TMI Blog2016 (11) TMI 751X X X X Extracts X X X X X X X X Extracts X X X X ..... of a statute is challenged, Court presumes constitutionality unless shown otherwise but presumption cannot go to uphold a provision whereof compliance is impossible by any person and still that statute hold one guilty and further liable of penalty and other dues for non compliance. The above doctrine and also exposition of law that a statute cannot require performance of something which is impossible and places a burden upon a person for no fault of him has also been considered in M/s. D.C.M. Ltd. and others Vs. State of U.P. And others Writ C No. 9513 of 1989 - In view of above exposition of law, when we look into the amended Rule 70(5) of Rule, 2008 as substituted by U.P. VAT (First Amendment) Rules, 2009, we find that rule framing authority, while framing a rule and enforcing the same on 30.01.2009, has required concerned units to deposit tax and submit return between July 2008 to December 2008 which is ex-facie irrational, unreasonable and improbable. When information by way of framing Rules is being given on 30.01.2009, no one can be expected to comply in retrospect i.e. during July 2008 to December 2008. In our view, Sub-rule (5) of Rule 70 as substituted by U.P. VAT (First ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel for respondents. 2. Petitioners have filed these writ petitions under Article 226 of Constitution of India challenging vires of Section 42(4) and 42(5) of U.P. Value Added Tax Act, 2008 (hereinafter referred to as the 'Act, 2008') as substituted vide U.P. VAT (Amendment) Ordinance, 2008 which came to be substituted by U.P. VAT (Amendment) Act, 2008 i.e. U.P. Act No. 11 of 2008 (hereinafter referred to as the 'Amendment Act, 2008'). Some of the petitioners have also challenged validity of Rule 70(5) of U.P. Value Added Tax Rules, 2008 (hereinafter referred to as the 'Rules, 2008') as stands substituted by U.P. VAT (First Amendment) Rules, 2009. 3. In writ petition no. 1448 of 2009, writ of certiorari for quashing order dated 05.06.2009 passed by Joint Commissioner, Corporate Circle, Commercial Tax, Noida has also been prayed whereby respondent 3 has found that in view of amended provision, petitioner was supposed to deposit admitted tax of January 2008 to March 2008 by 20th October 2008 but it has been deposited late i.e. on 18.12.2008, 24.12.2008 and 31.12.2008. Hence petitioner is liable to pay interest on the aforesaid delayed payment. Respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Government in the notification dated 31.03.1995, allowing certain tax exemptions. Petitioner's unit was established for manufacture of printed and unprinted multi layer laminated metal and non metal plastic films etc. It has its unit established at Plot No. A-1, Sector-60 and D-1 to 15, 16 Sector 59, New Okhla Industrial Development Authority (hereinafter referred to as the 'NOIDA'). Since petitioner satisfied all the requirements of tax exemption, it was granted eligibility certificate under Section 4-A of U.P. Trade Tax Act, 1948 (hereinafter referred to as the 'Act, 1948') for a period of 15 years or to the extent of ₹ 959,51,76,417/- which ever is earlier. The exemption was granted w.e.f. 16.02.1995. 11. In normal circumstances, petitioner was entitled to avail aforesaid exemption up to 15.02.2010 or till the amount of exemption of tax reaches to the extent of ₹ 959,51,76,417/-, which ever is earlier. 12. The facts in all other writ petitions are similar, inasmuch as, all the petitioners have been granted eligibility certificate entitled for exemption and for the period of dispute i.e. from January 2008 to June 2008 it is admitted by res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h along with return. As a consequence thereof U.P. Value Added Tax (Amendment) Ordinance, 2008 (U.P. Ordinance No. 3 of 2008) (hereinafter referred to as the 'Amendment Ordinance, 2008') was enacted vide notification dated 16.07.2008 by which Section 42 was substituted w.e.f. 01.01.2008. Relevant Section 42 (4), (5), (6) and (7) are reproduced as under: 42-- Treatment of industrial units availing exemption or reduction in the rate of tax under erstwhile Act - .............. (4) The industrial unit availing benefit of exemption from, or reduction in the rate of, tax on the turnover of sales before the date of commencement of this Act or an industrial unit which is granted the facility of exemption from, or reduction in the rate of, tax on or after such commencement, on the turnover of sales under the erstwhile Act or the Central Sales Tax Act, 1956, shall be entitled for exemption by way of refund of net tax paid along with the return of tax period in prescribed manner and on fulfilling the conditions that,- (a) the unit shall hold valid registration certificate issued under this Act or under the Central Sales Tax Act, 1956 (b) the unit shall hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailable for exemption or reduction in the rate of tax and the amount availed in exemption or reduction in the rate of tax before the commencement of this Act. (b) The total period of the refund shall not exceed difference of the total period available for exemption or reduction in the rate of tax and the period exhausted before the commencement of this Act. (7) If any amount is found refundable and is not refunded within the prescribed time, the industrial unit shall be entitled to simple interest at the rate of twelve percent per annum from the last date prescribed for refund. The amount of interest shall be refunded in such manner as may be prescribed. (Emphasis added) 16. The aforesaid amendment of Section 42 by substitution was given effect from 01.01.2008. Amended Section 42(1) provided that no industrial unit availing benefit of exemption or of reduction in the rate of tax or granted benefit of tax from exemption or reduction in the rate of tax under Act, 1948 and Central Sales Tax Act, 1956 shall be permitted to avail benefit of exemption or reduction in the rate of tax on the turn over of sale and purchase or both, as the case may be, on or after th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax return under sub-section (1), the dealer shall, in the manner prescribed, deposit the net amount of tax payable shown in such tax return alongwith amount, if any, realized in excess of amount of tax due under this Act from purchasers of goods during the tax period. (3)Every person or dealer to whom provisions of section 34 apply, shall, in respect of dealers from whom any amount of tax has been deducted, submit such statement within such time as may be prescribed. (4)Where as a consequence of the date for the submission of return being extended under subsection (1) on the application of the dealer, the deposit of tax under sub-section (2) is deferred, there shall be payable simple interest at the rate of one and quarter percent per men sum on such deposit for the period commencing on the last date prescribed for submission of the tax return and ending with the date of deposit of such amount. (5) If any dealer discovers any omission or other error in any tax return submitted by him, he may, at any time before the expiry of the time prescribed for submitting the next tax return, submit a revised tax return. If the revised tax return shows a greater amount of ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a quarter referred to in clause (b) of subrule (1), deposit amount of net tax payable by him and Treasury Challan of such deposit shall be submitted to the assessing authority and shall submit to his assessing authority tax return within twenty days after expiry of the quarter along with proof of deposit of net amount of tax payable by him. (4) Before submitting the return under sub-rule (2) for a tax period, the dealer shall in the manner laid down in these rules, deposit the net amount of tax payable by him under the Act as disclosed in the return and shall submit to the assessing authority, along with the return a copy of the treasury challan in Form I: Provided that where a Government department wants to deposit the tax by book transfer, such department shall, before submitting such return, prepare a bill, in triplicate, for the net amount of tax payable, endorse it to the assessing authority in accordance with the financial rules on the subject and two copies thereof with such return. One of the copies shall be retained by the assessing authority and the other copy shall be sent to the Accountant General, Uttar Pradesh for crediting the amount to the account of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o comply with the requirements of Section 42 as amended. 24. Thereafter, Rule 70 was also amended by Amendment Rules, 2009 vide notification dated 30.01.2009 which came into force from the date of publication in gazette. Rule 70 as it existed earlier and stood after amendment by notification dated 30.01.2009 is reproduced as under: Column-I Existing rule Column-II Rule as hereby substituted (1) Subject to other provisions of this rule, dealers holding eligibility certificate, granted before, on or after the date of commencement of the Act, shall be eligible for tax deferment, referred to in section 42 to the extent and for the period, whichever expires earlier, as under: (a)(i) In case of an industrial unit referred to in first paragraph of sub-section (1), to the extent of the difference of the amount of exemption from tax mentioned in the eligibility certificate and the aggregate of amounts of exemption from payment of tax that has been availed, either under the Uttar Pradesh Trade Tax Act, 1948 or under the Central Sales Tax Act, 1956, before the date of the commencement of the Act; and (ii) In case of an industrial un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the facility of exemption or reduction in the rate of tax under erstwhile Act, may apply to the Commissioner for issue of certificate of entitlement duly filled and signed by the person authorized under sub-rule (6) of rule 32, in form XLV up to 31st August 2008 or within thirty days from the date of publication of this rule whichever is later. (2) A copy of the application along with enclosures, if any, shall be served to the assessing authority and certified copy of such receipt shall be annexed to the application. (3) The assessing authority shall, after examining relevant record and after giving the dealer a reasonable opportunity of being heard if necessary, send to the Commissioner a report in form XLVI within a period of thirty days from the date of receipt of the application. (4) If the Commissioner is satisfied that information furnished is correct and complete and report of the assessing authority confirms the particulars of the application, he shall issue the certificate of entitlement in form XLVII within sixty days of the receipt of the application. (5) If the net tax payable for tax periods commencing on January2008 and ending with 30th June 2008,has not been depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25. This substituted Rule 70(5) though came into force on 30.01.2009 but requires industrial units availing exemption/ concession to deposit tax payable during the period of January 2008 to May 2008 by 20.08.2008 to 20.12.2008, but for the period of June 2008 by 31st July 2008. Sub Rule 7 further provides, if an industrial unit failed to pay tax as prescribed under sub Rule (5), unit shall be liable to pay interest under Section 33(2) and penalty under Section 54. 26. The short and crucial issue raised in these writ petitions is that compliance of deposit of net tax to which petitioners were entitled for exemption with regard to period of January 2008 to June 2008 was practically impossible for the reason that Section 42 for the first time making such different procedure came to be enacted on 16.07.2008 and relevant rule came to be enacted on 30.01.2009 by which date time for deposit of tax along with return had already elapsed. The submission is that petitioners and other similarly placed industries could have never imagined or dreamt that in future legislature will change scheme for entitlement of tax benefit for remaining period/ amount in a totally different manner i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are bad for any reason whatsoever, and have no hesitation in us holding the same. However, the question is whether compliance of Section 42(4)(d) of Act, 2008 as amended by Amendment Act, 2008 read with Rule 70(5) as amended by U.P. VAT (First Amendment) Rules, 2009 requires petitioners or any person similarly situated, to do something which is practicably possible. A provision compliance whereof is improbable, irrational, in that view of the matter is Rule 70(5) of U.P. VAT (First Amendment) Rules, 2009 is invalid, irrational and unreasonable. 30. Section 42(4)(d) as amended by Amendment Act, 2008 seeks compliance in the prescribed manner . Under existing Act, 2008, and Rules 2008, there was no provision with regard to deposit of tax, by industrial units having certificate of entitlement for exemption of tax along with return, therefore, no procedure or scheme was prescribed till Rule 70 was amended by U.P. VAT (First Amendment) Rules, 2009. The amended Rule 70 provides the manner in which net tax payable along with return shall be paid and thus for the first time requirement of Section 42(4)(d) as amended by Amendment Act, 2008 satisfied 'prescribed manner' only on 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The aforesaid doctrines have been accepted, approved and applied by Courts, in India also, in Cochin State Power and Light Corporation Ltd. Vs. State of Kerala AIR 1965 SC 1688, Court followed the aforesaid maxims and held: The performance of this impossible duty must be excused in accordance with the maxim, lex non cogit ad impossibilia (the law does not compel the doing of impossibilities), and sub-s. (4) of S. 6 must be construed as not being applicable to a case where compliance with it is impossible . (para 8) 35. A Constitution Bench of seven Hon'ble Judges in Re: Presential Pool 1974 (2) SCC 33: (AIR 1974 SC 1682) held as under: The maxim of law impotentia excusat legam is intimately connected with another maxim of law lex non cogit and impossibilia. Impotenia excusat legam is that when there is a necessary or invincible disability to perform the mandatory part of the law that impotentia excuses. The law does not compel one to do that which one cannot possibly perform. Where that law creates a duty or charge, and the party is disabled to perform it, without any default in him, and has no remedy over it, there the law will in general excuse him. Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t which he cannot possibly perform. There ought a always thus to be an invincible disability to perform the obligation and the same is akin to the Roman Maxim. nemo tenetur ad impossibilia . (para 30) 39. A Constitutional Bench of Five Hon'ble Judges also considered the aforesaid maxim in Special Reference No. 1 of 2002 reported in AIR 2003 Supreme Court 1987 and held: The maxim of law impotentia excusat legem is intimately connected with another maxim of law lex non cogit ad impossibilia. Impotentia excusat legem is that when there is a necessary or invincible disability to perform the mandatory party of the law that impotentia excuses. The law does not compel one to do that which one cannot possibly perform. Where the law creates a duty or charge, and the party is disabled to perform it, without any default in him, and has no remedy over it, there the law will in general excuse him . Therefore, when it appears that the performance of the formalities prescribed by a statute has been rendered impossible by circumstances over which the persons interested had no control, like the act of God, the circumstances will be taken as a valid excuse. Where the act of God preve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In Maharashtra State Board of Secondary Education Vs. Paritiosh Bhupesh Kumar Seth AIR 1984 SC 1543, Court, in para 29 of judgment, observed as under:- It will be wholly wrong for the court to make a pedantic and purely idealistic approach to the problems of this nature, isolated from the actual realities and gaoss root problems involved in the workign of the system and unmindful of the consequences which would emanate if a purely idealistic view as opposed to a pragmatic one were to be propounded. It is equally important that the court should also, as far as possible, avoid any decision or interpretation of a statutory provision, rule or by law which would bring about the result of rendering the system uunworkable in practice . 43. We may add that the aforesaid principle has been followed by Division Bench of this Court in Inter College, Kasmali 2006 (2) ALJ 601. 44. When issues of a statute is challenged, Court presumes constitutionality unless shown otherwise but presumption cannot go to uphold a provision whereof compliance is impossible by any person and still that statute hold one guilty and further liable of penalty and other dues for non compliance. 45. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 70 also cannot be complied. Therefore, the same would become inoperative till a valid provision providing a rational procedure for compliance under Section 42(4)(d) is made by competent rule framing authority. 49. In view of above discussion, impugned notices and orders in all these writ petitions, issued by taxing authorities, are also hereby quashed. 50. Since dispute relates to deposit of tax from January 2008 to June 2008 and sufficient period had already elapsed since then, in order to mitigate and avoid any further scope of litigation and in the interest of both the parties, we provide and permit petitioners to deposit requisite amount of tax along with return within two months from today,if not already deposited, and if the said direction is complied with, respondent tax authorities shall treat said deposit and submission of return as due compliance of requirement of Section 42(4)(d) of Act, 2008 as amended by Amendment Act, 2008 and proceed accordingly for the purpose of refund of tax as provided under amended Section 42(5). If deposit has already been made, the same shall be treated as a deposit of tax in time then respondents shall proceed accordingly. 51. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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