Is the Division Bench ruling in Sha Kantilal Jayantilal denying input tax credit on DEPB licences per incuriam?

No. The ruling in M/s.Sha Kantilal Jayantilal v. State of Tamil Nadu analysed the entire scheme of Section 19 of the TNVAT Act and the Supreme Court decisions on DEPB and REP licences before holding that DEPB licences do not qualify for input tax credit, so it is a binding precedent and not per incuriam.

Tamil Nadu Value Added Tax Act, 2006 — s.19 — Input Tax Credit — DEPB licence — Section 2(21) — meaning of goods — Tamil Nadu Value Added Tax Act, 2006 — s.19(1) — Input tax credit — restriction to goods specified in First Schedule — Held: Input tax credit under Section 19(1) of the TNVAT Act is available only where the tax paid or payable relates to taxable goods specified in the First Schedule, and a DEPB licence, though falling within the definition of goods under Section 2(21), is not itself listed in Part A, Part B or Part C of the First Schedule. (¶32) Tamil Nadu Value Added Tax Act, 2006 — s.19(2) — Input tax credit — DEPB licence excluded — no nexus with imported goods — Held further: A DEPB licence is distinct from the goods imported on its strength; only the goods actually imported using the licence, if taxed under the Act and listed in the First Schedule, can attract input tax credit under Section 19(1), and the duty paid on the DEPB licence itself does not qualify under Section 19(2). (¶33, 34) Precedent — binding effect of Division Bench ruling — per incuriam plea rejected — Held further: The Division Bench ruling in M/s.Sha Kantilal Jayantilal v. State of Tamil Nadu, which examined the scheme of Section 19 in detail and denied input tax credit on DEPB licences, is not per incuriam and remains binding on the question of entitlement to credit on DEPB purchases. (¶17-20, 22) Tamil Nadu Value Added Tax Act, 2006 — s.19 — Input tax credit — assessee not entitled — appeal dismissed — Held further: The assessee, having purchased DEPB licences and imported plastic granules sold as such, is not entitled to input tax credit on the tax borne on the DEPB licence for discharging output tax on sale of plastic granules, as DEPB licences are not goods specified in the First Schedule. Writ Appeals dismissed. (¶33, 23)

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