Input tax credit rejection must be supported by reasoned evaluation of documents before disallowance is sustained

Assessment orders rejecting input tax credit were set aside because the assessing authority did not properly examine the invoices, declaration letters, bank statements and other material filed to prove the genuineness of purchases. Broad observations about non-submission of documents, without a reasoned evaluation of the evidence or an explanation why it was insufficient, were treated as inadequate. The matter was remanded for fresh consideration after allowing production of supporting documents, including original tax invoices, and after giving a reasonable opportunity of hearing.

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Issues: Whether the assessment orders rejecting the input tax credit claim were liable to be quashed for failure to consider the documents furnished by the dealer and for not recording a reasoned assessment of the genuineness of the purchases.

Analysis: The assessment orders referred to invoices, declaration letters, bank statements and related material said to have been filed by the dealer, but did not examine those documents, assess their evidentiary value, or explain why they were insufficient to establish the genuineness of the purchases. The rejection was instead founded on broad and vague observations of non-submission of documents, along with reliance on the requirement of original tax invoices under the TNVAT Rules. In these circumstances, the orders did not reflect a proper consideration of the material placed before the assessing authority.

Conclusion: The assessment orders were quashed and the matters were remanded to the assessing officer for fresh consideration after permitting production of supporting documents, including the original tax invoices, and after giving a reasonable opportunity of hearing.

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