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TMI Blog2018 (10) TMI 814X X X X Extracts X X X X X X X X Extracts X X X X ..... s on sale of goods. Sub section (3) is the part of the same scheme where tax payable under sub section (2) by registered dealer shall be reduced, in the manner prescribed, to the extent of tax paid on his purchase of goods - this Court noticed the contradiction in phraseology of Section 8 sub-Section (4) and Section 13 sub section (4) and held that non mention of time in Section 8(4) is for clearly denying the rule making power to make any rule pertaining to the time. The input 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. The judgment on which learned Advocate General of Tamil Nadu had placed much reliance i.e. Jayam and Company versus Assistant Commissioner and Another, [2016 (9) TMI 408 - SUPREME COURT], is the judgment which is relevant for present case - In the above case, this Court had occasion to interpret provisions of Tamil Nadu Value Added Tax Act, 2016, Section 19(20), Section 3(2) and Section 3(3). Validity of Section 19(20) was under challenge in the said case. The interpretation put up by this Court on Section 3(2) and 3(3) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitting the report of the public analyst was held to be directory for the reason that on the negligence of those to whom public duties are entrusted no one should suffer. Such interpretation should not be put which may promote the public mischief and cause public inconvenience and defeat the main object of the statute - The interpretation of the Rule 9(j) in the above case was on its own statutory scheme and has no bearing in the present case. Whether Assessing Authorities could have extended the period for claiming Input Tax Credit beyond the period as provided in Section 19(11) of Tamil Nadu VAT Act, 2006? - Held that:- The expression shall occurring in Section 19(11) is mandatory whose compliance is necessary for claiming Input Tax Credit - The statute having not given any indication for extension of time which is a condition for claiming Input Tax Credit, the submission that period could have been extended by assessing authority is unfounded and cannot be accepted. Appeal dismissed. - CIVIL APPEAL NOS. 10412-10413 OF 2018 (ARISING OUT OF SLP(C)NOS.36112-36113 OF 2013) - - - Dated:- 12-10-2018 - A.K. SIKRI AND ASHOK BHUSHAN JJ. For Petitioner(s) Mr. Sanand Ram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 @ SLP(C)NO.30673 OF 2015, Civil Appeal Nos. 10545 10548 of 2018 @ SLP(C)NOS. 26924 26927 OF 2015, Civil Appeal No. 10550 of 2018 @ SLP(C) NO. 14350 OF 2016, Civil Appeal Nos. 10551 10553 of 2018 @ SLP(C)NOS.22612 22614 OF 2016, Civil Appeal Nos. 10554 10558 of 2018 @ SLP(C)NOS.487 491 OF 2017, Civil Appeal No. 10559 of 2018 @ SLP(C)NO.33303 OF 2017. J U D G M E N T ASHOK BHUSHAN, J. Delay condoned. Leave granted. 2. All these appeals have been filed against common judgment dated 17.07.2013 of Madras High Court dismissing a bunch of writ petitions filed by the appellants. The main challenge in the writ petitions was provision of Section 19(11) of Tamil Nadu Value Added Tax Act, 2006 (hereinafter referred to as the Tamil Nadu VAT Act,2006 ). For appreciating the issues raised in this batch of appeals it is sufficient to notice the facts in Civil Appeal Nos. 10412 10413 of 2018 arising out of SLP(C)Nos. 36112 36113 of 2013(ALD Automotive Pvt. Ltd. vs. The Commercial Tax Officer and others). 3. The appellant Company is a registered dealer under Tamil Nadu VAT Act, 2006. The appellant Company is engaged in the business of leasing and fleet management of the moto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8137 of 2009, the High Court set aside the order confirming the proposal to disallow the Input Tax Credit and directed the Commercial Tax Officer to pass appropriate orders in accordance with law. Notice was issued proposing to reject the appellant's revised returns which was objected. In the objections, the appellant stated that the delay in getting the original tax invoices was only due to the fact that the Original Tax Invoices were received belatedly from the registered dealers. Notice dated 01.06.2009 was issued confirming the notice and rejecting the appellant's objections by treating the entire amount of Input Tax Credit of ₹ 1,28,36,822/ as not admissible for the assessment year 2008 2009 taking the view that it was a belated claim. The appellant filed writ petition. In the writ petition following prayers were made: For the reasons stated above, it is prayed that this Hon'ble Court may be pleased to issue a Writ of Declaration or any other appropriate Writ, order or direction in the nature of Writ, declaring Section 19(11) of the Act read with Rule 10(2) of the Tamil Nadu Value Added Tax Rules, 2007 as ultra vires the provisions of the Act, arbitra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit and proper in the circumstances of this case and render justice. 29. It is therefore just and necessary that this Hon'ble Court may be pleased to issue a Writ of Certiorari or and other appropriate writ order or direction under Article 226 of the Constitution of India quashing the proceedings of the First Respondent herein in his TIN 33251300045/06 07 dated 11.04.2011 and to quash the same or pass such further or other orders as may deem fit and proper in the circumstance of the case and render justice. 7. Similarly, large number of writ petitions were filed in Madras High Court by other writ petitioners where Input Tax Credit was disallowed on account of non compliance of Section 19(11) of the Tamil Nadu VAT Act, 2006. All the writ petitions were decided by common judgment dated 17.07.2013. The Division Bench of the Madras High Court by the impugned judgment upheld the validity of Section 19(11) of the Tamil Nadu VAT Act, 2006 and upheld the orders passed by the respondents denying the benefit of Input Tax Credit. The High Court further, in the cases where final orders of assessment have been challenged, granted liberty to the appellants to prefer statutory appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06 requiring claim to be made within 90 days from the date of purchase or before the end of the financial year whichever is later. 11. It is submitted that Section 19(11) makes the enforcement of the substantive right unreasonable as well as arbitrary and violative of Article 14 and 19(1)(g) of the Constitution. Such right under Section 3(3) of the Act cannot be taken away by Section 19(11) which is only a procedural provision. Section 19(11) is inconsistent with the charging Section 3(3) of the Act. In any view of the matter, Section 19(11) is only a directory provision and cannot be held to be mandatory. Sections 3(3) and 19(11) being part of the same scheme that is to allow Input Tax Credit, Section 19(11) has to be construed harmoniously so as not to take away the right which has been given under Section 3(3). Statutory benefit under Section 3(3) is mandatory being part of charging Section. Section 3 which entitles claim of Input Tax Credit does not contain any limitation hence such right could not be hedged by any limitation, as contained in Section 19(11). 12. Learned Advocate General of the State of Tamil Nadu refuting the submissions of learned counsel for the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Levy of Taxes on sales of goods. (1) (a) Every dealer, other than a casual trader or agent of a non resident dealer, whose total turnover for a year is not less than rupees five lakhs and every casual trader or agent of a non resident dealer, whatever be his total turnover, for a year shall pay tax under this Act. 1(b) Notwithstanding anything contained in clause (a), every dealer, other than a casual trader or agent of a non resident dealer, whose total turnover in respect of purchase and sale within the State, for a year, is not less than rupees ten lakhs, shall pay tax under this Act. (1 A) Notwithstanding anything contained in this Act, for the purpose of assessment of tax under this Act, for the period from the 1st day of January 2007 to the 31st day of March 2007 in respect of dealers referred to in clause (a) or (b) of sub section (1) the total turnover for the period from the 1st day of April 2006 to the 31st day of December 2006 under the repealed Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act 1 of 1959) and the total turnover for the period from the 1st day of January 2007 to the 31st day of March 2007 under this Act, shall be the total turnov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Another rule of equal importance is that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion etc. It has been said by no less a person than Holmes, J., that the legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrinaire or straitjacket formula and this is particularly true in case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature. The court should feel more inclined to give judicial deference to legislative judgment in the field of economic regulation than in other areas where fundamental human rights are involved. Nowhere has this admonition been more felicitously expressed than in Morey v. Doud7 where Frankfurter, J., said in his inimitable style: In the utilities, tax and economic regulation cases, there are good reasons for judicial self restraint if not judicial deference to legislative judgment. The legislature after all has the affirmative responsib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax on sugarcane. Section 12. Levy of purchase tax. 20. Section 13 deals with reduction of tax at source in works contract, Section 14 deals with reversal of tax credit, Section 15 deals with exempted sale, Section 16 deals with stages of levy of taxes in respect of imported and exported goods; Section 17 deals with burden of proof; Section 18 deals with zero rating; and Section 19 deals with Input Tax Credit. 21. As noted above, Section 3, sub Section (3) provided that tax payable under sub Section (2) by registered dealer shall be reduced, in the manner prescribed, to the extent of tax paid on his purchase of goods specified in Part B and Part C of the First Schedule inside the State, who is registered dealer who sold the goods to him. The provision of Section 3 sub Section (3) is a provision which entitled a registered dealer to obtain a tax credit which has been explained in Section 19. The submission that Section 19 is inconsistent to Section 3(3) is wholly misconceived. What is envisaged in Section 3 sub Section (3) is amplified and explained in Section 19. The reduction in the tax as contemplated in Section 3 sub section (3) has to be in manner and as prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e evidencing the amount of input tax. (b) if the original tax invoice is lost, input tax credit shall be allowed only on the basis of duplicate or carbon copy of such tax invoice obtained from the selling dealer subject to such conditions as may be prescribed. 22. Can it be said that above provisions are inconsistent to Section 3(3) which permits reduction of tax of registered dealer, answer, obviously is No. When the input tax credit is to be allowed and when it is to be disallowed is elaborated in Section 19 which is self contained scheme and benefit under Section 3 sub Section (3) can be claimed only when conditions as enumerated in Section 19 are fulfilled. 23. Now, we need to refer to certain judgments of this Court which has been relied by learned Counsel for the appellant. The first judgment which needs to be noticed is the judgment of this Court in AIR (1967) SC 1823, Sales Tax officer, Ponkunnam and another versus K.I. Abraham. This Court had occasion to consider Section 8 of the Central Sales Tax Act, 1956 and Rule 6 of the Central Sales Tax (Kerala Rules, 1957). Section 8 sub Section (1) provided that for dealer who in the course of inter State trade or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n paragraph 6 of the judgment this Court interpreting the phrase in the prescribed manner occurring in Section 8(4) and held that it does not take in the time element. This Court also notice the provision of Section 13(4) which provision empowers the State to make rules for the time within which and the manner in which the authorities to whom any change in the ownership of any business shall be furnished. It is useful to extract relevant observations made in paragraph 6 of the judgment: 6 But the phrase in the prescribed manner in Section 8(4) does not take in the time element. In other words, the section does not authorise the rule making authority to prescribe a time limit within which the declaration is to be filed by the registered dealer. The view that we have taken is supported by the language of Section 13(4)(g) of the Act which states that the State Government may make rules for the time within which, the manner in which and the authorities to whom any change in the ownership of any business or in the name, place or nature of any business carried on by any dealer shall be furnished . This makes it clear that the legislature was conscious of the fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period 21 4 1986 to 2 4 1987. 29. In paragraph 2 of the judgment this Court noticed that Rule 57 E of the Central Excise Rule, 1944 as first introduced on 01.03.1986 provided for adjustment in duty credit. It further provided that duty paid on any inputs is varied subsequently due to any reason credit alone shall vary accordingly by adjustment in the credit account maintained under Rule 57G (3). The relevant provisions of Rule and amendments have been noticed in paragraph 2 which is to the following effect: 2....Rule 57 E as it stood when MODVAT was first introduced on 1 3 1986 provided for adjustment in duty credit. It originally provided that if the duty paid on any inputs in respect of which credit has been allowed under Rule 57 A, is varied subsequently due to any reason resulting in refund, the credit alone shall be varied accordingly by adjustment in the credit account maintained under Rule 57 G(3) (with which we are concerned). Rule 57 E underwent a change on 13 1987 under which it was stipulated that if duty is paid on any inputs in respect of which credit has been allowed under Rule 57 A and if such duty is varied subsequently due to any reason resulting in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the Statute. Reference is made to judgment of this Court in Godrej and Boyce Mfg. Co. Pvt. Ltd. and Others versus Commissioner of Sales Tax and Others, (1992) 3 SCC 624. Rule 41 and 42 of Bombay Sales Tax, 1959 provided for the set off of the purchase tax. This Court held that Rule making authority can provide curtailment while extending the concession. In paragraph 9 of the judgment, following has been laid down: 9... In law (apart from Rules 41 and 41A) the appellant has no legal right to claim set off of the purchase tax paid by him on his purchases within the State from out of the sales tax payable by him on the sale of the goods manufactured by him. It is only by virtue of the said Rules - which, as stated above, are conceived mainly in the interest of public - that he is entitled to such set off. It is really a concession and an indulgence. More particularly, where the manufactured goods are not sold within the State of Maharashtra but are despatched to out State branches and agents and sold there, no sales tax can be or is levied by the State of Maharashtra. The State of Maharashtra gets nothing in respect of such sales effected outside the State. In respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is a settled proposition of law that taxing statute are to be interpreted literally and further it is in the domain of the legislature as to how much tax credit is to be given under what circumstances. Following was stated in paragraph 32: 32. Fourthly, the entire scheme of the KVAT Act is to be kept in mind and Section 17 is to be applied in that context. Sunflower oil cake is subject to input tax. The legislature, however, has incorporated the provision, in the form of Section 10, to give tax credit in respect of such goods which are used as inputs/raw material for manufacturing other goods. Rationale behind the same is simple. When the finished product, after manufacture, is sold, VAT would be again payable thereon. This VAT is payable on the price at which such goods are sold, costing whereof is done keeping in view the expenses involved in the manufacture of such goods plus the profits which the manufacturer intends to earn. Insofar as costing is concerned, element of expenses incurred on raw material would be included. In this manner, when the final product is sold and the VAT paid, component of raw material would be included again. Keeping in view this objective, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e arguments of Mr Bagaria would have assumed some relevance. But, keeping in view the scope of the issue, such a plea is not admissible having regard to the plain language of sections of the VAT Act, read along with other provisions of the said Act as referred to above. 37. The Constitutional validity of Section 19(20) was upheld. The above decision is a clear authority with proposition that Input Tax Credit is admissible only as per conditions enumerated under Section 19 of the Tamil Nadu Value Added Tax Act, 2016. The interpretation put up by this Court on Section 3(2) and 3(3) and Section 19(2) is fully attracted while considering the same provisions of Section 3(2) and 3(3) and provision of Section 19(11) of the Act. The Statutory scheme delineated by Section 19(11) 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. We thus do not find any infirmity in the judgment of the High Court upholding the validity of Section 19(11) of the Act. Both the issues are answered accordingly. Issue Number 3 and 4 38. The alternative submission pressed by learned Counsel for the appellant was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g month to the assessing authority in whose jurisdiction his principal place of business or head office is situated. Such return shall be accompanied by proof of payment of tax.] 39. Section 21 of the Act provides for filing of return in following manner: [21. Filing of returns. Every dealer, liable to pay tax under this Act, shall file return, in the prescribed form showing the total and taxable turnover within the prescribed period, in the prescribed manner, along with proof of payment of tax. The tax under this section shall become due without any notice of demand to the dealer on the date of receipt of the return or on the last date of the period for filing return as prescribed.] 40. Section 19(11) thus allowed an extended period for Input Credit which if not claimed in any month can be claimed before the end of the financial year or before the 90 days from the date of purchase whichever is later. The provision of Section 19(11) is thus an additional benefit given to dealer for claiming Input Credit in extended period. The use of word shall make the claim needs no other interpretation. 41. Learned Counsel for the appellant has referred to judgment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... giving sufficient time to the person from whom the sample was taken to make such arrangements as he might like to challenge the report of the Public Analyst, for example, by making a request to the Magistrate to send the other sample to the Director of the Central Food Laboratory for analysis. Where the effect of non compliance with the rule was such as to wholly deprive the right of the person to challenge the Public Analyst s report by obtaining the report of the Director of the Central Food Laboratory, there might be just cause for complaint, as prejudice would then be writ large. Where no prejudice was caused there could be no cause for complaint. I am clearly of the view that Rule 9(j) of the Prevention of Food Adulteration Rules was directory and not mandatory 42. This Court in the above case clearly laid down that whether particular provision is mandatory or directory has to be determined on the basis of object of particular provision and design of the statute. The period of 10 days in submitting the report of the public analyst was held to be directory for the reason that on the negligence of those to whom public duties are entrusted no one should suffer. Such inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... February 20, 1970 to make the deposit but due to rush he could not make the deposit. On his application Shri Rajni Kant extended the time permitting the deposit by February 28, 1970 as a result of which a fresh challan was prepared which was valid up to February 28, 1970 and within that period appellant deposited the balance purchase money 44. Section 33 has been extracted in paragraph 10 of the judgment which is to the following effect: 10. Section 33 reads as under: Certain residuary powers of Central Government. -The Central Government may at any time call for the record of any proceeding under this Act and may pass such order in relation thereto as in its opinion the circumstances of the case require and as is not inconsistent with any of the provisions contained in this Act or the rules made thereunder. 45. This Court in the above case held that the officer was exercising power of Central Government under Section 33 and had ample jurisdiction to set aside the Orders of the sub ordinate authorities canceling the order and to permit the appellant to deposit the balance amount of the purchase money. Following observations while examining the power giv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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