In Brief
TVS Motor Company and other assessees challenged Section 19(5)(c) of the Tamil Nadu VAT Act, which denies input tax credit (ITC) on inter-state sales to unregistered dealers lacking Form C. The Court held that ITC is a statutory concession, not a vested right, and conditions for claiming it may be prescribed by the legislature. The restriction on ITC for sales to unregistered dealers is constitutional as it rests on intelligible differentia and rationally protects revenue from tax evasion. However, the Court read down the provision to permit dealers making exclusive sales to other State Governments to claim ITC without Form C, treating State Governments as registered dealers in that limited context, since no tax evasion risk exists in government-to-government transactions.
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