Mismatch verification procedure in input tax credit reversals must precede revised assessment; defective notice and order set aside.

In mismatch cases involving reversal of input tax credit and revised assessment based on turnover differences or purchase-sales discrepancies, the assessing authority must first conduct departmental verification and then issue a properly informed show-cause notice setting out the enquiry particulars and the prima facie basis for the proposed revision. An assessment order passed without following that procedure cannot be sustained. The matter was remitted to the assessing authority for fresh assessment in accordance with law, applying the required mismatch verification process.

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Issues: Whether the revised assessment order was liable to be set aside for non-adherence to the procedure required in mismatch cases and the matter remitted for fresh consideration.

Analysis: The impugned revised assessment arose from reversal of input tax credit on the basis of turnover difference and mismatch between purchase and sales particulars. The Court held that, in mismatch cases, the assessing authority must first undertake departmental verification and then issue a properly informed show-cause notice containing the particulars of the enquiry and the prima facie basis for the proposed revision. As the impugned order had not been passed in conformity with that procedure, it was not sustained. The objection regarding non-response to the show-cause notice was not adjudicated as the matter was being remitted on the separate ground of non-adherence to the governing procedure.

Conclusion: The revised assessment order was set aside and the matter was remitted to the assessing authority for fresh assessment in accordance with law, applying the required mismatch verification procedure.

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