TNVAT – Important Judgement on ITC Reversal for Inter-state Sales

The TNVAT (5th Amendment)Act 2013 – Act No 28 of 2013 requires reversal of Input tax credit @ 3% with regard to Inter-state Sales (CST Sales) . This was applicable from 11th Nov 2013 to 31st March 2015.

There was an ambiguity whether this reversal provision is applicable to manufacturers also or applicable only to the traders.

The High Court of Madras has recently delivered a judgement clarifying the position. As per judgement given by the Madras High Court on 06th Feb 2017 (W.P. No 7969 of 2014) in the case of M/s. Everest Industries Limited Vs The State of Tamilnadu, Commercial Taxes Department, it has been upheld that these provisions are not applicable to manufacturers and accordingly, manufacturers are not required to reverse the Input tax Credit (ITC) in respect of the Inter state sales effected by them for the period from 11th Nov 2013 to 31st March 2015.

The relevant judgement is attached herewith.

You can check the applicability / suitability of the same to individual cases and take necessary action with the jurisdictional Assessment Circle.

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