and produced invoices, when the seller had not reported the corresponding sales.

Analysis: The purchase transactions and the supporting invoices were not disputed. The recorded reasoning applies the principle that, where the seller fails to disclose the sales or remit the tax, action lies against the defaulting seller and not against the bona fide purchaser who has claimed input tax credit on the basis of the seller's invoice. The impugned reassessment was therefore found unsustainable on the facts, and the matter was directed to be reconsidered after affording opportunity of personal hearing.

Conclusion: The reassessment order could not be sustained against the purchaser on the basis of the seller's default, and the writ petition succeeded to the extent of quashing the order and remitting the matter for fresh consideration.

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