Retrospective tax amendment restores Input Tax Credit entitlement despite later sale of finished goods.

A curative and declaratory amendment to Section 19(2)(v) of the Tamil Nadu Value Added Tax Act, 2006 was treated as operating retrospectively from 11.11.2013, restoring the original position on Input Tax Credit. On that basis, a manufacturer's entitlement to claim Input Tax Credit on inputs used in manufacture or processing within the State was treated as an accrued right, not defeated by the later interstate or intrastate sale of the finished goods. The assessment denying credit was therefore set aside and relief was granted.

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Issues: Whether the denial 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 held to be curative and declaratory.

Analysis: The impugned assessment reversed the assessee's claim to Input Tax Credit under Section 19(2)(v). The binding view relied upon held that the amendment brought about in 2015 was curative in nature, that it operated retrospectively from 11.11.2013, and that it restored the original position under the provision. On that basis, the right of the manufacturer to avail Input Tax Credit was treated as an absolute right once the inputs were used in manufacture or processing within the State, and the subsequent interstate or intrastate sale of the finished goods did not whittle down that entitlement.

Conclusion: The denial of Input Tax Credit could not be sustained, and the assessee was held entitled to relief.

Final Conclusion: The assessment order was set aside and the writ petition was allowed.

Ratio Decidendi: A curative or declaratory amendment to a tax provision relating back retrospectively restores the original entitlement and cannot be used to restrict an accrued Input Tax Credit right already earned under the statute.

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