Natural justice in input tax credit disallowance justified writ interference and remand for fresh assessment.

A writ petition challenging disallowance of input tax credit and penalty under the Gujarat Value Added Tax Act was maintained despite an alternative appellate remedy because the assessee alleged breach of natural justice. The Court noted non-supply of material documents, including orders cancelling vendors' registrations, and procedural lapses in the hearing. It held that the assessee had to receive the relevant documents and a fair opportunity to explain the genuineness of the transactions before the credit claim could be finally rejected. The impugned assessment order and demand notice were quashed, and the matter was remitted for fresh consideration.

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Issues: Whether the writ petition was maintainable despite the alternative appellate remedy, and whether the assessment order disallowing input tax credit and imposing penalty was liable to be quashed for breach of natural justice and remitted for fresh consideration.

Analysis: The dispute concerned disallowance of input tax credit on purchases from vendors whose registrations had been cancelled and the levy of penalty in assessment proceedings under the Gujarat Value Added Tax Act, 2003. The Court found that the petition raised a serious complaint of non-supply of material documents, particularly the orders relating to cancellation of vendors' registrations, and noted procedural lapses in the manner in which the hearing was conducted. It also held that the existence of an appellate remedy did not bar writ jurisdiction where breach of natural justice was apparent. Relying on earlier decisions, the Court held that the assessee had to be given the relevant documents and a fair opportunity to explain the genuineness of the transactions before the claim of input tax credit could be finally rejected.

Conclusion: The writ petition was entertained and the impugned assessment order and demand notice were quashed. The matter was remitted to the assessing authority for fresh consideration after furnishing the relevant documents and granting due opportunity of hearing.

Ratio Decidendi: A writ court may interfere notwithstanding an alternative remedy where disallowance of input tax credit is made without furnishing the basic documents relied upon against the assessee and without a fair opportunity of hearing, as such action violates natural justice and warrants remand for de novo decision.

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