Excess input tax credit may be adjusted against CST liability where statutory language covers outstanding tax dues.

Excess input tax credit under the Tamil Nadu Value Added Tax Act, 2006 was held adjustable against outstanding Central Sales Tax liability because section 19(17) was read broadly to cover "any outstanding tax due" for that purpose. The earlier ruling on adjustment of excess credit against tax dues was treated as binding ratio, especially since it had not been challenged by the Department. On that footing, the taxpayer was entitled to set off the excess credit against CST liability, and the assessment orders could not stand.

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Issues: Whether excess input tax credit under the Tamil Nadu Value Added Tax Act, 2006 could be adjusted against outstanding tax liability under the Central Sales Tax Act, 1956.

Analysis: Section 19(17) of the Tamil Nadu Value Added Tax Act, 2006 was read to permit adjustment where input tax credit determined for a year exceeds the tax liability for that year, and the expression "any outstanding tax due" was treated as wide enough to cover liability under the Central Sales Tax Act, 1956. The earlier decision relied on by the petitioner was treated as binding, since the ratio decidendi had held that excess tax credit could be adjusted against outstanding tax dues and the Department had not challenged that ruling.

Conclusion: The petitioner was entitled to adjust the excess input tax credit against the CST liability, and the assessment orders were unsustainable.

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