Can time limit be prescribed by law for availment of ITC

[CA Akash Phophalia]

In this article the author wishes to throw light on the legality of the provision restricting the time limit for availment of Input tax credit in the light of judicial pronouncement by Supreme Court of India in the case of ALD AUTOMOTIVE PVT. LTD. VERSUS THE COMMERCIAL TAX OFFICER NOW UPGRADED AS THE ASSISTANT COMMISSIONER (CT) & ORS. [2018 (10) TMI 814 - SUPREME COURT]

Facts

The assessed was engaged in business of leasing and fleet management of the motor vehicles however it could not claimed input tax credit of tax paid on purchases while filing its regular returns but could claimed only while filing belated revised returns.

Discussion

The statutory scheme delineated under the provisions neither can be said to be arbitrary nor can be said to violate the right guaranteed to the dealer under article 19(1)(g) of the Constitution of India.

The condition under which the concession and benefit is given is always to be strictly construed. In event, it is accepted that there is no time period for claiming input tax credit, the provision becomes too flexible and give rise to large number of difficulties including difficulty in verification of claim of input tax credit. Taxing statutes contain self-contained scheme of levy, computation and collection of tax. The time under which a return is to be filed for purpose of assessment of the tax cannot be dependent on the will of a dealer.

Decision

The input tax credit is in nature of benefit/concession extended to dealer under the statutory scheme. The concession can be received by the beneficiary only as per the scheme of the statute. It is a clear authority with proposition that input tax credit is admissible only as per conditions enumerated under section 19.

Discussions to this article

[KASTURI SETHI]

Yes, Sir. ITC is not a fundamental right of any assessee. It is a facility and concession. The taxer payers are required to avail ITC within the restrictions and parameters laid down by the legislature. Otherwise also this facility is being misused by some assessees. This facility has caused a huge loss to revenue by manipulations. Detection of fraudulently availed credit is a proof to this view. Govt. should levy minimum rate of tax instead of providing ITC facility. Since 1986, Modvat Credit was implemented, Govt has termed it a facility. Keeping in view frauds of Cenvat Credit detected in the past 34 years, this concession should be withdrawn by the Govt. and minimum rate of tax should be levied. Rate of tax can differ depending upon luxury items etc.

Under GST ITC facility has become more complicated.

[Alkesh Jani]

Sir,

The article is really good. The decision of Hon'ble SC is with regards to TN VAT Act. if the wording used in TN VAT Act and GST Act are discussed, it would be more helpful. Your effort is really appreciable.

Thanks

[KASTURI SETHI]

In GST taxable event is 'supply' and same was the position in VAT/Sale Tax. In VAT also taxable event was 'supply (sale)'. GST Acts are on the pattern of VAT/CST. So the judgement of Supreme Court is squarely applicable to GST Acts also.

[Alkesh Jani]

Sir,

I requested for the wording used in TN VAT and GST Act. In GST is there should be supply against consideration was the same in TN VAT. As sale can be with or without consideration or agreed upon (sale cane booked as either cash or on mercantile basis in the balance sheet) The decision of Hon'ble SC is with regards to Article 19(1)(g) of Constitution of India, which is correct as the denial of credit of tax/duty paid under existing Acts would amount to violation of Article 14 and 300A of Constitution of India. Unutilized credit has been recognized as vested right and property in terms of Article 300A of the Constitution of India. (HC Gujarat SLP of union Government was dismissed by SC).

[OmPrakash jain]

There is no SLP against Gujrat high court decision. decided by the supreme court as mentioned by Alkesh Jani. kidnly give me its citation. I am aware of SLP decided against P&H high court decision only.

2020 (3) TMI 188 - SC ORDER = 2019 (11) TMI 282 - PUNJAB AND HARYANA HIGH COURT

[Alkesh Jani]

Sir,

In case of Adfert Technologies Pvt. Ltd. Vs. Union of India, (P&H) = 2019 (11) TMI 282 - PUNJAB AND HARYANA HIGH COURT at Para 10 the decision of Gujarat High Court was relied upon and SLP 2020 (3) TMI 188 - SC ORDER of department was dismissed.

The SC has rightly held that ITC is not right under Article 19(1)(g) rather it is property under Article 300A

Thanks