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2017 (4) TMI 365 - HC - VAT and Sales TaxVires of Rule 20 of the Punjab Value Added Tax Rules, 2005 - rule prescribes the time limit of 90 days for claiming back the Input Tax Credit (ITC) reversed for the goods which have been sent on job work - The Tribunal noted that although the bullion was not received within 90 days of it having been sent to the job workers, it was received in the subsequent year. It was also contended on behalf of the petitioner that penalty in any event ought not to be charged inter-alia as the petitioner had no intention to evade or avoid the tax and had also disclosed all the facts Held that: - 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. The reason for 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. There is no warrant for holding that the goods sent must be returned by the job workers during the same assessment year. That is not contemplated by Rule 20. The period of 90 days is not confined to the same assessment year. Indeed it cannot be. If for instance the goods are sent during the last few days of the assessment year or even on the last date of the assessment year, they cannot be expected to be returned by the job workers during the same assessment year. That is not even contemplated by the Rule - there is 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. The challenge to Rule 20 insofar as it prescribes the time limit of 90 days is rejected. It is, however, held that the same is directory and not mandatory. The Tribunal, therefore, applied the wrong test in determining whether the goods were returned in a reasonable time or not. It would be necessary, therefore, for the Tribunal to decide the question afresh in accordance with this judgment - appeal allowed by way of remand.
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