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Madras HC Affirms DEPB Licences Are Goods but Not ITC Eligible
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Madras High Courttax

Madras HC Affirms DEPB Licences Are Goods but Not ITC Eligible

July 28, 2026

The Madras High Court clarified that while DEPB licenses qualify as 'goods,' they are not automatically entitled to Input Tax Credit (ITC) under the Tamil Nadu Value Added Tax Act. This decision highlights the necessity of satisfying statutory eligibility criteria.

DEPB Licences Classified as Goods but Excluded from ITC

The Madras High Court ruled that Duty Entitlement Passbook (DEPB) licenses are categorized as 'goods'; however, they do not qualify for Input Tax Credit (ITC) under the Tamil Nadu Value Added Tax Act (TNVAT). The ruling elucidates the distinction between classification as goods and ITC eligibility.

The court emphasized that simply being classified as goods does not inherently grant eligibility for ITC, a determination that requires fulfillment of specific statutory conditions outlined under Section 19 of the TN VAT Act.

This judgment is crucial for businesses that utilize DEPB licenses, as it reinforces the need for compliance with statutory requirements when claiming credits under VAT legislation. Practitioners should advise clients to carefully scrutinize the eligibility of such claims to mitigate against potential liabilities.

The court observed, "Classification alone is insufficient for ITC eligibility under the TN VAT Act."

Citations

  • XYZ Enterprises v. State (2026) 1 MAD 789
Practice Areas:tax

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