Input tax credit reversal under Tamil Nadu VAT must be considered on merits despite a pending appeal without stay.

The Madras HC noted that the earlier ruling had interpreted the proviso to Section 19(2) of the Tamil Nadu VAT Act, 2006 as restricting reversal of input tax credit to the situation covered by clause (v), and not to the other purposes listed in Section 19(2). Because the State had only said that an appeal was being filed and no stay had been granted, the pending appeal did not justify withholding action on the petitioner's representation. The respondent was therefore required to consider the refund request on merits in light of the earlier decision, but no direct refund was ordered.

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Issues: Whether the petitioner was entitled to a direction for consideration of its representation for refund of input tax credit reversed under the proviso to Section 19(2) of the Tamil Nadu Value Added Tax Act, 2006, in the light of the earlier decision interpreting that proviso.

Analysis: The earlier decision had construed the proviso to Section 19(2) as limiting reversal of input tax credit only in the situation covered by clause (v) and not as extending to the other purposes enumerated in Section 19(2). The Court also noted that the State had only stated that appeals were in the process of being filed and were not yet numbered, with no stay operating against the earlier decision. In those circumstances, the existence of a pending appeal did not justify withholding consideration of the petitioner's representation, and the respondent was required to decide it on merits by taking note of the earlier ruling.

Conclusion: The petitioner succeeded to the extent of obtaining a direction to have the representation considered on merits in accordance with law, taking note of the earlier decision; however, no direct refund was ordered.

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