Refund of unutilised input tax credit on capital goods cannot be rejected on limitation where filing was timely and processing was delayed.

Unutilised input tax credit on capital goods under the Tamil Nadu Value Added Tax Act, 2006 was treated as eligible for refund because the definition of input under Section 2(23) includes capital goods and Section 18(3) governing zero-rating covers such claims. The refund applications were stated to have been filed within the prescribed 180 days, but processing was delayed due to Circular No. 22/2011, later superseded by Circular No. 12 of 2018, so the delay could not fairly be attributed to the claimant and the limitation objection was unsustainable. Entitlement to refund still required verification against the relevant ITC and export documents, so the merits had to be examined on remand.

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Issues: Whether the petitioner was entitled to refund of unutilised input tax credit on capital goods under the Tamil Nadu Value Added Tax Act, 2006 and whether the rejection of the refund claim on limitation was sustainable.

Analysis: The definition of input under Section 2(23) of the Tamil Nadu Value Added Tax Act, 2006 includes capital goods, and Section 18(3) governing zero-rating also covers such claims. The records showed that the refund claims had been made within the prescribed 180 days, but processing was deferred because of Circular No.22/2011, which was later superseded by Circular No.12 of 2018. In these circumstances, the petitioner could not be blamed for the delay in disposal of the claim, and the limitation objection could not be sustained on the reasoning adopted in the impugned order. At the same time, the entitlement to refund had to be verified on the basis of the relevant ITC and export documents, which required factual examination.

Conclusion: The rejection of the refund claim on limitation was unsustainable, and the matter was remanded for reconsideration of the refund claim on merits, without examining limitation.

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