Input tax credit mismatch under TNVAT Act and writ jurisdiction limits led to remand for fresh assessment.

Input tax credit under the TNVAT Act was discussed in the context of purchase mismatch noticed after audit under Section 65. The dealer relied on the statutory documents for claiming credit under Section 19(10)(a) and Rule 10(2), while Section 19(11) was invoked for entitlement and Section 19(16) was contended to make credit only provisional, not reversible merely because the selling dealer allegedly failed to remit tax. The Court also noted that, in writ jurisdiction under Article 226, it would not resolve disputed factual questions on credit entitlement. The impugned assessment orders were set aside and the matter was remitted for fresh consideration in accordance with law.

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Issues: Whether the revision of input tax credit on the ground of mismatch was sustainable under the TNVAT Act and whether the assessment orders deserved to be interfered with in writ jurisdiction.

Analysis: The dispute related to input tax credit claimed on purchases where mismatch was noticed by the department. The assessment proceedings had been initiated after audit under Section 65 of the TNVAT Act, 2006, and the dealer relied on the documents contemplated under Section 19(10)(a) of the TNVAT Act, 2006 and Rule 10(2) of the TNVAT Rules, 2007 to claim credit under Section 19(11) of the TNVAT Act, 2006. The Court noted the contention that Section 19(16) only makes input tax credit provisional and does not authorise reversal merely because the selling dealer allegedly did not pay tax. At the same time, the Court held that, in writ jurisdiction under Article 226 of the Constitution of India, it was not sitting as an appellate forum to decide disputed questions of fact concerning entitlement to input tax credit. In view of the later course adopted in mismatch cases and the direction for a fresh mechanism, the impugned orders were set aside and the matters were remitted for fresh orders in accordance with law.

Conclusion: The challenge to the assessment orders succeeded to the extent of remand. The impugned orders were set aside and the matter was sent back to the assessing authority for fresh consideration.

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