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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 ..... AOR For Respondent(s) Mr. Vinodh Kanna B., AOR Ms. Valarmathi, Adv. Mr. B. Balaji, AOR Mr. K. V. Vijayakumar, AOR Civil Appeal Nos. 1041410450 of 2018 @ SLP(C) NOS.3659036626 OF 2013, Civil Appeal Nos. 1045110455 of 2018 @ SLP(C)NOS.24742478 OF 2014, Civil Appeal Nos. 1049810499 of 2018 @ SLP(C)NOS.1006010061 OF 2014, Civil Appeal Nos. 1045610481 of 2018 @ SLP(C) Nos. 36753700 of 2014, Civil Appeal Nos.1048210497 of 2018 @ SLP(C) NOS.37023717 OF 2014, Civil Appeal Nos. 1050910513 of 2018 @ SLP(C)NOS.1131311317 OF 2014, Civil Appeal Nos. 1050310507 of 2018 @ SLP(C)NOS.1131911323 OF 2014, Civil Appeal No. 10523 of 2018 @ SLP(C)NO.13961 OF 2014, Civil Appeal Nos. 1052510527 of 2018 @ SLP(C)NOS. 1320413206 OF 2014, Civil Appeal No. 10544 of 2018 @ SLP(C)NO.30638 OF 2014, Civil Appeal No. 10522 of 2018 @ SLP(C)NO.13960 OF 2014, Civil Appeal No. 10524 of 2018 @ SLP(C)NO. 12779 OF 2014, Civil Appeal Nos. 1051910521 of 2018 @ SLP(C)NOS.1217512177 OF 2014, Civil Appeal Nos. 1050010502 of 2018 @ SLP(C)NOS.1050610508 OF 2014, Civil Appeal No. 10508 of 2018 @ SLP (C) NO. 11324 OF 2014, Civil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed after a considerable delay as the original documents are sent to the Regional Transport Authority for registration of motor vehicles. The appellant enters the details of the tax invoice containing the payment of tax in its books of accounts. The appellant had outsourced the job of collection of original tax invoices to one M/s. MID Controls Private Limited, an Agency specialised for collecting documents. The appellant is entitled to claim Input Tax Credit of the amount of tax paid on the purchases made from the registered dealer of motor vehicle as per Section 19(2) of the Tamil Nadu VAT Act, 2006. As per Section 19(11), if a dealer has not claimed Input Tax Credit for a particular month, the dealer can claim the Input Tax Credit before the end of the financial year or before 90 days from the date of purchase whichever is later. When the appellant filed its returns for the assessment year 20072008 for want of the tax invoices, the said Input Tax Credit could not be claimed. The appellant, however, filed revised returns claiming Input Tax Credit on the receipt of the tax invoices from the dealer. The appellant also filed its monthly returns for the period from April, 2007 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent to allow the appellant's claim of Input Tax Credit for the sum of Rs. 1,28,36,822/, pass such other or further orders as this Hon'ble Court may deem fit and proper on the facts and circumstances of the case and thus render justice." 5. We may also notice the facts of another Civil Appeal No. 1050310507 of 2018 arising out of SLP(C) Nos.1131911323 of 2014 (Sri Devi Enterprises vs. The Commercial Tax Officer & Anr.). 6. The appellant is a partnership firm which owns petrol pump and deals in petrol, diesel, Auto LPG and Lubricating Oils (all products of Bharat Petroleum Corporation Limited). The appellant's claim for Input Tax Credit was disallowed by order dated 11.04.2011. The respondent placed reliance on time limit under Section 19(11) of Tamil Nadu VAT Act, 2006 for disallowing Input Tax Credit to the appellant. Aggrieved by the aforesaid order dated 11.04.2011 Writ Petition (C) No.10648 of 2011 was filed by the appellant wherein following reliefs were claimed: "28.It is therefore just and necessary that this Hon'ble Court may be pleased to issue a Writ of Declaration or any other appropriate writ, order or direction under Article 226 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving failed the writ petitions challenging assessment orders/show cause notices have no legs to stand and therefore, they should necessarily fail. 85. In cases where final orders of assessment have been challenged, the assessees shall be entitled to prefer statutory appeal against such order and if such appeals are presented, whithin a period of 60 days from the date of receipt of a copy of this order, the same shall be entertained by the appellate authority subject to the assessee fullfilling other mandatory statutory conditions except rejecting those appeals on the ground of limitation. In ceases where the petitioners have challenged show cause notices, they are at liberty to submit their explanation. If such explanation is submitted within a period of 30 days from the date of receipt of a copy of this order, the assessing authority shall consider the case in accordance with law. 86. In the result, all the writ petitions are dismissed holding that Section 19(11) is a valid piece of legislation, cannot be struck down as being either unreasonable or discriminatory and violative of Article 265 and 360A of the Constitution of India. The interim stay granted in all writ petitions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r concession is given by the statute or notification, the conditions thereof should strictly be complied with in order to avail such concession, is fully applicable in the facts of the present case and all the appeals are liable to be dismissed. 13. From the submissions of the learned counsel for the parties and evidence on record following are the issues which arise for consideration in this batch of appeals : (1) Whether Section 19(11) violates Article 14 and 19(1)(g) of the Constitution of India ? (2) Whether Section 19(11) is inconsistent to Section 3(3) of the Act ? (3) Whether Section19(11) is directory provision, noncompliance of which cannot be a ground for denial of input tax credit to the appellants ? (4) Whether denial of input tax credit to the appellants is contrary to the scheme of VAT Act, 2006 ? (5) 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 ? 14. Before we enter into the submissions of the learned counsel of the parties, it is necessary to notice the statutory scheme as delineated by the Tamial Nadu Value Added Tax Act, 2006. The T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by a dealer on every sale made by him within the State at the rate specified therein: Provided that all spare parts, components and accessories of such goods shall also be taxed at the same rate as that of the goods if such spare parts, components and accessories are not specifically enumerated in the First Schedule and made liable to tax under that Schedule.] (3) The tax payable under subsection (2) by aregistered dealer shall be reduced, in the manner prescribed, to the extent of tax paid on his purchase of goods specified in Part B or Part C of the First Schedule, inside the State, to the registered dealer, who sold the goods to him." 16. Section 19 contains a heading "Input Tax Credit". Section 19 contains 20 subsections. Section 19 enumerates several subsections which provide that no Input Tax Credit is allowed in certain circumstances whereas other provisions contain statutory scheme under which Input Tax Credit is permissible. In the present case we are concerned with Section 19(11) which is to the following effect: "19(11) In case any registered dealer fails to claim input tax credit in respect of any transaction of taxable purchase in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subject matter dealt within different sections or parts of the same statute is the same. This proposition was reiterated by this Court in Kailash Chandra and another versus Mukundi lal and others, 2002 (2) SCC 678. In paragraph 11, following has been laid down: "11. A provision in the statute is not to be read in isolation. It has to be read with other related provisions in the Act itself, more particularly, when the subjectmatter dealt with in different sections or parts of the same statute is the same or similar in nature." 19. Here we have noticed that Input Tax Credit is being allowed under Section 3 which is provision on "levy of taxes on sale of goods". Section 3 is a charging section which provides for levy of taxes on sale of goods. Subsection (3) is the part of the same scheme where tax payable under subsection (2) by registered dealer shall be reduced, in the manner prescribed, to the extent of tax paid on his purchase of goods. Other provisions of the Act elaborated and explained the whole mechanism of the Act. Section 4 to 12 are various provisions dealing with following subject matters:= "Section 4. Levy of tax on right to use any goods. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture of taxable goods in the manner prescribed.] (7) No registered dealer shall be entitled toinput tax credit in respect of - (a) goods purchased and accounted for in business but utilized for the purpose of providing facility to the proprietor or partner or director including employees and in any residential accommodation; or (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 (c) purchase of airconditioning units unless the registered dealer is in the business of dealing in such units. (8) No input tax credit shall be allowed toany goods purchased by him for sale but given away by him by way of free sample or gift or goods consumed for personal use. (9) No input tax credit shall be available toa registered dealer for tax paid or payable at the time of purchase of goods, if such (i) goods are not sold because of anytheft, loss or destruction, for any reason, including natural calamity. If a dealer has already availed input tax credit against purchase of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a prescribed form obtained from the prescribed authority; or (b) if the goods are sold to theGovernment, not being a registered dealer, a certificate in the prescribed form duly filled and signed by a duly authorised officer of the Government." 24. Rule 6 of Central Sales Tax (Kerala Rules) has been noticed in paragraph 5, which is to the following effect: "5. Rule 6 of the Central Sales Tax (Kerala) Rules, 1957 read as follows: "6. (1) Every dealer registered under Section 7 of the Act and every dealer liable to pay under the Act shall submit a return of all his transaction including those in the course of export of the goods out of the territory of India in Form II together with connected declaration forms so as to reach the assessing authority on or before the 20th of each month showing the turnover for the preceding month and the amount or amounts collected by way of tax together with proof for the payment of tax due thereon under the Act. Provided that in cases of delayed receipt of declaration forms, the dealer may submit the declaration forms at any time before the assessment is made: Provided further that the delay in submitting the declaration forms shall not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. 27. The ground on which Rule 6 was held as ultra vires has been clearly noticed by this Court in paragraph 6 as noticed above. It is relevant to notice that in the same paragraph this Court had noticed Section 13(4)(g) of the Act where the State was empowered to make rule with regard to the 'time'. Thus, this Court noticed the contradiction in phraseology of Section 8 sub-Section (4) and Section 13 subsection (4) and held that nonmention of time in Section 8(4) is for clearly denying the rule making power to make any rule pertaining to the time. Thus, the above case has no bearing in the present controversy, since, in the present case the time period is prescribed in Section 19(11) itself which is a part of the Act and has to be read with Section 3 subsection (3). 28. Another judgment which needs to be noticed is judgment of this Court in Commissioner of Central Excise, Madras versus Home Ashok Leyland Ltd., 2007 (4) SCC 51. The issue which came to be considered in the above case was noticed in paragraph 1 of the judgment, which is to the following effect: "1. In this civil appeal filed by the Department the short question which arises fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich further duty had been paid for any reason subsequent to the date of the receipt of inputs by the manufacturer is recognised. However, such right accrues to the manufacturer subject to his complying with the procedure of adjustment contemplated in Rule 57E, as amended." 30. In the above case, Rule 57E was amended w.e.f. 15.04.1987 providing for MODVAT credit but department contended that since the amendment shall apply prospectively the respondents were not entitled to claim MODVAT credit. The High Court had held that Rule 57E as amended was clarificatory in nature and shall not affect the right of manufacturer to claim MODVAT credit for duty paid on inputs. In paragraph 4 following has been held: "4. In our view, therefore, the courts below were right in holding that Rule 57E was procedural, clarificatory and therefore would not affect the substantive rights of the manufacturer of the specified final product to claim MODVAT credit for the duty paid on the inputs subsequent to the date of the receipt of those inputs. Consequently, the respondent manufacturer in the present case was entitled to take credit between the period 1681987 to 30&sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or a concession. It was open to the rulemaking authority to provide for a small abridgement or curtailment while extending a concession. Viewed from this angle, the argument that providing for such deduction amounts to levy of tax either on purchases of raw material effected outside the State or on sale of manufactured goods effected outside the State of Maharashtra appears to be beside the point and is unacceptable. So is the argument about apportioning the saleprice with reference to the proportion in which raw material was purchased within and outside the State." 33. A ThreeJudge Bench in (2005) 2 SCC 129, India Agencies (Regd.), Bangalore versus Additional Commissioner of Commercial Taxes, Bangalore had occasion to consider Rule 6(b)(ii) of Central Sales Tax (Karnataka) Rules, 1957, which requires furnishing original FormC to claim concessional rate of tax under Section 8(1). This Court held that the requirement under the Rule is mandatory and without producing the specified documents, dealers cannot claim the benefits. Following was laid down in paragraph 13: "13......Under Rule 6(b)(ii) of the Karnataka Rules, the State Government has prescribed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. This Court after noticing the scheme under Section 19 noticed following aspects in paragraph 11: "11. From the aforesaid scheme of Section 19 following significant aspects emerge: (a) ITC is a form of concession provided by the legislature. It is not admissible to all kinds of sales and certain specified sales are specifically excluded. (b) Concession 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." 36. This Court further held that it is a trite law that whenever concession is given by a statute the conditions thereof are to be strictly complied with in order to avail such concession. In paragraph 12, following has been laid down: "12. It is a trite law that whenever concession is given by statute or notification, etc. the conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The use of word 'shall' in Section 19(11) does not admit to any other interpretation except that the submission of Input claimed cannot be beyond the time prescribed. Section 19(11), in fact, gives additional time period for claim of Input Credit. The Statutory scheme contemplates filing of the timely return before 20th of the succeeding month. Rule 7 of Tamil Nadu Value Added Tax Rules, 2007 deals with filing of returns. Rule 7(a) and (b) are as follows: "7. Filing of Returns: (1)(a) Every registered dealer liable to pay tax under the Act, other than a dealer who opted to pay tax under subsection (4) of section 3 or section 6 or section 8 including agent of a nonresident dealer and casual trader, shall file return for each month in Form I on or before 20th of the succeeding m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne whether a provision is mandatory or directory. The broad purpose of the statute is important. The object of the particular provision must be considered. The link between the two is most important. The weighing of the consequence of holding a provision to be mandatory or directory is vital and, more often than not, determinative of the very question whether the provision is mandatory or directory. Where the design of the statute is the avoidance or prevention of public mischief, but the enforcement of a particular provision literally to its letter will tend to defeat that design, the provision must be held to be directory, so that proof of prejudice in addition to noncompliance of the provision is necessary to invalidate the act complained of. It is well to remember that quite often many rules, though couched in language which appears to be imperative, are no more than mere instructions to those entrusted with the task of discharging statutory duties for public benefit. The negligence of those to whom public duties are entrusted cannot by statutory interpretation be allowed to promote public mischief and cause public inconvenience and defeat the main object of the statute. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valid explanation for not claiming Input Tax Credit within the time provided under Section 19(11), hence, the authority had jurisdiction to extend the time. It is submitted that time period as contained in Section 19(11) is not akin to the law of limitation. We have already found that expression "shall" occurring in Section 19(11) is mandatory whose compliance is necessary for claiming Input Tax Credit. The appellant has placed reliance on judgment of this Court reported in Surinder Singh versus Central Government and Others, 1986 (4) SCC 667. Learned Counsel submits that in the above case Central Government which was exercising authority under Displaced Persons (Compensation and Rehabilitation) Act, 1954 was held to be entitled to extend the time which was required for depositing the auction amount. In the above case, the officials of the Central Government were exercising Revisional Jurisdiction as conferred under Section 33 of the Act to the Central Government. Facts of the case were noticed in paragraph 9 to the following effect: "9. The second question relates to the validity of the order of Shri Rajni Kant the officer to whom power under Section 33 was delegated, exte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ass any order which may be inconsistent with any of the provisions of the Act and the rules made thereunder. Therefore, the Central Government or the delegated authority has power to set aside any order of the subordinate authorities, or to issue directions which it may consider necessary on the facts of a case subject to the aforesaid rider. This power is intended to be used to do justice and to mitigate hardship to a party unriddled by technicalities. Shri Rajni Kant while exercising powers of the Central Government under Section 33 of the Act had ample jurisdiction to set aside the orders of the subordinate authorities cancelling the auction held on August 24, 1959 and to permit the appellant to deposit the balance amount of the purchase money and he further had jurisdiction to extend the time initially granted by him. Extension of time to enable the appellant to deposit the money did not amount to review of the earlier order dated February 6, 1970.........." 46. The above case was thus on its own facts, this Court held that in exercise of residuary power of Central Government, it had jurisdiction to pass such order in relation thereto as in its opinion the circumstances in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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