Input tax credit restriction under Tamil Nadu VAT must follow the earlier proviso interpretation unless stayed.

The Madras HC noted that the earlier interpretation of the proviso to Section 19(2) of the Tamil Nadu Value Added Tax Act, 2006 limited the restriction on input tax credit to the purpose covered by clause (v), and not to the other purposes listed in Section 19(2). It also observed that mere pendency of appeals without an interim stay does not suspend that ruling. On that basis, the petitioner's request for reconsideration of reversal of input tax credit could not be rejected outright, and the respondent was directed to examine the representations in light of the binding earlier decision and pass orders on merits.

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Issues: Whether the petitioner was entitled to a direction to reconsider its representations for cancellation of reversal of input tax credit in the light of the earlier interpretation of the proviso to Section 19(2)(ii) of the Tamil Nadu Value Added Tax Act, 2006.

Analysis: The earlier batch decision had construed the proviso to Section 19(2) of the Tamil Nadu Value Added Tax Act, 2006 as restricting the limitation on input tax credit only in relation to the purpose covered by clause (v), and not to the other purposes enumerated in Section 19(2). The Court also noted that pendency of appeals without any interim order does not amount to a stay of that decision. In that background, the petitioner's request for reconsideration could not be rejected outright and required examination in the light of the binding earlier ruling.

Conclusion: The respondent was directed to consider the petitioner's representations, taking note of the earlier decision, and pass appropriate orders on merits and in accordance with law.

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