Retrospective input tax credit amendment preserves accrued credit despite later sale of manufactured goods.

A curative and declaratory amendment to Section 19(2) of the Tamil Nadu Value Added Tax Act operates retrospectively, so input tax credit remains intact once the statutory conditions for accrual are satisfied. On that basis, the right to credit becomes absolute when inputs are used in manufacture or processing within the State, and the later inter-State or intra-State sale of the finished goods does not defeat that entitlement. The assessment reversing input tax credit under Section 19(2)(v) was therefore unsustainable and was set aside, leaving the dealer entitled to the claimed relief.

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Issues: Whether the reversal of input tax credit under Section 19(2)(v) of the Tamil Nadu Value Added Tax Act, 2006 could be sustained in view of the later amendment and the binding Division Bench decision holding the amendment to be curative and declaratory.

Analysis: The assessment had denied the petitioner's claim to input tax credit under Section 19(2)(v). The governing Division Bench ruling had already determined that the amendment to Section 19(2) was curative and declaratory in nature, with retrospective effect, and that the right to input tax credit becomes absolute once the inputs are used in manufacture or processing within the State. On that footing, the subsequent sale of the finished goods, whether inter-State or intra-State, does not defeat or restrict the credit earned in the interregnum period.

Conclusion: The impugned assessment order could not be sustained and was set aside in favour of the petitioner.

Final Conclusion: The writ petition succeeded and the assessment reversing input tax credit was quashed, leaving the petitioner entitled to the claimed relief.

Ratio Decidendi: A curative and declaratory amendment relating to input tax credit operates retrospectively and preserves the credit once the statutory conditions for accrual are satisfied; subsequent sale of the manufactured goods does not extinguish that entitlement.

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