Input tax credit burden of proof failed where invoices alone did not prove genuine purchases or movement of goods.

A pre-assessment notice questioning the genuineness of input tax credit put the dealer on notice that the purchases were suspected to be from a bill trader, so the dealer had to produce material proving the transaction, including evidence of actual movement of goods. Under Section 17 of the Tamil Nadu Value Added Tax Act, 2006, the burden of proof lay on the dealer, and that burden was not discharged by invoices alone or by relying on the seller's registration cancellation date. Because no records were produced to substantiate the purchase, the disallowance of input tax credit was sustained and the assessment was not vitiated by breach of natural justice.

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Issues: Whether the order disallowing input tax credit was vitiated for breach of natural justice and whether the assessee had discharged the burden of proving the genuineness of the purchase transaction and movement of goods.

Analysis: The pre-assessment notice raised the genuineness of the claim and put the assessee on notice that the transaction was suspected to be with a bill trader. In such circumstances, the assessee was required to adduce material to establish the validity of the purchase, including documentary evidence of actual movement of goods and other supporting particulars. Section 17 of the Tamil Nadu Value Added Tax Act, 2006 places the burden of proof on the dealer, and in a claim for input tax credit that burden is not discharged merely by relying on invoices or the cancellation date of the seller's registration. As no records were produced to prove the transaction, the disallowance of input tax credit could not be faulted.

Conclusion: The assessment was not vitiated by violation of natural justice, and the assessee failed to discharge the burden under Section 17; the disallowance of input tax credit was upheld.

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