Input tax credit refund under Tamil Nadu VAT must follow Section 19 limits and cannot be cut by ad hoc loss estimates.

Refund of input tax credit under Section 18(2) of the Tamil Nadu Value Added Tax Act, 2006 is subject to the conditions and restrictions in Section 19, including Section 19(9), and must be examined on the facts of the claim. The Assessing Authority cannot reduce the refund by applying a uniform ad hoc percentage for invisible loss or mechanically reverse credit on capital goods without determining the actual loss, the nature of the goods, and the statutory restrictions applicable. The Form W undertaking is only for verification and does not exclude scrutiny within the Act and Rules.

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Issues: Whether refund of input tax credit claimed by an exporter under Section 18(2) of the Tamil Nadu Value Added Tax Act, 2006 could be restricted by applying a uniform percentage towards invisible loss and by reversing credit on capital goods, and whether such claim had to be tested in the light of the restrictions under Section 19 of the Act.

Analysis: Refund under Section 18(2) is not automatic merely because tax was paid on purchases and the goods were used in manufacture. The dealer must satisfy the Assessing Authority that the claim is not barred by the conditions and restrictions contained in Section 19, including Section 19(9). At the same time, the Assessing Authority cannot adopt an ad hoc or uniform percentage as invisible loss and mechanically require reversal of input tax credit. The authority must undertake a factual enquiry into the actual loss, the nature of the goods purchased and manufactured, and the applicability of the statutory restrictions before deciding the refund claim. The undertaking in Form W is only for verification under Rule 11(2) and does not exclude the power to examine the claim within the statutory framework.

Conclusion: The restriction of refund by applying a uniform percentage and the consequential reversal of input tax credit were not justified. The petitioners were entitled to relief in line with the earlier decision, with liberty to the Assessing Authority to proceed by issuing proper notice and deciding the matter in accordance with law.

Final Conclusion: The writ petitions were disposed of by following the earlier ruling, and the impugned treatment of the refund claim could not stand on an ad hoc percentage basis.

Ratio Decidendi: Refund of input tax credit under Section 18(2) of the Tamil Nadu Value Added Tax Act, 2006 is subject to Section 19 restrictions, but the Assessing Authority cannot disallow or reverse credit on a mechanical uniform-percentage estimate of loss without a factual determination.

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