2013 (4) TMI 169 - HC - VAT and Sales Tax

Input tax credit claimed - Petitioner is a dealer under the KVAT Act commenced their business with effect from 8-5-2006 and applied for registration on 28-12-2006 granting input tax credit only for the period subsequent to 28-12-2006 - Held that - Dealers who had voluntarily applied for registration under the Act for the period from 15-12-2007 to 31-3-2008 would be entitled to claim input tax credit on their purchasers covered under bills/invoices of registered dealers within the State, from the date of commencement of their business. It is evident that this section applies only to dealers who were not registered under the Act and had voluntarily applied for registration during the period specified in the Section. Thus in so far as the petitioner is concerned, they got themselves registration with effect from 28-12-2006. Therefore, when Section 15 B was introduced by the Kerala Finance Act, 2008 with effect from 1-4-2008, petitioner was registered dealer and hence is not one similarly situated to dealers who are eligible for the benefit of the section. Consequently, the petitioner cannot plead that they are similarly situated dealers and cannot complaint of discrimination or violation of Article 14 of the Constitution. Thus case of discrimination canvassed by the petitioner has to be rejected.

Summary

Issues:
1. Entitlement to input tax credit for the period prior to registration under the KVAT Act.
2. Validity of Section 15 B of the KVAT Act and alleged discrimination.
3. Legitimacy of cut-off dates specified in legislation regarding input tax credit.

Analysis:
1. The petitioner, a dealer under the KVAT Act, sought input tax credit for the period before their registration on 28-12-2006. The petitioner contended that they should benefit from Section 15 B of the KVAT Act. However, Section 15 B applies to unregistered dealers voluntarily applying for registration between 15-12-2007 to 31-3-2008. As the petitioner was already registered before the introduction of Section 15 B, they are not similarly situated to unregistered dealers eligible for the section's benefits. Consequently, the petitioner's claim for input tax credit for the pre-registration period was rejected, as they cannot allege discrimination under Article 14 of the Constitution.

2. Section 15 B of the KVAT Act provides benefits to unregistered dealers voluntarily applying for registration during a specified period. The court emphasized that when beneficial provisions are introduced in a statute, the legislature can set cut-off dates for their operation. The court noted that unless it is proven that the specified cut-off date is arbitrary, the judiciary should not interfere with such legislative decisions. In this case, the petitioner failed to substantiate their claim that the cut-off date in Section 15 B was arbitrary. The court also highlighted that the legislature did not intend for the provision to reopen settled issues under the KVAT Act. Consequently, the court found no merit in the petitioner's arguments and dismissed the writ petition.

3. The judgment underscores the importance of legislative discretion in setting cut-off dates for the operation of beneficial provisions. It clarifies that unless arbitrariness is demonstrated, the judiciary should not interfere with such legislative decisions. Additionally, the judgment emphasizes that the introduction of new provisions should not lead to the reopening of settled matters under existing laws. The court's analysis provides a comprehensive understanding of the legal principles governing the interpretation and application of statutory provisions, ensuring clarity and consistency in legal proceedings related to taxation laws.