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TMI Blog2025 (3) TMI 561X X X X Extracts X X X X X X X X Extracts X X X X ..... h 2010, the Assessee had filed his Returns inter alia claiming Input Tax Credit on purchase of goods which were used in the manufacture and sale/stock-transfer. In terms of Sections 11(a)(5) and 14 of the Act read with Notification No. FD 507 CSL 2007 (IX) dated 01.04.2008 (KVAT Notification) issued under 2003 Act and other Notification No.1/2008-CST-F.No.28/11/2007-ST dated 30.05.2008 ('CST Notification') issued under the provisions of the Central Goods and Services Tax Act, 2017, Assessee claimed to be eligible to deduct input tax paid on the purchase of subject goods used as inputs in the manufacture of taxable goods stock-transferred outside the State to the extent of input tax charged at a rate higher than 3% with effect from 01.04.2008 and at a rate higher than 2% with effect from 01.06.2008 while calculating his net tax liability under the Act. (b) On his purchases of goods which were chargeable to VAT at 12.5% which were used in the manufacture of goods that were stock-transferred outside the State, the Assessee availed Input Tax Credit at the rate of 10.5% (12.5%-2%), under a wrong impression that the aforesaid benefit was available only in respect of goods liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Authority extending the special rebating scheme to the Respondent? (2) Whether pursuant to Section 35 of the KVAT Act, the Respondent could have availed the benefit of special rebating scheme without filing revised Returns when the Respondent has not claimed for it in the Returns filed for the said assessment period? IN STRP 26/2023: (3) Whether on the facts and in the circumstances of the Petitioners' case, the Appellate Tribunal was right in law, in allowing the Respondent's Appeal by setting aside the order passed by the Revisional Authority and restoring the order of reassessment/ rectification ? (4) Whether on the facts and in the circumstances of the Petitioners' case, the Appellate Tribunal was right in law, in allowing the Respondent's Appeal and holding that the Respondent was eligible for deduction of Input Tax Credit tax at 2% on the input purchased locally at 4% used in the manufacture of stock transferred out goods as envisaged as per the provisions of Section 14 of the Act ? (5) Whether on the facts and in the circumstances of the Petitioners' case, the Appellate Tribunal was right in law, by holding that the Respondent for the periods from Apr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we have treated only those relevant of them. V. In the light of pleadings of the parties coupled with the above submissions, the questions that arise for our consideration are as under: (i) If Input Tax Credit is a concession as distinguished from a right under the scheme of 2003 Act, what really is meant by and follows from that...? (ii) Whether the claim for Input Tax Credit cannot be entertained unless made in the Return or revised Return...? (iii) Whether claim for Input Tax Credit can be rectified under section 39 of the Act even when it is disadvantageous to the State Exchequer...? (iv) Whether there is any limitation period for claiming the Input Tax Credit...? The above questions have been articulated after putting them to the counsel representing the parties who had advanced Marathon submissions. VI. Our discussion follows as under: (A) A THUMBNAIL DESCRIPTION OF TAXATION: (a) Power to tax is one of the attributes of State sovereignty. Tax is a price a person pays for being a member of civilized society, to put it broadly. Tax is broadly defined as a pecuniary charge imposed by statute upon persons, property or transactions, for public purposes: it is a force ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y defined, is apparent from their text. Sub-section (3) mandates payment of net tax which is arrived at by deducting input tax from output tax. (b) Sub-section (3) of section 10 has certain special features and therefore, for ease of understanding, the same is reproduced below: "[(3) Subject to input tax restriction specified in sections 11, 12, 14, 17, 18 and 19, the net tax payable by a registered dealer in respect of each tax period shall be the amount of output tax payable by him in that period less the input tax deductible by him as may be prescribed in that period and shall be accounted for in accordance with the provisions of this Act.] [Provided that, a registered dealer while calculating the net tax payable on or after first day of April 2015 may claim input tax relatable to goods purchased during the period immediately preceding five tax periods of such tax period, if input tax of such goods is not claimed in any of such five preceding tax periods.]" Apparently, this provision begins with the expression "Subject to input tax restriction specified in sections..." One of the sections specified in section 10 is section 11 which prescribes "Input tax restrictions" as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us fact situations, particularly economic ones. Be it a right or a concession, they are not absolute. If a concession is enacted by the State, ordinarily it ceases to be a gratis or privilege. Merely because something is called as a 'concession' and the claim for that is conditioned, that per se may not rob elements that usually animate the right created by law. As already discussed above, subsection (5) provides for adjustment or refund of amount when Input Tax exceeds Output Tax payable. Added, it is with interest that such adjustment/refund has to be made. If it was a mere concession, how is that the State is mandating to pay the interest, whatever be its rate as may be prescribed by Rules...? Thus, a right is created to the refund and to that is superadded the right to interest on the delay brooked in making refund/adjustment. (b) Grant of concession arguably may involve discretion. However, it is not Moghul's discretion of granting or cancelling the firman. The discretion allowed by the statute to the holder of a public office, as Lord Halsbury observed in Sharp v. Wakefield [1891] AC 173 at 179, is intended to be exercised according to the rules of reason & justice, not acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of ITC is available on certain conditions mentioned in this Section. (c) One of the most important condition is that in order to enable the dealer to claim ITC it has to produce original tax invoice, completed in all respect, evidencing the amount of input tax. 12. It is a trite law that whenever concession is given by statute or notification etc. the conditions thereof are to be strictly complied with in order to avail such concession. Thus, it is not the right of the 'dealers' to get the benefit of ITC but its a concession granted by virtue of Section 19. As a fortiorari, conditions specified in Section 10 must be fulfilled..." (c) The third decision cited by AGA is a Division Bench decision of Madras High Court in ASSISTANT COMMISSIONER OF GST & CENTRAL EXCISE vs. SUTHERLAND GLOBAL SERVICES PRIVATE LIMITED (2020) 83 GSTR 259. The case essentially involved Central Goods and Services Tax Act, 2017, Finance Act, 1994, Finance Act, 2016 Central Excise Act, 1944 and CGST Rules, 2017, etc. True it is that the court at paragraph 55 observed: "...it is clear that Cenvat credit or input-tax credit under the GST regime is a concession and a facility and not a vested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 19(11) cannot be held to be mandatory and it is only a directory provision, noncompliance of which cannot be ground of denial of Input Tax Credit to the appellant. The conditions under which Input Tax Credit is to be given are all enumerated in Section 19 as noticed above. The condition under which the concession and benefit is given is always to be strictly construed. In event, it is accepted that there is no time period for claiming Input Tax Credit as contained in Section 19(11), the provision become too flexible and give rise to large number of difficulties including difficulty in verification of claim of Input Credit. Taxing Statutes contains selfcontained scheme of levy, computation and collection of tax. The time under which a return is to be filed for purpose of assessment of the tax cannot be dependent on the will of a dealer." (D) AS TO THE TRUE MEANING OF 'RIGHT' & 'CONCESSION': (a) A brief discussion about what is a right and what is a concession assumes importance because of extreme views canvassed by the advocates appearing for the parties. Learned AGA said that Input Tax Credit is only a concession whereas, Assessee's counsel asserted that it is an indefea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved: "A word is not a crystal, transparent and unchanged; it is the skin of a living thought and may vary greatly in colour and content according to the circumstances and time in which it is used..." (d) As to what Apex Court said about the meaning of concession and its invocation: (i) In INDIAN ALUMINIUM COMPANY LIMITED vs. THANE MUNICIPAL CORPN 1992 Supp.(1) SCC 480, paras 5, 6, it is observed as under: "However, a concession has to be availed at the time when it was available and in the manner prescribed. The common dictionary meaning of the word "concession" is the act of yielding or conceding as a demand or argument, something conceded; usually implying a demand, claim, or request, "a thing yielded", "a grant". In the Dictionary of English Law by Earl Jowitt, the meaning of "concession" is given as under: "Concession, a grant by a central or local public authority to a private person or private persons for the utilisation or working of lands, an industry, a railway waterworks, etc." The expressions "rebate" and "concession" in the commercial parlance have the same concept..." (ii) In COMMISSIONER OF CUSTOMS vs. DILIP KUMAR (2018) 9 SCC 1, para 50, the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les. This accords with the constitutional mandate enacted in Article 265, as broadly construed by the Apex Court. If tax cannot be levied and collected except with the authority of law, then as a corollary of this, any excess exaction also cannot be retained by the State subject to exceptions such as unjust enrichment, delay & latches, non-compliance of mandatory form, etc. It is more so because section 10(5) mandates refund/adjustment of excess of Input Tax Credit that too with interest. (f) Merit and legality of a proposition like the above can be better understood by contemplating the consequences of the contra. With all this in mind, we ask ourselves now: 'Despite strict compliance of all conditions, can the claim for Input Tax Credit be denied to the Assessee...?' Answer has to be a big 'NO'. Reasons for this are not far to seek: firtly, what is payable is net tax; net tax is arrived at by deducting Input Tax by Output Tax. Secondly, Article 265 does not permit exaction of any money than what the statute authorizes. Thirdly, denial of Input Tax may eventually result into double taxation. Fourthly, section 10(5) provides for refund of Input Tax coupled with interest. Fifthly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a return furnished under sub-section (3) of Section 38, discovers any omission or incorrect statement therein, other than as a result of an inspection or receipt of any other information or evidence by the prescribed authority, (a) he shall furnish a revised return within the time prescribed for filing the return for the succeeding tax period; and (b) he shall furnish a revised return any time thereafter but within six months from the end of the relevant tax period, if so permitted by the prescribed authority." (c) Sub-section (1) of section 35 mandates filing of Return in prescribed form & manner and paying of tax due on such Return within a specified period. Sub-section (3) empowers the prescribed authority to call for a Return for specific periods or insist upon separate Returns qua the business branches of the dealer. Sub-section (4) enables the dealer to file Revised Return within a prescribed period if he discovers any omission or incorrect statement in the Return already filed. Section 38 provides for selfassessment/ deemed assessment based on the Return filed, subject to exceptions. Section 39 provides for reassessment of tax when the Return filed by the dealer understat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a monthly return, containing particulars of net values of sales, purchases and other transactions, including input and output tax claimed or collected and net tax relating to all of his places of business, and accompanied by proof of full payment of any tax due, to the jurisdictional Local VAT officer or VAT sub-officer in Form VAT 100 within twenty days after the end of the relevant tax period." Relevant part of prescribed Form VAT 100 namely paragraphs 4.1, 4.2, 4.3 & 4.9 reads as under: 4.1 Output tax payable (Refer Box No. 8.3) 4.2 Brought forward credit of/excess payment made during previous month/quarter (Refer Box No.4.10) 4.3 Input Tax Credit (Refer Box No.11) 4.9 Refund [Other columns not being much relevant, are not reproduced.] (b) It is a specific case of the Revenue that unless claim is made for Input Tax Credit in the Return, a dealer cannot grieve against disallowance; learned AGA hastened to add that, if there was a mistake in the Return, nothing prevented the dealer from filing a Revised Return, of course within the prescribed period of limitation. In support of this, he relied upon the following decisions: (i) In CENTUM supra, a Coordinate Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stries supra, and INFINITE BUILDERS & DEVELOPERS vs. ADDITIONAL CCT (2013) 76 Kar.L.J 390. (c) In the above decisions, it is apparent that no claim for Input Tax Credit was made in the Return, nor any Revised Return was furnished. Limitation period as prescribed by law is also discussed for filing of Return or Revised Return. However, Mr.Suryanarayana is right in telling us that the case of his client is markedly different from the fact matrix of those decisions inasmuch as Input Tax Credit was specifically claimed in the Returns filed in time. Since the matter went for re-assessment, the Assessee before closure of the said process had sent the letters for rectifying the mistake by recomputing the tax rates as specified in the extant Notifications. Had the case of Assessee been one of deemed assessment, it would have been altogether a different scenario. We need not reiterate that a case is an authority for the proposition that it lays down in a given fact matrix and not for all that which logically follows from what has been so laid down vide Lord Halsbury in QUINN vs. LEATHEM (1901) UKHL 2. (d) The Tribunal although inarticulately has rightly granted relief to the Assessee, sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Benches of this Court. They are (i) M/s Centum Industries, (ii) Nandi Constructions, (iii) Infinite Builders & Developers & (iv) MANASA ELECTRICALS COMPANY vs. STATE OF KARNATAKA 2016 SCC OnLine Kar 9412. (b) We very carefully perused these decisions which consistently suggest, if not hold that in the absence of claim being made in the Return, amended Return or Revised Return, Input Tax Credit can be denied. This broad proposition is structured keeping in view inter alia sections 10, 11, 14, 35, 38 & 39 of 2003 Act read with Rule 38 and Form VAT 100 of 2005 Rules. However, reference to Rule 130A which is on the Rule book since April 2007 is conspicuously absent. As already observed above, the text of this Rule is markedly different from that of Rule 38. Had this significant Rule been adverted to in the said decisions, it would have certainly had impact on the breadth of their ratio. How this particular Rule of significance remained unmindful, is beside the point. "Is" outweighs "ought". (c) Salmond's Jurisprudence Fitzgerald, Tenth Edition, page 158 observes: "...a decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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