The petitioner, having paid the tax to the selling dealer, was entitled to claim input tax credit under Section 19(1) of the TNVAT Act, and the authority's use of Section 19(16) to revoke the input tax credit was incorrect and contrary to the provisions of the Act.

1. Heard the learned counsel for the petitioner and the learned Government Advocate for the respondents.

2. Though an alternative remedy is available in cases of this nature, when on going through the admitted facts of the cases and taking note of the reasons given by the authority in the orders impugned, the Court is of the view that there is a gross error on the part of the authority in holding that the petitioner is liable for the non-payment of tax by the selling dealer. This apparently is a mistake which is admitted in the pre-revision notices and in the orders themselves. Therefore, the Court, in exercise of power under Article 226, is entitled to correct such gross injustice, arbitrariness and error apparent on the face of record.

3. The petitioner in these cases is a dealer in lubricants and has a valid TIN number issued by the respondent. The three assessment years relate to 2008-09, 2009-10 and 2010-11. In all these cases, the petitioner purchased lubricants from M/s Classic Enterprises, falling under the jurisdiction of the Assistant Commissioner (CT), Palayamkottai Assessment Circle, and the seller-M/s Classic Enterprises has a valid TIN No.3383556355. It appears that the enforcement wing officials of the first respondent-Department conducted an inspection on 13.7.2010 and on verification of the returns, it was found that the dealer at Palayamkottai Assessment Circle, namely, M/s Classic Enterprises, had not filed the monthly returns in Form-I and also not paid the tax to the department for the relevant period. Therefore, while accepting that the petitioner-dealer had paid the tax to the selling dealer, pre-revision notices were issued on 7.12.2012 in respect of each assessment year contending that input tax credit should be reversed on the failure of selling dealer in paying tax. The petitioner filed their detailed objections to the pre-revision notices stating that at the time of self-assessment under Section 22(2) of the Tamil Nadu Value Added Tax Act, 2006 (for short, "the TNVAT Act"), all the records relevant for claiming the input tax credit have been filed as annexure to the documents and they have been accepted by the Department. Even in the pre-revision notices, it is an admitted fact that the petitioner herein had paid the tax. The allegation is only against the selling dealer stating that they had not filed the Form-I returns nor paid the tax to the department. Therefore, it was contended by the petitioner that in terms of Section 19(1) of the TNVAT Act, they have complied with the requirement for claiming input tax credit at the time of self-assessment itself. The first respondent, after three years, has come to a different conclusion that the petitioner is not entitled to avail the input tax credit on the plea that the selling dealer did not file Form-I returns and did not pay the tax. Hence, the revision notices and the proposed penalty were hotly contested as improper, arbitrary and contrary to the provisions of the TNVAT Act. To further clarify the position, the specific objections of the petitioner are as follows:-

"We further state that M/s Classic Enterprises are still existing dealer till date and continuing business and also state inter alia that we had already stated before the Enforcement Wing officials that you had not issued any mismatch transaction audit notice and that the proper course was to ascertain whether the said M/s Classic Enterprises had remitted the tax collected from the purchasers to the treasury and not to insist that we should reverse tax paid to the seller and had to pay the tax again, which in fact has already been paid by us to seller which fact has also been admitted by you in the above said notice.

Further we also pray to drop the proposal to reverse the ITC which has been correctly availed by us and also to drop the proposal to levy penalty. We also request you to make proper enquiries at the Palayamkottai assessment circle to ascertain whether the said M/s Cl