Dear expert,
one of my manufacturers of automobile components and related goods. They have purchased capital goods and which is used for producing finished taxable goods. In the financial year 2014-15 they have sold goods within the state as well as interstate sales. The sales tax authority reverse the input tax credit proportionately towards cst sales.
my question is even reversal of itc even applicable to capital goods?
Clarification on ITC Reversal for Capital Goods Under Section 19(3) of TNVAT Act; 2015 Amendments Impact. A manufacturer of automobile components sought clarification on whether input tax credit (ITC) reversal on capital goods is applicable under the Tamil Nadu VAT Act when goods are sold both within the state and interstate. The sales tax authority reversed ITC proportionately for interstate sales. Respondents clarified that according to Section 19(3) of the TNVAT Act, ITC reversal is not required for taxable goods. Sections 19(5)(c) and 19(2)(v), cited by the authority, were omitted by a 2015 amendment. The manufacturer was advised to argue against the reversal based on these provisions, asserting that no reversal is necessary for capital goods used in manufacturing taxable goods. (AI Summary)
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