Input tax credit denial based on alleged deregistration was unsustainable; reassessment required fresh examination of invoices and payment records.

Denial of input tax credit based solely on the selling dealer's alleged deregistration during the relevant tax period was treated as unsustainable where the dealer was in fact registered for those periods. The assessee's cheque payment records and tax invoices were required to be examined by the prescribed authority. The reassessment and related demand were therefore set aside, and the matter was remitted for fresh consideration of the material in accordance with law.

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Issues: Whether the denial of input tax credit on the ground that the selling dealer was stated to be deregistered during the relevant period could be sustained, and whether the reassessment and consequential demand required reconsideration.

Analysis: The selling dealer was found to have been registered during the relevant tax periods, and the rejection of input tax credit solely on the premise of deregistration was held unsustainable. The documents placed by the assessee regarding payment through cheque and tax invoices required examination by the prescribed authority. The matter, therefore, called for a fresh assessment of the relevant material in accordance with law.

Conclusion: The denial of input tax credit on the stated ground was not upheld, and the impugned reassessment, demand notices, and endorsement were set aside with the matter remitted to the authority for reconsideration.

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