Input tax credit reversal under Tamil Nadu VAT upheld against constitutional challenge and treated as a valid part of the assessment scheme.

The Tamil Nadu VAT mechanism for reversal of input tax credit under Section 19(11) was upheld as part of the Act's charging and assessment scheme. The Madras High Court followed its earlier binding Division Bench view rejecting identical constitutional challenges and found the provision neither arbitrary nor discriminatory. The challenge under Articles 14 and 19(1)(g) therefore failed, and the writ petitions were dismissed.

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Issues: Whether Section 19(11) of the Tamil Nadu Value Added Tax Act, 2006 and the connected rule and provisions governing reversal of input tax credit were ultra vires the charging and assessment scheme of the Act and violative of Articles 14 and 19(1)(g) of the Constitution of India.

Analysis: The challenge was considered in the light of an earlier Division Bench decision of the same High Court which had already rejected identical contentions concerning the validity of the impugned VAT provisions. Following that binding view, the Court treated the assessees' challenge as covered against them. The impugned provision was examined as part of the statutory scheme relating to input tax credit and assessment, and was not found to be arbitrary, irrational, or constitutionally invalid.

Conclusion: The challenge failed. Section 19(11) of the Tamil Nadu Value Added Tax Act, 2006 was upheld as a valid provision, and the writ petitions were dismissed.

Final Conclusion: The statutory mechanism for reversal of input tax credit under the Tamil Nadu VAT framework was sustained, and no constitutional infirmity was found in the impugned provision.

Ratio Decidendi: A provision forming part of the VAT assessment and input tax credit scheme will be upheld where an earlier binding decision has already rejected identical constitutional challenges and the impugned provision is not shown to be arbitrary or discriminatory.

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