9911796707
TMI Blog2008 (7) TMI 890X X X X Extracts X X X X X X X X Extracts X X X X ..... lf of the applicant requested the registering authority (STO/KR) to issue registration certificate making it effective from the date of incurring the liability to pay tax, that is, with effect from April 29, 2005 so that he could avail of the benefit of input-tax credit from April 29, 2005. It is not apparent from the record whether such prayer was actually made or not. The fact remains that the registration certificate was made effective from March 29, 2006. Observation made by STO/KR in his order dated March 29, 2006 is as below: Liability: The dealer is liable under VAT Act from April 29, 2005 as taxable quantum of Rs. 5,00,000 exceeded on April 28, 2005. Validity of RC: From March 29, 2006 (disposal date). On going through the registration certificate sent to the applicant, it appeared to him that his prayer for making the registration certificate effective from the date of incurring liability to pay tax had not been entertained. So being aggrieved by the order of STO/KR, the applicant preferred a revision petition before the Assistant Commissioner of Sales Tax, Berhampore Circle (in short, ACST/BRC ) with the prayer to make the registration certificate effective fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nial of the retrospective effect of registration certificate as prayed for by the applicant made him ineligible for availing of the benefit of input-tax credit as only registered dealers are entitled to such benefits as per provision of the VAT Act and Rules framed thereunder. Such denial, as submitted by the learned Senior Advocate, is against the declared avowed objects of the VAT Act and also frustrates the very purpose of framing the VAT Act. The learned Senior Advocate contended that the applicant incurred liability to pay tax under the VAT Act. It was admittedly obligatory on his part as per provision of section 23 to apply for registration under section 24 of the VAT Act. Sub-section (2) of section 23 also requires that a dealer, incurring liability to pay tax under the VAT Act, shall make such application within ninety days from the date of incurring liability (subsequently reduced to thirty days with effect from August 1, 2006). Section 24 requires that every dealer liable to pay tax shall make an application for registration in the prescribed manner to the prescribed authority, and such application shall be accompanied by a declaration in the prescribed form duly fille ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant submitted the application for registration late. But there is no restriction in giving retrospective effect of the registration certificate. He argued that the registering authority was under obligation to dispose of the application within twenty one days (as prevailed at that time) from the date of filing of such application and if such application had been filed within ninety days from the date of incurring the liability, registration certificate was supposed to be made effective from the date of incurring the liability. It, therefore, impliedly means, as per submission of the learned Senior Advocate, that there is no bar in making the registration certificate effective retrospectively. It was further submitted by the learned Senior Advocate that for such delayed submission, the authorities concerned are empowered to impose penalty under subsection (4) of section 23 but for such delayed submission the registration certificate cannot be made effective from the date of order which would make the applicant ineligible for availing of the input-tax credit from the date of incurring the liability to pay tax. This is against the intention of the Legislature as, because of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be under obligation to grant registration certificate to the applicant within such period, in such manner and subject to such conditions as prescribed under rule 6 of the VAT Rules. Sub-rule (2) of rule 6 has imposed a restriction only to the extent that if it is found that the application had been filed beyond ninety days vide provision under section 23(2) of the VAT Act, the registration certificate would be made effective from the date of passing the order. Similar provision was there under the West Bengal Sales Tax Act, 1994 (in short, the 1994 Act ). In terms of the provision of sub-section (6) of section 26 of the 1994 Act, the registration certificate of a dealer was supposed to be made effective from the date of incurring liability if the applicant-dealer filed application for registration within thirty days from the date of incurring the liability. In all other cases, date of effect was supposed to be the date of order. Unlike the VAT Act for getting the registration under the West Bengal Sales Tax Act, 1994, a dealer could apply for registration only when the gross turnover of sales during a year exceeded Rs. 25,000 but there is no such restriction under the VAT A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yond the rule-making power of the State as conferred by section 114 of the VAT Act; (2) whether in the event of payment of penalty as per provision of section 23(4) of the VAT Act for submission of the application for registration beyond the prescribed time frame or showing reasonable cause for such delayed submission such application should be treated as an application filed under section 23(2) of the VAT Act or not and in such cases, what would be the effect of the registration certificate and (3) whether in the given facts and circumstances of this case, the applicant was entitled to get the registration certificate effective from the date of accrual of liability so that he could have enjoyed the benefit of input tax credit in respect of purchases made from the date of accrual of liability to the date prior to the date of granting the registration. Before answering these questions, we feel that it would be better to get an idea about the input tax, output tax and input tax credit/rebate. Definitions as given in section 2(18), 2(26) and 2(19) of the VAT Act are reproduced below: 2(18) 'Input tax', in relation to a tax period on or after coming into force of this Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the concept of input tax credit or rebate from the tax paid or payable by registered dealer while purchasing goods in West Bengal (input tax) against the tax payable on the sales effected by him in West Bengal (output tax). The VAT is based on the value addition to the goods and the related VAT liability (net tax) of the dealer is calculated by deducting input-tax credit from the tax collected on sales during the period . It is, thus, apparent that for obtaining input-tax credit, the transaction must be made in between two registered dealers. The emphasis on sales being made between two registered dealers has been given to weed out unregistered dealers as there is every possibility of tax paid at the time of purchase/sales remaining unaccounted if such transaction takes place between an unregistered dealer and a registered dealer. In this case, the applicant-dealer was aware that he was selling a taxable item (kerosene oil). He was also aware that he incurred the liability to pay tax with effect from April 29, 2005 but did not care to apply for registration within ninety days as specified in section 23(2) of the VAT Act. He was aware that he was purchasing the goods as an unre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority has imposed certain restrictions. Input-tax credit is an incentive. It helps the registered dealer to sell his product at a competitive price. When certain benefits/ incentives are allowed, it is incumbent upon such beneficiary to abide by the conditions and restrictions imposed under relevant Act and Rules framed thereunder. The problem as raised in this application is the alleged conflict between the provision of section 23(4) of the VAT Act and rule 6(2) of the VAT Rules. Section 23(4) of the VAT Act provides that if a dealer files an application for registration beyond the period prescribed under section 23(2) of the VAT Act without having any reasonable cause, the Commissioner may, by an order in writing after giving the dealer an opportunity of being heard, impose upon such dealers by way of penalty a sum not less than five hundred rupees and not exceeding one thousand rupees for each month of default, in such manner as may be prescribed. Such power has been delegated to Deputy Commissioner, Assistant Commissioner and Sales Tax Officer and prescriptions have been made under rule 8 of the VAT Rules. It, therefore, appears that there must be a reasonable cause fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticular case, the applicant was entitled to get the registration certificate effective from the date of accrual of liability. We have already discussed that in this case, the applicant was aware that being a seller of taxable item, he incurred liability to pay tax on April 28, 2005 but could not find time to file the application for registration before March 21, 2006. No penalty for such delayed submission appears to have been imposed on the applicant, neither was he prosecuted against. Records produced do not show that there was any written explanation showing cause for such delayed submission of the application for registration. He is only to blame himself for the consequences followed. We are of the view that in the given facts and circumstances of the case, STO/KR did not make any mistake in making the registration certificate effective from the date of order. The application fails on contest. No order as to costs. PRADIPTA RAY (Chairman). I have read the judgment written by my learned brother. I agree with the conclusions reached by him. However, I like to give my own reasons in support of the views expressed in this judgment. The petitioner in this application h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal explaining the scheme of VAT and the features of the VAT Act it has been stated that the essence of VAT is in providing set off through the concept input tax credit or rebate for the tax paid or payable by registered dealer while purchasing goods in West Bengal (input tax) against tax payable on the sales effected by him in West Bengal (output tax). The petitioner has not challenged any provision of the VAT Act, 2003 as unconstitutional or ultra vires. He has merely questioned the legality and validity of sub-rule (2) of rule 6 of the VAT Rules on the grounds as already stated hereinbefore. When a court of law is required to determine the object and purpose of enacting a particular statute it takes into account the provisions of the Act in their entirety and the objects and purposes as reflected by the provisions of the concerned statute. Courts cannot ordinarily take into account any report and any committee or any statement or declaration outside the Legislature for the purpose of determining the object and purpose of enacting the statute. Only in cases where the meaning is not clear the courts may take external aid like objects and reasons appended to the concerned s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if, they are not registered or they have not taken any step for getting themselves registered in accordance with the provisions of the Act and the Rules. For the purpose of enabling unregistered dealers to get themselves registered section 24 of the Act has provided for submission of application for registration in the prescribed manner to the prescribed authority. Section 23(2) of the Act has prescribed the time-limit within which application for registration is required to be submitted. Under section 23(2) an application for registration is to be submitted within thirty days (it was ninety days up to July 31, 2006) from the date of incurring liability to pay tax under the provisions of the VAT Act. In case a dealer applies for registration within time prescribed by sub-section (2) of section 23 but his application has not been disposed of, he can carry on the business under first proviso to section 23(1). Definition of input tax as contained in section 2(18) of the VAT Act also makes it clear that only the amount of tax paid or payable by a registered dealer or a dealer who has to make an application within the prescribed time for registration qualifies as input tax for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding dealer from being prosecuted for committing criminal offence. (vide section 93(14) of the VAT Act) Compulsive registration of dealers liable to pay VAT is not unique in the West Bengal Act. VAT Acts enacted by almost all major States contain similar provision for compulsory registration within prescribed time-limit and conferring the benefit of input tax credit only on registered dealers or dealers applying for registration within the prescribed time-limit. It is not possible to accept the submission of Mr. Ghosh that the object of the VAT Act is to give input-tax credit to all dealers. Only dealers who are already registered on the date of incurring liability to pay VAT or dealers who apply for within the prescribed time are entitled to get the benefit of input-tax credit from the date of incurring tax liability. All other dealers, who applied or apply for registration after the prescribed periods are entitled to benefit of input-tax credit from the date of order granting registration. The VAT Act has expressly and clearly made distinction between those who applied or apply for registration within the prescribed time and those who failed or fail to apply for registr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout any reasonable cause, to make an application for registration within the time allowed under sub-section (2), the Commissioner may, by an order in writing, after giving the dealer an opportunity of being heard, impose upon such dealer by way of penalty a sum not less than five hundred rupees and not exceeding one thousand rupees for each month of default, in such manner as may be prescribed. Any dealer can apply for registration at any point of time and if he is eligible he gets registration either from the date of application or from the date of the order for registration. Section 23(2) has prescribed a time-limit for the purpose of allowing the benefit of input-tax credit to the applicants within the said time-limit. In other words, a dealer gets 30 days' (previously 90 days') time from the date of incurring liability to pay tax to apply for registration and if he does so and his application is allowed he gets registration from the date of incurring liability to pay tax. Because of such retrospective registration he gets the benefit of input-tax credit which is available to registered dealers only. This is a special benefit allowed to dealers because it takes so ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
