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2016 (4) TMI 1309 - MADRAS HIGH COURTValidity of assessment order - reversal of input tax credit - TNVAT Act - DEPB scheme - reversal of credit on the ground that the input availed for the goods sold without Form 'C' had to be reversed and that as per Section 19(4), the input tax credit had to be availed over and above 3%, on the transfer of goods to other State otherwise by way of sale. Can the Department deny the benefit of input tax credit for the duty paid by the petitioner on the purchase of DEPB licences, when such licences are considered to be "goods" within the meaning of Section 2 (21) and the tax paid on the purchase of such licences are considered as "input tax" under Section 2(24) and also when the charging provisions in Section 3(3) clearly entitle a registered dealer to such a benefit? - Held that: - From the scheme of Section 19(1), it appears that to become eligible for input tax credit, the following conditions should be satisfied by a person: (i) he should be a registered dealer; (ii) he must have paid or become obliged to pay a tax under this Act, to the seller on the purchase of taxable goods; and (iii) such taxable goods, on the purchase of which, he paid or became liable to pay tax under the Act, are also specified in the First Schedule. What the petitioner claims is an input tax credit on the amount of duty paid for the purchase of a DEPB licence. The claim of the petitioner is that a DEPB licence is also a "good" within the meaning of the expression "goods" under Section 2(21) - A look at Section 19(1), which provides for input tax credit shows that the entitlement for such credit is restricted only to the amount of tax paid or payable under the Act by the registered dealer to the seller on his purchases of taxable goods specified in the First Schedule. Therefore, unless the claim for input tax credit relates to the tax paid or payable on the purchase of taxable goods specified in the First Schedule, it is not possible to grant credit - DEPB licences do not even fall under any of the categories mentioned in Section 19(2). The case of the petitioner does not even fall under Sub-Section (3) or Sub-Section (4) of Section 19. Therefore, our answer to the first question of law would be that the Department was right in denying the benefit of input tax credit in respect of the duty paid by the petitioner on the purchase of DEPB licences, despite the fact that these licences constitute goods within the meaning of Section 2(21). DEPB licences do not even fall under any of the categories mentioned in Section 19(2). The case of the petitioner does not even fall under Sub-Section (3) or Sub-Section (4) of Section 19. Therefore, our answer to the first question of law would be that the Department was right in denying the benefit of input tax credit in respect of the duty paid by the petitioner on the purchase of DEPB licences, despite the fact that these licences constitute goods within the meaning of Section 2(21). Is the list mentioned in Clauses (i) to (vi) of Sub-Section (2) of Section 19 enumerative or exhaustive? - Held that: - entitlement, non-entitlement, etc., are covered with reference to specifics in the other Sub-Sections of Section 19. It does not mean that the very entitlement to credit could be traced only to Sub-Sections (2) to (4) and the non-entitlement could be traced to Sub-Sections (5) to (10). If a dealer satisfies the essential conditions stipulated in Sub-Section (1), he is entitled to credit. Therefore, we are of the considered view that Sub-Section (2) of Section 19 is enumerative and not exhaustive. Revision dismissed.
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