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TMI Blog2011 (9) TMI 492X X X X Extracts X X X X X X X X Extracts X X X X ..... Kumar, Ajay Kumar Mittal, JJ. K.L. Goyal, Sr. Adv., with Sandeep Goyal, Rajiv Agnihotri, Vijay Pal and Avneesh Jhingan for the Petitioner Vinod S. Bhardwaj, Additional Adv., General, Haryana, for the Respondent JUDGMENT Ajay Kumar Mittal J.- By this order a bunch of twenty six writ petitions, viz., Civil Writ Petition Nos. 6573, 6888, 6913, 6932, 6933, 7015, 7031 and 7107 of 2007, 9350. and 18345 of 2008, 4259 and 11581 of 2009, 2296, 2297, 3340, 8275 and 23400 of 2010, 9633, 10007, 11712, 11713, 44142, 14150, 14220, 14224 and 14248 of 2011 is being disposed of as questions of law involved are common in all these petitions. The common issue raised in these petitions is with regard to denial of input-tax credit by the Assessing Authority on the ground that the dealers from whom the petitioners have purchased goods, have not deposited full tax in the State treasury. The petitioners have not been held entitled for deduction of input tax credit in terms of the provisions of section 8 of the Haryana Value Added Tax Act, 2003 (for brevity, the Act ). The facts have been extracted from Civil Writ Petition No. 6573 of 2007. The prayer made in these pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be allowed the necessary input-tax credit. The said selling dealers discharged their tax liability and deposited the tax payable by them by deducting the input-tax credit available to them. The case of the petitioner is that when a registered dealer makes sales and issues tax invoice in terms of section 8 of the Act to the purchasing dealer, the latter is entitled to claim input-tax credit. The person making purchases is, thus, required to ensure that the dealer selling the goods is a registered dealer and he has issued the tax invoice as per the provisions of the Act. As per the mandate of section 8(3) of the Act, in the eventuality of a claim of input-tax credit in respect of goods sold to a dealer being called into question, the purchasing dealer may be called upon to produce before the authority conducting the proceedings, a certificate to be issued by the selling dealer. Such claim can only be allowed if the assessing authority is satisfied about the contents of the certificate. It has further been claimed that the selling dealers have also discharged their tax liability and deposited the tax payable in their hands by deducting the input tax credit available to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to the vires of section 8(3) of the Act read with rule 20 of the Rules being ultra vires the Constitution of India and, in particular, article 14 thereof, as according to the petitioner the conditions imposed by way of section 8(3) of the Act read with rule ibid. are arbitrary, unreasonable and not sustainable in law. The respondents in the joint written statement vehemently Opposed the prayer of the petitioner. It was stated that section 8(3) of the Act was perfectly valid and did not violate articles 14 and 19(1)(g) of the Constitution of India. It was specifically denied that the said provisions conferred any excessive power upon the State Government to frame the Rules. It further states that vires of the provisions of the above section 8(3) of the Act and rules 20(1) and 20(4) of the Rules framed under the Act have been challenged by the petitioner to by-pass statutory remedies available to it which could legally be done by availing of the remedy of appeal against the order of assessment as provided under section 33 of the Act. It was further asserted that where a statute provided remedies against the orders of the assessment, the court should refrain from entertaining w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Support was also drawn from the following observations of the honourable Supreme Court in State of Punjab v. Atul Fasteners Ltd. [2007] 7 VST 278 (SC) ; [2007] 4 SCC 471 (page 282 in 7 VST): . . . The question of paying interest will also not arise because sales tax is an indirect tax. It is collected by the assessee from its customers. The incidence of tax falls not on the assessee but on its customers. The assessee collects the sales tax from its customers as a part of sale price. It forms part of his turnover for the stipulated period. Under the Scheme the liability to pay tax by the assessee accrues each year but the payment of tax is deferred. On expiry of seven years the assessee has to pay back the tax collected by it during seven years. It is a sort of a loan given by the State to the assessee so that the assessee can use the tax amount to meet its working capital requirement. As stated the liability of the respondent-assessee accrued each year, therefore, there is no question of the Department paying interest at 18 per cent on the tax collected by the assessee during the aforestated period. The tax was collected by the assessee from its customers as an agent for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reat detail the stage at which and the time when the excise duty is to be paid by a party. If the literal construction that the amount should have been actually paid is accepted then in case like the present one on hand, when no duty has been levied, the Department will not Be able to take any action under rule 10. Rule 10A cannot apply when a short-levy is made through error or mis-construction on the part of an officer, as such a case is specifically provided by rule 10. Therefore, in our opinion, the proper interpretation to be placed on the expression 'paid' is 'ought to have been paid'. Such an interpretation has been placed on the expression 'paid' occurring in certain other enactments as in Gursahai Saigal v. Commissioner of Income-tax, Punjab [1963] 48 ITR 1 (SC); [1963] 3 SCR 893 ; AIR 1963 SC 1062 and in Allen v. Thorn Electrical Industries Ltd. [1968] 1 QB 487. . . According to the learned counsel, the sub-rules (1) and (4) of rule 20 of the Rules, and form VAT C4 are arbitrary prescribing thereunder requiring the purchasing dealer to establish that the contents thereof are true. Meaning thereby, for the assessee to establish that the regist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax and furnishing of a security. This can also be done even during the currency of the registration certificate if it was deemed necessary to do so for proper realisation of the tax payable. The Act further empowers the assessing authority to direct the dealer to furnish additional security in case the security already furnished was not sufficient for the purpose of securing proper deposit of tax. Once all such requirements and conditions are fulfilled, certificate of registration is issued to the applicant who is also authorized for collection of tax from the purchasers. Chapter VIII of the Act deals with offences and penalties in different eventualities enumerated therein. If, however, the person who does not get himself registered or is not authorized to collect tax and still collects the tax, he would be liable to pay penalty as provided under section 39 of the Act. The dealer holding a valid certificate of registration who is authorized to collect tax would be required to pay tax in accordance with the provisions of the Act and the Rules framed thereunder. He is also obliged to furnish returns from time to time in terms of section 14 of the Act. He is also required to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 20(1), (2) and (3)) Certificate (True copy to be retained by the selling VAT dealer) Certificate to be issued by a selling VAT dealer to a purchasing VAT dealer in respect of taxable goods for claim of input tax under sub-section (3) of section 8. Certified that I/We.............................(Name and complete address of the selling dealer) having Taxpayers Identification Number (TIN).................... registered under the Haryana Value Added Tax Act, 2003, in District................; (i) have paid the full amount of tax under the Haryana Value Added Tax Act, 2003 vide TR No.....................date............/(ii) have adjusted the input tax paid to M/s..................Name and complete address of the selling dealer) holding TIN............on the goods sold to M/s.................(Name and complete address of the purchasing dealer) holding TIN............as per tax invoice (s) stated below:- Sl. No. Description of goods sold Tax Invoice No. Date Taxable amount Amount of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purchasing dealer shall stand abated. This shall entitle the purchasing dealer to seek refund of the tax collected from him within three years of finalization of his assessment. In order to avoid declaration of unconstitutionality, the courts have adopted such principles of interpretation which would result in sustaining the statute. The Constitution Bench of the apex court in the State of Madhya Pradesh v. Chhotabhai Jethabhai Patel and Co. AIR 1972 SC 971 in para 10 had held as under: It is settled law that where two constructions of a legislative provision are possible one consistent with the constitutionality of the measure impugned and the other offending the same, the court will lean towards the first if it be compatible with the object and purpose of the impugned Act, the mischief which it sought to prevent ascertaining from relevant factors its true scope and meaning. Further, another Constitution Bench of the Supreme Court in Sunil Batra v. Delhi Administration AIR 1978 SC 1675, in para 38, had observed as under: Constitutional deference to the Legislature and the democratic assumption that people's representatives express the wisdom of the community ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected with any such event or an act. Law cannot envisage an almost impossible eventuality. The onus upon the assessee gets discharged on production of form VAT C4 which is required to be genuine and not thereafter to substantiate its truthfulness by running from pillar to post to collect the material for its authenticity. In the absence of any mala fide intention, connivance or wrongful association of the assessee with the selling dealer, or any dealer earlier thereto, no liability can be imposed on the principle of vicarious liability. Law cannot put such onerous responsibility on the assessee otherwise, it would be difficult to hold the law to be valid on the touchstone of articles 14 and 19 of the Constitution of India. The rule of interpretation requires that such meaning should be assigned to the provision which would make the provision of the Act effective and advance the purpose of the Act. This should be done wherever possible without doing any violence to the language of the provision. A statute has to be read in such a manner so as to do justice to the parties. If it is held that the person who does not deposit or is required to deposit the tax would be put in an adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pretation which will make the provisions of the Act effective and implement the purpose of the Act should be preferred when possible without doing violence to the language. The genuineness of the certificate and declaration may be examined by the taxing authority but not the correctness or the truthfulness of the statements. The sales tax authorities can examine whether certificate is 'farzi' or not, or if there was any collusion on the part of selling dealer-but not beyond-i.e., how the purchasing dealer has dealt with the goods. If in an appropriate case it could be established that the certificates were 'farzi' or that there was collusion between the purchasing dealer and the selling dealer, different considerations would arise. But in the facts of this case as noticed before, the facts have been found to the contrary by the appellate authority though that was the finding of the Sales Tax Officer. The question has been reframed for that purpose, i.e., to bring out the real controversy in the background of the facts found in this case. Madras High Court in Govindan and Co.'s case [1975] 35 STC 50 (Mad) was seized of the matter relating to liability of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect to section 8. Clause (iv) provides that the dealer claiming the set-off shall, at the time of assessment, produce copies of the relevant bills or cash memoranda obtained from the selling registered dealer in support of the fact that the raw material or incidental goods purchased by him have been taxed at full rate under sub-section (1) of section 6 at the hands of the selling registered dealer. Therefore, by virtue of clause (iv) of rule 20C, once the purchasing dealer produced the bill of registered dealer then it shall be presumed that the goods have suffered the incidence of tax. If there is any doubt about it then instead of driving the assessee from pillar to post, he collects the evidence for this. The assessing authority in the event of any suspicion, should call upon that whether the goods have suffered the tax or not. Once the law defines the registered dealer and tax-paid goods, the assessee, i.e., purchasing dealer, produced the bill issued by the registered dealer then his burden is discharged and he cannot be held responsible or he cannot be forced to go around from pillar to post to collect the material in order to get the rebate. Rather, it should be on the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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