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TMI Blog2017 (4) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribing a time limit albeit directory as we will shortly indicate is evident. It is to ensure that the goods returned by the job workers after processing are the same as the goods that were sent by the taxable person for further processing on job work basis. The importance of the identity of the goods is obvious for the ITC was claimed in respect of those goods. If the goods returned by the job workers after processing are different from and less in value, than the goods sent for processing on job work basis, the taxable person would in effect be availing the ITC of a higher value than it was entitled to. Prescribing a time limit only makes it easier for the Department to ascertain whether the goods returned by the job workers after processing are the same as the goods that were sent by the taxable persons to the job workers for processing/further processing. Rule 20 is, therefore, not ultra-vires Section 13(3) or otherwise invalid. The period of 90 days prescribed in Rule 20 is only directory and not mandatory - Once it is held that the period of 90 days is only directory, the authorities must not consider themselves bound by any rigid time-frame or any specific period. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Reliance Retail Ltd. The petitioner carries on its business of the manufacturer and sale of jewellery. It is admittedly entitled to Input Tax Credit (ITC) of the tax paid on purchase of gold used in the manufacture of jewellery. The petitioner filed returns for the assessment year 2008-09 in which it claimed ITC in respect of the gold purchased during that year and adjusted the admissible tax credit against its output tax liability and carried forward the balance tax credit to the next year. 3. The respondents by a notice dated 29.08.2012 called upon the petitioner to show cause why penalty and interest be not imposed upon it under sections 56 and 32 of the Act. The notice stated that ITC on purchases amounting to about ₹ 8.23 crores was liable to be rejected as it was not in accordance with Rule 20 read with Section 13(3) of the Act. The petitioner responded to this show cause notice in writing and at the personal hearing. By an assessment order dated 15.11.2012 the respondents imposed tax, penalty and interest aggregating to ₹ 25,80,541/-upon the petitioner. The First Appellate Authority-Deputy Excise and Taxation Commissioner (Appeals) dismissed the appeal by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her Rule 20 is directory or mandatory, it would be suffice to say that the delay in receiving the goods after job work for a few days, under special extra ordinary circumstances could be condoned, but in the present case goods were not received during the said financial year. Therefore, the ITC so claimed was bound to be reversed . The Tribunal also held that the appellant had not led cogent evidence evidencing that the same goods have been received back after the job work. This aspect need not detain us for evidently the petitioner had infact led evidence in this regard even before the Assessing Authority. As Mr.Goyal, the learned counsel appearing for the petitioner rightly pointed out neither the Assessing Authority nor the First Appellate Authority held that the petitioner had not led cogent evidence that the same goods had been received back after the job work. As we are inclined to accept Mr.Goyal s submission regarding the interpretation of Rule 20 read with Section 13(3), we will be remanding the matter to the Tribunal for a fresh decision onmerits. At the hearing on remand this aspect would have to be considered afresh. 5. This brings us back to Mr.Goyal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt out of the territory of India. 13(3) Where a taxable person sends any goods as such or after being partially processed for further processing on job work basis, he shall debit the ITC by four percent of the value of such goods. If such goods after processing are received back by such person, the ITC debited at the time of dispatch, shall be restored. Such person shall, however, be required to produce proper evidence in the shape of records, challans or memos or any other document evidencing receipt of such goods, whenever asked for. Section 26 26(1) Every taxable person shall make self assessment of tax and shall file return for a period, within such time and in such form as may be prescribed. (2) Every registered person shall make self assessment of tax and shall file return for a period, within such time and in such form as may be prescribed. (8) A taxable person or a registered person, whose registration is cancelled under section 24, shall file such final return, as may be prescribed, within thirty days from the date of cancellation by the Commissioner or the designated officer, as the case may be. Section 31 31(6) A casual trader, shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C in such manner and subject to such conditions as may be prescribed and that, therefore, the legislature was entitled to prescribe the time limit within which the goods sent for job work must be received back. 10. Section 13(1) deals with a taxable person s entitlement to ITC. It provides that a taxable person would be entitled to ITC subject to such conditions as may be prescribed. The legislature is, therefore, entitled to prescribe the conditions subject to which the taxable person shall be entitled to ITC. When a party fulfills the conditions, as may be prescribed, his entitlement to ITC is crystallized and vested in him. Sub section (3) of Section 13 does not curtail this entitlement to a taxable person to ITC. As far as the entitlement to ITC is concerned, the matter ends there. Sub section (3) deals with a different situation. It deals with a situation where the taxable person sends such goods for further processing on job work basis. In such a case the taxable person is bound to debit the ITC by 5% of the value of such goods. The ITC so debited is liable to be restored only if such goods after processing are received back by the taxable person. That the two sit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on transfer of goods for job work can be restored if the goods are received back after a period of ninety days which is against the rule 20 of PVAT Act, 2005. The order in so far as it is relevant reads as under:- Rule 20 regulates the provision of section 13(3) of the PVAT Act, 2005. This rule is directory in nature. No tax is evaded if the goods are received after 90 days of sending the same for job work and are accompanied by relevant documents i.e. challan, invoice or any such documents as may show the same goods are being received after job work by the taxable person. Therefore at the most it can be considered as violation of rule which can be penalized under section 60 of the PVAT Act, 2005. Therefore, orders may please be passed in such a way that the taxable person had not to forego the input tax credit available to him without selling the goods or converting same into tax free goods. .. I have heard the arguments of the counsel and perused the relevant provision of the Act and rules. If the taxable person is able to establish that the goods which were sent for job work and for which input tax credit was debited are received back after a period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the job workers during the same assessment year. That is not even contemplated by the Rule. 16. The Tribunal also observed that the goods were not returned within a few days. We see no reason to restrict the right to claim a reversal of the debit under sub section 3 only if the goods are returned within a few days. They must be returned within a reasonable time. 17. This brings us to an important aspect as to what is a reasonable time for the purpose of reversing the debit under sub section (3) of Section 13. Although what is reasonable time must depend on the facts of each case, in our view, the reasonable time must be assessed not in vacuum but keeping in mind the scheme and purpose of the Act itself. Keeping in view the purpose and the scheme of the Act, we are inclined to hold that it must be determined considering the possibility of ascertaining whether the goods returned by the job workers are the very goods that were sent by the taxable persons to the job workers. The ITC is availed of in respect of particular goods. The debit under section 13(3) is in respect of the goods that are sent to the job workers for further processing. The clear language of section 13(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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