Input tax credit on DEPB licences denied where statutory conditions under the VAT scheme were not satisfied.

Input tax credit under the Tamil Nadu Value Added Tax Act is available only when the purchase satisfies Section 19(1) and concerns taxable goods specified in the First Schedule. Although DEPB licences are treated as goods, they do not fall within the First Schedule or the specific entitlement categories under Section 19(2), and therefore duty paid on their purchase cannot support input tax credit; the denial was upheld. On the construction of Section 19(2), the six clauses were treated as enumerative rather than exhaustive, so the provision does not close the field of entitlement beyond the situations expressly stated.

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Issues: (i) Whether input tax credit was admissible on duty paid for purchase of DEPB licences, and whether such licences could qualify the claim under the relevant provisions of the Tamil Nadu Value Added Tax Act, 2006. (ii) Whether the list of purposes in clauses (i) to (vi) of Section 19(2) of the Tamil Nadu Value Added Tax Act, 2006 is enumerative or exhaustive.

Issue (i): Whether input tax credit was admissible on duty paid for purchase of DEPB licences, and whether such licences could qualify the claim under the relevant provisions of the Tamil Nadu Value Added Tax Act, 2006.

Analysis: Section 19(1) grants input tax credit only when a registered dealer has paid or become liable to pay tax on purchase of taxable goods specified in the First Schedule. Although DEPB licences are goods within the meaning of Section 2(21) of the Tamil Nadu Value Added Tax Act, 2006, they are not goods specified in the First Schedule. They also do not fall within the specific entitlement categories under Section 19(2), nor within the scope of Sections 19(3) or 19(4). The claim was for duty paid on purchase of licences used for payment of import customs duty, which did not satisfy the statutory conditions for input tax credit.

Conclusion: The denial of input tax credit on purchase of DEPB licences was upheld, and the issue was decided against the assessee.

Issue (ii): Whether the list of purposes in clauses (i) to (vi) of Section 19(2) of the Tamil Nadu Value Added Tax Act, 2006 is enumerative or exhaustive.

Analysis: Section 19 is a complete code governing entitlement to input tax credit, its denial, reversal, transfer, and related contingencies. The entitlement to input tax credit originates in Section 19(1), while Section 19(2) carves out specific situations in which credit is available for purchases within the State. In that scheme, the six clauses in Section 19(2) describe particular instances and do not exhaust the entire field of entitlement.

Conclusion: Section 19(2) was held to be enumerative and not exhaustive, in favour of the assessee on this issue.

Final Conclusion: The revision failed because the assessee could not satisfy the statutory conditions for input tax credit on DEPB licences, even though Section 19(2) was construed as illustrative rather than exhaustive.

Ratio Decidendi: Input tax credit under the Tamil Nadu Value Added Tax Act, 2006 is available only when the purchase satisfies the statutory conditions of Section 19(1), and a purchase falling outside the First Schedule cannot be brought within credit entitlement merely because the item is otherwise treated as goods.

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