Input tax credit rejection under Tamil Nadu VAT law was set aside, while the Revenue's right to revisit the issue was preserved.

The Madras HC held that the rejection of input tax credit under Section 19(5)(c) of the Tamil Nadu Value Added Tax Act, 2006 could not be sustained where the issue was already covered by earlier High Court decisions, while a challenge on the same point remained pending before the Supreme Court. The Court set aside the impugned order and disposed of the writ in favour of the dealer, but preserved the Revenue's right to revisit the issue after the Supreme Court's decision, so the Department's future contention was not foreclosed.

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Issues: Whether the order rejecting input tax credit under Section 19(5)(c) of the Tamil Nadu Value Added Tax Act, 2006 could be sustained in the light of the earlier decision covering the same issue and the pending challenge before the Supreme Court.

Analysis: The impugned rejection was made pursuant to a remand order, but the legal issue was already covered by earlier decisions of the High Court dealing with the same statutory provision. The Court accepted the submission that, in view of the pending special leave petition, the Revenue's position should not be foreclosed. At the same time, the Court preserved the Department's right to revisit the issue after the Supreme Court's decision. The writ jurisdiction was therefore exercised to set aside the impugned order while safeguarding the Revenue's future contention.

Conclusion: The rejection of the petitioner's claim was set aside and the matter was disposed of in favour of the petitioner, with the Department's right to reconsider the issue kept open for the future.

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