Input tax credit on cancelled dealer registrations treated as show cause notice, with fresh assessment directed after objections.

Dispute over input tax credit on purchases from dealers whose registration certificates were later cancelled led the Madras High Court to treat the revised assessment under the Tamil Nadu Value Added Tax Act as a show cause notice rather than a final determination. Because the cancellation had retrospective effect but the petitioner still needed an opportunity to submit objections and purchase details, the matter was remitted for fresh consideration. The petitioner was directed to file objections along with 15% of the proposed tax, after which the respondent was to redo the revised assessment and pass a fresh order.

---

---

Issues: Whether the revised assessment order under Section 27 of the Tamil Nadu Value Added Tax Act, 2006 should be sustained, or be treated as a show cause notice with the matter remitted for fresh consideration.

Analysis: The dispute arose from availment of input tax credit on purchases from dealers whose registration certificates had been cancelled. The cancellation proceedings were dated after the relevant assessment year, though the cancellation was given retrospective effect from an earlier date. In these circumstances, and having regard to the need for the petitioner to submit objections and purchase details, the revised assessment was not finally affirmed. Instead, it was converted into a show cause notice, with a direction to the petitioner to file objections along with 15% of the proposed tax, and thereafter for the respondent to redo the revised assessment and pass a fresh order.

Conclusion: The petitioner obtained partial relief and the matter was remitted for fresh assessment after objections and partial payment.

---