Input tax credit is a statutory concession; reversal was upheld where the seller's registration had already been cancelled.

Input tax credit under the Tamil Nadu VAT framework is a statutory concession, not an absolute right, and must be claimed only on strict compliance with the prescribed conditions. Section 19(15) was upheld because no constitutional violation was shown, and its requirement for reversal of credit where the seller's registration has been cancelled was treated as part of the statutory scheme. Where the purchasing dealer bought goods after the seller's registration had already been cancelled, the tax invoice did not override the need for a subsisting registration, and reversal of input tax credit was held to be legally permissible.

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Issues: (i) Whether Section 19(15) of the Tamil Nadu Value Added Tax Act, 2006 was unconstitutional and unenforceable; (ii) Whether reversal of input tax credit was justified where the purchasing dealer had bought goods from a seller whose registration had already been cancelled.

Issue (i): Whether Section 19(15) of the Tamil Nadu Value Added Tax Act, 2006 was unconstitutional and unenforceable.

Analysis: The challenge to the fiscal provision was examined in the light of the settled principle that input tax credit is a statutory concession and not an absolute right. The provision requiring reversal of credit where the selling dealer's registration is cancelled operates within the statutory scheme and no material was shown to establish any violation of constitutional guarantees.

Conclusion: The challenge to the validity of Section 19(15) failed and the provision was upheld.

Issue (ii): Whether reversal of input tax credit was justified where the purchasing dealer had bought goods from a seller whose registration had already been cancelled.

Analysis: The purchasing dealer had effected the purchase after the seller's registration had been cancelled. Under the statutory scheme, a dealer claiming input tax credit must strictly satisfy the conditions attached to the concession, and the production of a tax invoice does not override the requirement that the selling dealer's registration should be subsisting. In these circumstances, the plea of double taxation was not sustainable.

Conclusion: Reversal of input tax credit was justified and the challenge to the audit notice failed.

Final Conclusion: The writ petition was found to be without merit, and the statutory demand for reversal of input tax credit was sustained.

Ratio Decidendi: Input tax credit under the VAT scheme is a concession that must be availed only on strict fulfilment of the statutory conditions, and where the seller's registration has already been cancelled, reversal of the credit on the purchasing dealer is legally permissible.

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