Retrospective input tax credit relief covers manufacturers' inter-State sales, while refunds require proof against unjust enrichment and timely claims.
Under the Tamil Nadu Value Added Tax Act, the 2015 curative omission of the input tax credit restriction on inter-State sales operates retrospectively from 11 November 2013, removing the three-percent restriction for the intervening period. The original restriction covered manufacturers' qualifying sales to registered dealers as well as sales of goods as purchased, despite separate credit provisions for manufacturing inputs and inter-State sales. Refunds require proof that the tax burden was not passed on directly or indirectly, including through the price of goods manufactured using inputs or capital goods; steps to recover the tax must have been taken within three years of payment. Fiscal policy deference does not preclude judicial review of departmental statutory interpretation. Expiry of the statutory appeal period does not automatically bar writ relief, which depends on laches and judicial discretion, with available statutory rectification and similar pending challenges being relevant.
Issues: (i) Whether deference to fiscal policy bars judicial review of departmental statutory interpretation; (ii) Whether the 2013 input tax credit restriction on inter-State sales applies to manufacturers; (iii) Whether the 2015 omission of that restriction operates retrospectively; (iv) Whether refund claims are subject to unjust enrichment and a three-year limitation period; (v) Whether expiry of the statutory appeal period bars writ relief in these cases.
Issue (i): Whether deference to fiscal policy bars judicial review of departmental statutory interpretation.
Analysis: Although fiscal policy ordinarily attracts judicial restraint, Article 226 permits review of the legality of departmental action. The dispute concerned the interpretation and application of the statute, not a challenge to the policy or validity of the legislation.
Conclusion: No. Judicial review of the departmental interpretation was available, in favour of the assessees.
Issue (ii): Whether the 2013 input tax credit restriction on inter-State sales applies to manufacturers.
Analysis: Section 19(2)(ii) of the Tamil Nadu Value Added Tax Act, 2006 addresses credit for inputs used in manufacturing, while Section 19(2)(v) addresses qualifying inter-State sales. The independent clauses operate at different stages. On the plain meaning of sale, clause (v) covers manufactured goods as well as goods sold as purchased. The proviso restricted credit for transactions under clause (v), including manufacturers' sales to registered dealers.
Conclusion: Yes. As enacted, the proviso applied to manufacturers' qualifying inter-State sales, in favour of Revenue on its construction.
Issue (iii): Whether the 2015 omission of that restriction operates retrospectively.
Analysis: The restriction produced unintended adverse effects on manufacturers' competitiveness. Its omission alongside substitution of clause (v) was a curative measure intended to remove that counter-mischief. The legislative context supported retrospective operation despite the amendment's stated effective date.
Conclusion: Yes. The omission operates from 11 November 2013, removing the proviso's three-percent restriction for the intervening period, in favour of the assessees.
Issue (iv): Whether refund claims are subject to unjust enrichment and a three-year limitation period.
Analysis: Unjust enrichment applies even without an express statutory provision. A claimant must establish that the tax burden was not passed on directly or indirectly, including through the price of goods manufactured using inputs or capital goods. The applicable limitation for recovery of tax retained by the State is three years from payment.
Conclusion: Yes. Refund claims are subject to proof against unjust enrichment and steps must have been taken within three years of payment, in favour of Revenue.
Issue (v): Whether expiry of the statutory appeal period bars writ relief in these cases.
Analysis: Writ jurisdiction is governed by laches and judicial discretion; an alternative remedy and its limitation period do not create an absolute bar. The availability of statutory rectification and the pending batch of similar challenges were relevant to the exercise of that discretion.
Conclusion: No. The writs were not liable to dismissal solely on that ground in these cases, in favour of the assessee.
Final Conclusion: The retrospective removal of the reversal restriction preserves eligible credit for the disputed period, while refund claims remain subject to the requirements governing unjust enrichment and limitation.
Ratio Decidendi: A curative amendment removing an unintended tax-credit restriction may operate retrospectively where legislative intent and the statutory scheme require the remedy to relate back.