Input Tax Credit mismatch assessment set aside for failure to follow prescribed reconciliation procedure and fresh consideration ordered.

An assessment for alleged Input Tax Credit mismatch under the Tamil Nadu Value Added Tax Act could not be sustained because the departmental circular prescribing the reconciliation procedure had not been followed. The court held that, in such mismatch cases, the assessee must be given the invoice particulars relied upon, allowed to submit a fresh reply, and have the matter decided by a reasoned order. The assessment was quashed and the matter remitted for fresh disposal in accordance with the circular and guidelines.

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Issues: Whether the assessment order relating to alleged Input Tax Credit mismatch could be sustained when the procedure prescribed in the departmental circular had not been followed, and whether the matter required remand for fresh consideration.

Analysis: The dispute concerned an assessment for alleged wrongful availment of Input Tax Credit under the Tamil Nadu Value Added Tax Act, 2006. The governing circular issued by the Commercial Taxes Department prescribed the manner in which mismatch cases were to be examined and reconciled on the basis of website information. The record showed that the prescribed procedure was not followed. In these circumstances, the assessment could not be sustained in its existing form and the assessee was entitled to receive the invoice details relied upon, file a fresh reply, and have the matter reconsidered by a reasoned order.

Conclusion: The assessment order was quashed and the matter was remitted for fresh disposal in accordance with the circular and guidelines, with directions to furnish the relevant invoice particulars and permit a fresh reply.

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