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Issues: (i) Whether input tax credit availed under the Tamil Nadu Value Added Tax Act, 2006 could be adjusted against liability under the Central Sales Tax Act, 1956. (ii) Whether the petitioner could adjust the credit of Rs. 23,31,952/- against past tax liability without making a refund claim within time under the Tamil Nadu Value Added Tax Act, 2006.
Issue (i): Whether input tax credit availed under the Tamil Nadu Value Added Tax Act, 2006 could be adjusted against liability under the Central Sales Tax Act, 1956.
Analysis: The statutory scheme of input tax credit under the Tamil Nadu Value Added Tax Act, 2006 permits credit only subject to the restrictions contained in the Act and the Rules. Section 19(5)(c) read with Rule 10(9)(a) restricts the availability of credit in relation to inter-State sales unless the prescribed conditions are satisfied, including production of Form C. Rule 5(3-A) of the Central Sales Tax (Tamil Nadu) Rules, 1957 operates only after such credit is validly available under the VAT law. The credit is a concession and not an indefeasible right, and it must be availed and utilised in the manner prescribed by statute.
Conclusion: The adjustment of input tax credit against Central Sales Tax liability was not available as a matter of right and could be claimed only if the credit was validly permissible under the Tamil Nadu Value Added Tax Act, 2006.
Issue (ii): Whether the petitioner could adjust the credit of Rs. 23,31,952/- against past tax liability without making a refund claim within time under the Tamil Nadu Value Added Tax Act, 2006.
Analysis: Section 18(3) provides that where input tax credit is not adjusted or refund is not claimed within the prescribed period after zero-rated sales, the credit lapses to Government. The Court found that the petitioner had not shown entitlement to the credit in the manner asserted, and the statutory scheme did not permit adjustment of such amount against old liabilities outside the prescribed time limits. The plea for setting off the amount against arrears for earlier assessment years was inconsistent with the one-to-one correlation contemplated by the Act and Rules.
Conclusion: The petitioner was not entitled to adjust the disputed credit against past liability without complying with the statutory time limit for adjustment or refund.
Final Conclusion: The writ petition failed on the merits, and the dismissal was maintained, while preserving liberty to pursue the statutory appellate remedy.
Ratio Decidendi: Input tax credit under the Tamil Nadu Value Added Tax regime is a statutory concession that can be availed and utilised only in strict accordance with the Act and the Rules, and unutilised credit cannot be adjusted against past Central Sales Tax liability contrary to the prescribed scheme and time limits.
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