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

Input tax credit under the Tamil Nadu VAT Act was denied for duty paid on purchase of DEPB licences because, although the licences were treated as goods, they were not goods specified in the First Schedule and did not satisfy the statutory credit conditions in Section 19(1). The scheme of Section 19 was treated as a complete code for entitlement, denial, reversal, transfer and carry forward of credit. On that basis, the listed purposes in Section 19(2) were held to be enumerative rather than exhaustive, but that construction did not assist the assessee because the statutory requirements for credit on DEPB licences were not met.

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Issues: (i) Whether input tax credit could be denied on the duty paid for purchase of DEPB licences, though such licences were "goods" under the Act and the tax paid on them was claimed as input tax; (ii) Whether the purposes listed in clauses (i) to (vi) of Section 19(2) of the Tamil Nadu Value Added Tax Act, 2006 were exhaustive or merely enumerative.

Issue (i): Whether input tax credit could be denied on the duty paid for purchase of DEPB licences, though such licences were "goods" under the Act and the tax paid on them was claimed as input tax.

Analysis: Section 19(1) confers input tax credit only when the registered dealer satisfies all the statutory conditions, namely that tax has been paid or is payable on the purchase of taxable goods specified in the First Schedule. Although DEPB licences were held to be goods, they were not goods specified in the First Schedule. They also did not fall within the relevant credit-entitling provisions of Section 19, and the petitioner had not paid VAT on those purchases but sought credit for duty paid on their use for import duty. The statutory scheme therefore did not permit the claimed credit.

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

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

Analysis: Section 19 was treated as a complete code governing entitlement, denial, reversal, transfer and carry forward of input tax credit. Entitlement to credit arises from Section 19(1), while the later sub-sections carve out specific situations and categories. On that scheme, the listed purposes in Section 19(2) were not treated as the only source of entitlement, but as illustrative of the situations covered by that sub-section.

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

Final Conclusion: The revision failed because, despite the answer on the scope of Section 19(2), the assessee did not satisfy the statutory requirements for input tax credit in relation to DEPB licences.

Ratio Decidendi: Input tax credit under the Act is available only when the dealer satisfies the statutory conditions in Section 19(1), and a general claim cannot be founded merely on the fact that the item purchased is "goods" unless it is also covered by the specified credit-entitling scheme.

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