TMI Blog2018 (7) TMI 1355X X X X Extracts X X X X X X X X Extracts X X X X ..... er a period of three years. The Rule states a dealer shall be entitled to avail up to 50% of the credit in the same financial year and the balance credit before the end of the third financial year. A registered dealer, who has purchased capital goods shall be allowed input tax credit in terms of Rule 10(4) provided, he gives an intimation within 30 days from the date of commencement of commercial production and the tax leviable shall be not more than 50% in the same financial year and the balance before the end of the third financial year. Thus Section 19(3) read with Rule 10(4) of the TNVAT Rules speaks only about the entitlement. Section 19(11) does not carve out any distinction between the type of goods purchased by the dealer on which there is a claim for input tax credit, but refers to any transaction of taxable purchase in any month. Thus, if a dealer fails to claim input tax credit in respect of any transaction of taxable purchases, in any month, the legislature has given time to the dealer to make the claim before the end of the financial year or before 90 days from the date of purchase, whichever is later. Section 19 of the TNVAT Act, being a complete code by its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me. The assessee relies upon Section 19(3) of the TNVAT Act for claiming input tax credit on the VAT paid in respect of the capital goods. 4.It is the assessees case that in terms of Section 19(3)(b) of the TNVAT Act, a dealer can utilise the input tax credit on capital goods over a period of three years from the date of commencement of commercial production as may be prescribed. In this regard, reference is made to Rule 10(4)(b) of the TNVAT Rules, 2007, which prescribes the manner in which credit may be utilised, which states that the dealer may utilise up to 50% of the credit in the financial year in which commercial production begins and the remaining within three years of commencing commercial production. 5.In the return filed under the TNVAT Act for the month of June 2013, the assessee availed input tax credit of ₹ 8,00,24,079/- on capital goods. The assessees Assessing Officer, viz., Deputy Commissioner (CT)-III, Large Taxpayers Unit, determined as ₹ 7,93,44,106/- of the total input tax credit availed on capital goods was related to the years 2011-12 and 2012-13 and therefore, vide order dated 10.09.2013, disallowed the input tax credit on capital goods to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commercial production and over a period of three years in the manner as may be prescribed and after the expiry of three years, the unavailed input tax credit shall stand lapsed to Government. Further, Section 19(3) of the TNVAT Act gives the Government the power to make Rules in respect of input tax credit and the Rule being Rule 10(4)(a) of the TNVAT Rules, which clearly indicates that the intent of the legislature with regard to the claim of input tax credit qua capital goods is to be exclusively governed by Section 19(3) read with Rule 10(4) and not any other provision. In terms of the Rules, with respect to capital goods, input tax credit shall be allowed only upon commencement of commercial production and the time frame given to intimate such commencement of production is thirty days. It is stated that the petitioner has duly intimated the date of commencement of commercial production to the jurisdictional Assessing Officer within the stipulated thirty days vide their letter dated 01.02.2012. Therefore, it is submitted that denial of input tax credit vide the impugned order is invalid. It is further submitted that when there is an apparent contradiction between two provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved any books of accounts, other documents or stocks. Therefore, the accounts, which are required to be maintained by the assessee in terms of Rule 6(9) of the TNVAT Rules are required to be kept in the place of business of the assessee and cannot be removed by the Assessing Officer. 14.The learned counsel invited the attention of this Court to Form I, which is the Form in which the assessee is required to file the value added tax monthly returns. It is submitted that in Section A of the Form, the details of total purchases and input tax credit are to be furnished. In the tabulated statement, in Section A Clause H deals with local purchases and eligible input tax credit on capital goods. Therefore, if the assessee is to disclose in Column H, then it is necessary that such credit should be adjusted as in Column I, the net input tax credit available for adjustment is arrived at. 15.It is submitted that the Assessing Officer admitted that intimation letter has been given by the assessee, yet by referring to Section 19(1) of the TNVAT Act and it has been held that the petitioner is not eligible for availing input tax credit. The respondent, while confirming the order, has once ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Section 19(3)(b) of the TNVAT Act and therefore, it is explicit that the provision of Section 19(11) alone is applicable, as the provision prescribes time limit for claim of input tax credit and not Rule 10(4) as claimed by the assessee. 19.It is further submitted that the validity of Section 19(11) of the TNVAT Act was put to challenge in a batch of cases as being inconsistent with Section 3 and the general scheme of TNVAT Act and as being arbitrary and irrational infringing the rights of the dealers under Articles 14 and 19(1)(g) of the Constitution of India. The challenge to the said provision was rejected in the case of USA Agencies vs. CTO in W.P.No.902 of 2009 and etc., batch dated 17.07.2013. Thus, the provision having been upheld, the claim made by the petitioner in the present writ petition does not merit consideration. 20.It is reiterated that the petitioner did not give their intimation as required to be done under Rules 10(4)(a) and 10(4)(b) of the TNVAT Rules and therefore, the respondent was right in rejecting the revision petition filed by the petitioner for the reasons assigned therein. 21.Heard the learned counsels for the parties and carefully perused t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are for the purpose of (i) re-sale by him within the State; or (ii) use as input in manufacturing or processing of goods in the State; or (iii) use as containers, labels and other materials for packing of goods in the State; or (iv) use as capital goods in the manufacture of taxable goods. (v) sale in the course of inter-State trade or commerce falling under sub-section (1) of section 8 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956). (vi) Agency transactions by the principal within the State in the manner as may be prescribed Sec.19(3)(a) : Every registered dealer, in respect of purchases of capital goods wholly *[for use in the course of business of taxable goods], shall be allowed input tax credit in the manner prescribed. Note : *The expression for use in the manufacture of taxable goods was substituted for the expression wholly for use in the course of business by Act 21/2007 Gazette Extraordinary dated 08.06.2007 Effective from 01.01.2007 (Retrospective.) Sec. 19(3)(b) : Deduction of such input tax credit shall be allowed only after the commencement of commercial production and over a period of three years in the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er or director including employees and in any residential accommodation; or Sec. 19(7)(b) : purchase of all automobiles including commercial vehicles, two wheelers and three wheelers and spare parts for repair and maintenance thereof, unless the registered dealer is in the business of dealing in such automobiles or spare parts; or Sec. 19(7)(c) : purchase of air-conditioning units unless the registered dealer is in the business of dealing in such units. Sec. 19(8) : No input tax credit shall be allowed to any registered dealer in respect of any goods purchased by him for sale but given away by him by way of free sample or gift or goods consumed for personal use. Sec. 19(9) : No input tax credit shall be available to a registered dealer for tax paid or payable at the time of purchase of goods, if such- (i) goods are not sold because of any theft, loss or destruction, for any reason, including natural calamity. If a dealer has already availed input tax credit against purchase of such goods, there shall be reversal of tax credit; or (ii) inputs destroyed in fire accident or lost while in storage even before use in the manufacture of final products; or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods from another dealer and has availed input tax credit in respect of the said goods and if the registration certificate of the selling dealer is cancelled by the appropriate registering authority, such registered dealer, who has availed by way of input tax credit, shall pay the amount availed on the date from which the order of cancellation of the registration certificate takes effect. Such dealer shall be liable to pay, in addition to the amount due, interest at the rate of *[two] per cent, per month, on the amount of tax so payable, for the period commencing from the date of claim of input tax credit by the dealer to the date of its payment. Note : *Substituted by Act 13 of 2013 w.e.f. 29.05.2018 Sec. 19(16) : The input tax credit availed by any registered dealer shall be only provisional and the assessing authority is empowered to revoke the same if it appears to the assessing authority to be incorrect, incomplete or otherwise not in order. Sec. 19(17) : If the input tax credit determined by the assessing authority for a year exceeds tax liability for that year, the excess may be adjusted against any outstanding tax due from the dealer. Sec. 19(18) : The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the registering authority. Sec. 64(3) : Every registered dealer or person who moves goods in pursuance of a sale or purchase or otherwise from one place to another shall send along with the goods moved a bill of sale or delivery note or such other documents, as may be prescribed. Sec. 64(4) : The Commissioner may order for audit of the business of any registered dealer by an officer not below the rank of *[Deputy] Commercial Tax Officer. For the purpose of this section, the selection of dealers for audit shall be made from amongst the dealers,- Sec. 64(4)(a) : who have not filed returns within the prescribed period; or Sec. 64(4)(b) : who have claimed exorbitant amount of refund of tax; or Sec. 64(4)(c) : who have filed returns, but in the opinion of the Commissioner he is not satisfied with the correctness of any return filed, any claim made, deduction claimed or turnover disclosed in any such; or Sec. 64(4)(d) : on the basis of any other criteria or on a random selection basis by the Commissioner ; or Sec. 64(4)(e) : where detailed scrutiny of the case is necessary in the opinion of the Commissioner. Sec. 64(5)(a) : During the course of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods purchased from outside the State by issue of C Forms as prescribed under the Central Sales Tax (Registration and Turnover) Rules, 1957; (vii) Value of goods purchased from outside the State without issue of CForms; (viii) Value of goods purchased as specified in the Second Schedule; (ix) Value of goods received on stock transfer from principal or head office situated outside the State for sale; (x) Value of goods received on stock transfer from the principal within the State for sale; (xi) Value of goods imported; (xii) Value of goods returned; (xiii) Total tax paid on local purchases; R.6(2)(c) : The sales or stock transfer account maintained by a registered dealer shall contain the following particulars, namely: - (i) Invoice No. and date with buyers Taxpayer Identification Number; (ii) Description of goods with quantity and value sold; (iii) Sale value of exempted goods ; (iv) Sale value realized out of stock received from the principal; (v) Value of goods under zero rated sale out of taxable purchases; (vi) Inter-State sales out of taxable purchases; (vii) Sale value of goods specified in the Second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n letter, consignment notes or dispatch advices, as the case may be, sent to the agent in respect of the goods dispatched on each occasion. R.6(6)(a) Every commission agent, broker, del credere agent, auctioneer or other mercantile agent, by whatever name called, shall maintain- (i) a register showing the particulars of goods purchased or received for sale on each occasion, in respect of each principal separately; (ii) the original or copy of the written contracts, if any, entered into between the agent and the principal; (iii) copies of authorisations received by him to purchase or sell goods on behalf of each principal separately; (iv) details of purchases or sales effected on behalf of each principal, showing the names of commodities, quantities and value of purchases or sales, and the tax due thereon; (v) copies of pattials, i.e., accounts rendered by the agent to the principal from time to time, showing the gross amount of the purchases or sales, deductions on account of commission and incidental charges and the net amount payable to the principal. R.6(6)(b) Every such agent shall also furnish to the assessing authority concerned on or before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amendment, Rule 6(11) was as follows: R.6(11) Accounts maintained by a registered dealer shall be preserved by him for a period of five years from the date of assessment. ........................ Rule 10. Input tax credit (1) The input tax credit that can be deducted from the output tax payable for any month or year shall be calculated by using the formula (A + B) - (C + D) Where, A = Input tax credit carried forward from the previous month or year B = Input tax credit accrued during the month or year C = Input tax credit reversed during the month or year D = Input tax credit refunded during the month or year R.10(2) : Every registered dealer who claims input tax credit under sub-section (1) of section 19 shall, produce the original tax invoice, in support of his claim of the input tax credit, containing the following details, namely:- (a) A consecutive serial number; (b) The date on which the invoice is issued; (c) The name, address and the Taxpayer Identification Number of the seller; (d) The name, address and the Taxpayer Identification Number of the buyer; (e) The description of the goods; (f) The quantity or volume of the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he dealer who claims input tax credit under this sub-rule shall furnish separate statement. R.10(3)(b)(iii) : If the goods taxable under the Tamil Nadu General Sales Tax Act, 1959 are exempted under the Act, no input tax credit shall be allowed; R.10(3)(b)(iv) : Where any tax is paid on any goods at the point of purchase by the dealer himself, such tax shall be eligible for claiming input tax credit; R.10(3)(b)(v) : Every registered dealer shall avail the input tax credit immediately after the submission of stock inventory statement in From V by him. Such claim shall be availed within six months from the date of commencement of the Act. The unavailed input tax credit, if any, after six months shall lapse to Government. R.10(3)(b)(vi) : The assessing authority shall verify the claim made by the registered dealer with reference to documents filed along with the stock inventory in From V and pass an order *[not later than seven months, from the date of commencement of the Act], determining the amount for which the registered dealer is entitled to input tax credit and reverse the claim, wherever necessary. R.10(3)(b)(vii) : A registered dealer, who effects zero ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 19 shall be presented before the assessing authority within thirty days from the date on which the original tax invoice is lost. It shall be accompanied by a duplicate or carbon copy of the original invoice. The assessing authority shall verify such claim and pass orders allowing input tax credit on the basis of duplicate or carbon copy of the original invoice or its rejection. When the claim is rejected, the assessing authority shall record his reasons for doing so and communicate to the dealer: Provided that no order prejudicial to the dealer shall be passed unless the said dealer is given an opportunity of being heard. R.10(6)(a) : After availing input tax credit, if any, dealer who purchases goods returns the goods and gets credited the price and tax paid, the tax credit so availed shall be reversed, only when- (i) the purchase was included in the return; and (ii) the goods were returned within a period of six months from the date of purchase by him. R.10(6)(b) : Where a dealer who sells goods after paying tax, receives back his goods, he may deduct such tax amounts paid from the tax payable in the returns of following months only when, - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of tax at the time of purchase. R.19(8)(b) : The assessing authority shall verify the correctness of the details furnished under clause (a), allow or determine the amount of input tax credit transferred to the dealer or reject the claim: Provided that no order rejecting the claim shall be passed unless the dealer is given an opportunity of being heard. R.10(9) : Omitted[(a) Input tax credit on inter-state sales shall be allowed only if Form C prescribed in the Central Sales Tax (Registration and Turnover) Rules, 1957 is filed.]Omitted R.10(9)(b) : Input tax credit on transfer of goods falling under section 6-A of the Central Sales Tax Act, 1956 shall be allowed only if Form F prescribed in the Central Sales Tax (Registration and Turnover) Rules, 1957 is filed. R.10(10)(a) : In cases where the input tax paid in the month exceeds the output tax payable, the excess input credit shall be carried over to the next month. R.10(10)(b) : In cases where the input tax credit as determined by the assessing authority for any registered dealer, for a year, exceeds the tax liability for that year, it may adjust the excess input tax credit against any arrears ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the endeavour of Mr.M.V.Swaroop is to compartmentalize Section 19 of the TNVAT Act into more than one compartment and to carve out an exception so as to mean that they are exclusively meant for capital goods. 27.Mr.M.V.Swaroop, justified the action of the assessee by contending that three years period stipulated in Section 19(3)(b) of the TNVAT Act cannot be curtailed by invoking Section 19(11) of the TNVAT Act, which dealt with other goods, other capital goods. If we examine Section 19(3) of the TNVAT Act, it is evident that the said provision deals with the entitlement of the assessee for input tax credit. Clause (a) of Section 19(3) of the TNVAT Act states that every registered dealer in respect of purchases of capital goods wholly for the use in the manufacture of taxable goods shall be allowed input tax credit in the manner prescribed. 28.Clause (b) of Section 19(3) of the TNVAT Act deals with how the deduction of such input tax credit, which may be allowed, as in the manner prescribed. It states that credit shall be allowed only after commencement of commercial production and over a period of three years in the manner as may be prescribed. After the expiry of three yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 19(6) read with Rule 10(4) of the TNVAT Rules are complete code by themselves and Section 19(11) would have no application to capital goods. In my considered view, this is an improper interpretation to be given to Section 19. No such intention has been expressed by the legislature. The Court cannot dissect a piece of legislation and render any finding. What is required to be examined is the language of the statute and the meaning it seeks to convey. 32.As pointed out earlier Section 19(3)(a) of the TNVAT Act speaks about the entitlement of an assessee for credit in respect of purchases of capital goods. The entitlement is as per the manner prescribed under the TNVAT Rules, viz., Rule 10(4). Section 19(3)(b) of the TNVAT Act speaks about deduction of such input tax credit that may be allowed to be liable after the commencement of commercial production and over a period of three years in the manner as prescribed. After the expiry of three years, the unavailed credit shall lapse to the Government. 33.Rule 10(4)(b) of the TNVAT Rules prescribes the manner in which the credit shall be allowable after commencement of commercial production and over a period of three years. The Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing a claim for input tax credit after establishing that tax due on purchases has been paid by him in the manner prescribed, such claim for tax credit should fall within the scope of various categories to qualify for the tax credit. It was pointed out that Section 19 qualifies the entitlement of input tax credit and does not deal with the machinery of assessment. More or less, similar argument was advanced before the Division Bench by submitting that Rule 7(9) of the TNVAT Rules permits rectification of errors in returns and filing of revised returns within the period of six months from the last date of relevant period to which the return relates and Section 19(11) provides other limitation for claiming input tax credit. and there cannot be two different limitation periods for claiming input tax credit. This submission was rejected and held to effectuate the provision of the Act and beneficial to the registered dealer. 38.It was further pointed out that the benefit of credit under the Act is in the nature of a concession given, which could be availed only in the manner and in the circumstances mentioned in Section 19. One more argument was that Section 19(11) cannot be mandatory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hs 225 to 231 for the proposition that merely because the term any is used, it does not mean that the following phrase must be given a wide interpretation. 44.It is submitted that in the said judgment, it has been further held that the word any requirement cannot include something, which could have been said more specifically. Thus, it is the argument of Mr.M.V.Swaroop, that any transaction in Section 19(11) of the TNVAT Act cannot include something that could have been said more specifically especially when 'capital goods' have been specifically mentioned in various other parts of the Section. 45.It is further submitted that the Hon'ble Supreme Court has held that the term any need not mean every and must be read contextually. Thus, it is submitted that input tax credit on purchase of regular inputs must form part of the monthly returns. Section 19(11) of the TNVAT Act states that if a dealer fails to claim input tax credit within that particular month, he may claim it within the end of the year, or within ninety days from the date of purchase. When read in that context, it becomes clear that the term any transaction must only include such transactions for which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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