Input tax credit on capital goods denied where job-work manufacturer failed to satisfy statutory conditions and proof requirements.

An assessee engaged only in job work for a principal concern, manufacturing refractory products from materials supplied by that concern, was not entitled to input tax credit on capital goods under the Tamil Nadu Value Added Tax Act, 2006. The Court treated the statutory conditions in Section 19(2)(iv) as unmet because the capital goods were not used in the manner required for the assessee's own taxable activity, and the burden of proving entitlement under Section 17 remained on the dealer. Reliance on Rule 10(4)(e) of the Tamil Nadu Value Added Tax Rules, 2007 failed because that provision applied only after the relevant assessment period.

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Issues: Whether the assessee, engaged in job work of manufacturing refractory products from raw materials supplied by another concern, was entitled to input tax credit on capital goods under the Tamil Nadu Value Added Tax Act, 2006.

Analysis: The assessee manufactured refractory products only on a job-work basis using materials supplied by the principal concern, and the finished goods were ultimately used by that concern. On these facts, the assessee could not be treated as having used the capital goods in the manner required to claim input tax credit under Section 19(2)(iv) of the Tamil Nadu Value Added Tax Act, 2006. The burden of proving entitlement to input tax credit lay on the dealer under Section 17 of the Act, and that burden was not discharged. The reliance placed on Rule 10(4)(e) of the Tamil Nadu Value Added Tax Rules, 2007 was unavailing, as that clause came into force after the relevant assessment period. The claim was also inconsistent with the nature of job work recognised in the materials placed before the Court.

Conclusion: The assessee was not entitled to input tax credit on the capital goods, and the rejection of the claim was in law.

Ratio Decidendi: A dealer engaged only in job work, using materials supplied by another concern, cannot claim input tax credit on capital goods unless the statutory conditions for such credit are satisfied and the burden of proving entitlement is discharged.

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