Concessional tax proof and input tax credit under Tamil Nadu VAT cannot be denied solely for want of one certificate or lower-rate objection.

The Madras HC noted that the certificate under Rule 6(3)(b) of the Tamil Nadu VAT Rules is not the exclusive mode of proving entitlement to concessional treatment under Section 3(2) of the Tamil Nadu VAT Act, 2006; the assessee may rely on other contemporaneous documents and evidence, and the matter was remanded for fresh consideration on that point. It also held that input tax credit cannot be curtailed merely because the Revenue says tax ought to have been paid at a lower rate when the tax actually remitted is undisputed, and the restriction of credit on that basis was not sustainable.

---

---

Issues: (i) Whether the certificate contemplated by Rule 6(3)(b) of the Tamil Nadu Value Added Tax Rules, 2007 is mandatory for claiming the benefit under Section 3(2) of the Tamil Nadu Value Added Tax Act, 2006. (ii) Whether input tax credit could be restricted on the ground that tax was payable at a lower rate than the rate actually remitted.

Issue (i): Whether the certificate contemplated by Rule 6(3)(b) of the Tamil Nadu Value Added Tax Rules, 2007 is mandatory for claiming the benefit under Section 3(2) of the Tamil Nadu Value Added Tax Act, 2006.

Analysis: Rule 6(3)(b) refers to a certificate to be obtained by the purchaser, but the language does not state that production of that certificate is the only mode of proving entitlement to the concessional treatment. The statutory scheme permits the assessee to support the claim through other contemporaneous documents and evidence. The principle is reinforced by the distinction between a prescribed formality and proof of entitlement, and by the analogy drawn from cases where non-production of a prescribed declaration or pass shifts the evidentiary burden but does not automatically defeat the claim.

Conclusion: The certificate is not mandatory as the sole proof, and the assessee may establish entitlement through other supporting material. The matter was remanded for reconsideration on this aspect.

Issue (ii): Whether input tax credit could be restricted on the ground that tax was payable at a lower rate than the rate actually remitted.

Analysis: Input tax credit is linked to the tax actually paid on purchases made within the State for use as capital goods. Where the payment of tax is not disputed, the Revenue cannot reduce the credit merely by recharacterising the applicable rate and thereby restricting the credit to the lower figure. Doing so would permit the State to retain tax collected at one rate while confining the corresponding credit to a lesser rate, which is inconsistent with the scheme governing input tax credit.

Conclusion: The restriction of input tax credit on this ground was not sustainable, and the assessee succeeded on this issue.

Final Conclusion: The writ petitions succeeded in part. The first issue was remitted for fresh consideration, while the second ground was decided in favour of the assessee, resulting in a partial relief overall.

Ratio Decidendi: A prescribed certificate is not necessarily the exclusive means of proving statutory entitlement where the provision does not make production mandatory, and input tax credit cannot be curtailed merely because the Revenue contends that a lower tax rate should have applied when the tax actually paid is undisputed.

---