2026-VIL-901-MAD
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VAT High Court Cases

Tamil Nadu VAT Act, 2006 - Eligibility to input tax credit on purchase of Duty Entitlement Passbook (DEPB) - Appellant purchased Duty Entitlement Passbook and imported plastic granules utilising DEPB and availed Input Tax Credit under Section 19 of TNVAT Act on tax borne while purchasing DEPB, claiming plastic granules were partly used in manufacturing plastic products and partly sold as granules for manufacturing other plastic products - Whether DEPB licenses are eligible for Input Tax Credit under Section 19(1) of TNVAT Act despite being goods as defined under Section 2(21) of the TNVAT Act - HELD – The DEPB licenses though constitute goods within purview of Section 2(21) of TNVAT Act, 2006 are not entitled to Input Tax Credit because they are not specified in First Schedule and do not fall under any category enumerated in Section 19(2), (3) or (4). DEPB licenses are distinct and different from goods that can be imported on strength of those licenses and confer only a right to import goods at concession. Only goods actually imported on strength of DEPB licenses may fall within Section 19(1) provided tax is payable or paid under TNVAT Act on those goods and those goods are listed in First Schedule - The Court relied upon the binding precedent of Division Bench decision in M/s. Sha Kantilal Jayantilal case which had appropriately decided scope of Input Tax Credit under Section 19 of TNVAT Act qua DEPB after considering intent of TNVAT Act - the appellant is not entitled for Input Tax Credit qua Duty Entitlement Passbook – The writ appeals are dismissed
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