TMI Blog2023 (7) TMI 1226X X X X Extracts X X X X X X X X Extracts X X X X ..... ST Act, 2017 with minor differences which are not much relevant in the present context. Hence this section needs no much elaboration. When analyzed, Section 16(2) shall not appear to be a provision which allows input tax credit, rather ITC enabling provision is Section 16(1). On the other hand, Section 16(2) restricts the credit which is otherwise allowed to only such cases where conditions prescribed in it are satisfied. Therefore, Section 16(2) in terms only overrides the provision which enables the ITC i.e., Section 16(1). This is evident from the manner in which Section 16(2) is couched. The non obstante clause in Section 16(2) is followed by a negative sentence no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless . This negative sentence pellucidly tells that unless the conditions mentioned in Section 16(2) are satisfied, no credit will be eligible. This stipulation manifests that Section 16(2) is not an enabling provision but a restricting provision. What it restricts is the eligibility which was otherwise given U/s 16(1). It should be noted, when a non obstante clause is a mere restri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected by the 1st respondent. Hence there are no force in the present contentions. Petition dismissed. - HON BLE SRI JUSTICE U. DURGA PRASAD RAO AND HON BLE SRI JUSTICE T. MALLIKARJUNA RAO For the Petitioner: Sri Rama Krishna Kumar Potturi For the Respondent : Learned Advocate General Nos.1 and 2 and The Deputy Solicitor General for 3rd respondent ORDER: (PER HON BLE SRI JUSTICE U. DURGA PRASAD RAO) The petitioner prays for writ of mandamus declaring (a) Section 16(4) of APGST Act, 2017 and Section 16(4) of CGST Act, is violative of Article 14, 19(1)(g) and Section 300-A of Constitution of India. (b) That the non-obstante clause in Section 16(2) of APGST/CGST Act, 2017 would prevail over Section 16(4) of APGST / CGST Act, 2017. (c) That notification issued by Government of Andhra Pradesh vide G.O.Ms. No. 264, dated 11.09.2020 and providing extension of time for filing returns only to the non-resident and not allowing such extension to the others and thereby distinguishing other tax payers on account of COVID-19 pandemic is arbitrary, illegal and violative of Article 14 of Constitution of India. (d) That the action of Respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g on 02.03.2022. (e) Against the above notice, the petitioner through his advocate confirmed that he already filed his reply dated 17.01.2022. (f) Subsequently the petitioner received e-mail dated 14.03.2022 sent by the 1st respondent along with an attachment containing order vide AOO No. ZH370322OD48625, dated 14.03.2022 whereunder, without considering the objections raised by the petitioner in his reply, the 1st respondent wrongly held as if the petitioner made an irregular claim of ITC of an amount of Rs. 4,78,626/- and fixed Rs. 11,24,994/- towards tax, penalty and interest. Hence the writ petition. 3. 1st respondent filed counter contending thus: (a) The writ petition is perverse and liable to be dismissed in limini as the writ petition cannot be filed contrary to the legislative intent. Further, the petitioner has an efficacious alternative remedy of appeal. (b) It is false to allege that notice dt: 16.12.2021 was sent by department through private e-mail ID. The said e-mail ID is the official e-mail ID allotted to the 1st respondent. Further, the notice was sent in Form GST DRC-01 as per Rule 142 of GST Rules, 2017 and various contentions raised b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If there is no time limitation, one would go on claiming ITC after indefinite period, which would defeat the very purpose of the limitation prescribed in the enactment. Therefore, it is the primary obligation of the taxable person to scrupulously abide the statutory obligations. (d) It is not obligatory on the part of Assessing Authority to issue opportunity under Section 74(5) of the APGST / CGST Acts, 2017 as it is only optional. The petitioner obtained registration voluntarily and therefore, there is no separate provision or special exemption for the taxable person. (e) It was only a proposal made to levy penalty at the rate equivalent to the amount of Input Tax irregularly claimed as the petitioner was reminded with an option for reduced penalty @ 25% of tax demanded if the petitioner pays tax and applicable interest within 30 days from the date of issuance of show cause notice. But the petitioner did not exercise this option also. Hence the writ petition is liable to be dismissed. 4. The petitioner filed a lengthy reply denying the counter averments. 5. Heard arguments of Sri Rama Krishna Kumar Potturi, learned counsel for petitioner, learned Advocate General repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4/- towards tax, interest and penalty under Section 74 of the APGST / CGST Act, 2017. Learned counsel strenuously argued that Input Tax Credit is a statutory right which an assessee is entitled to claim and placing stumbling blocks by way of imposing time limit under Section 16(4) of the APGST / CGST Act, 2017 from claiming such right tantamount to violation of Article 14, 19(1)(g) and 300A of the Constitution of India. He would further argue, Section 16(2) of APGST Act / CGST Act, 2017 which commences with a non-obstantee clause will override Section 16(4) of the said Act, meaning thereby, if the conditions mentioned in Section 16(2) are complied with by an assessee, he will be entitled to claim ITC without reference to the time limit prescribed under Section 16(4) and in the instant case, since the 1st respondent permitted the petitioner to file return with late fee of Rs. 10,000/-, the petitioner cannot be deprived of the right of ITC on the sole ground that claim was made beyond the period prescribed under Section 16(4). (a) Learned counsel would argue that in the backdrop of facts, the imposition of interest and 100% of penalty that too without giving an opportunity o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the former. Learned AG would expatiate that in order to strike down a provision in a statute to be violative of Article 14, it must be established that the said provision is arbitrary and negated the equality. Said arbitrariness must be manifest from the provision impugned. In this context he relied upon State of Tamil Nadu v. K. Shyam Sunder (2011) 8 SCC 737 . Learned Advocate General while supporting the exaction of interest and 100% of penalty on the tax due, argued that the petitioner alone was not the sufferer of COVID-19 pandemic prevalent circumstances and other traders of his ilk who were under similar circumstances have filed their returns in due time and therefore the petitioner cannot be given special treatment. He thus prayed to dismiss the writ petition. 10. Court s Findings: The precise reason why the Department proposed to levy tax, penalty and applicable interest invoking powers under Section 74(1) of the APGST Act, 2017 is that the petitioner filed monthly returns belatedly as mentioned below, after due date prescribed under Section 39 of the APGST Act, 2017 for the month of September 2020 and thereby claimed ITC of Rs. 4,78,626/- irregularly in contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed time for filing the return relating to the month of September of succeeding year. The 1st respondent thus observed that the petitioner can claim ITC subject to fulfillment of conditions stipulated in Section 16 of SGST/CGST Act r/w Section 20 of IGST Act and the claim made through GSTR 3B return filed after prescribed date was not valid. In the light of above diverse contentions the concept of ITC and relevant provisions have to be perused. 11. The input tax credit owed its genesis to the legislative measure of introducing APGST/CGST Acts to eradicate cascading effect of taxes which existed under Excise, VAT and Service tax. Input Tax is the tax paid by the buyer on purchase of goods or services. Such tax which is paid by the purchaser can be reduced from the liability payable on outward supplies known as Output Tax. Precisely input tax credit is the tax reduced from output tax payable on account of sale. For instance A purchased goods worth Rs. 18,000/- on which he paid GST of Rs. 3,240/- at 18%. Then he sold goods worth Rs. 22,000/- whereon GST payable @ 18% is Rs. 3,960/-. Thus the net GST payable after availing input tax credit is Rs. 720/- (3,960-3,240). In that manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless, (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other taxpaying documents as may be prescribed; (b) he has received the goods or services or both. [ Explanation :- For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services- (i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise; (ii) where the services are provided by the supplier to any person on the direction of and on account of such registered person.] (c) subject to the provisions of [Section 41 or Section 43A], the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices or both to him unless,- (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other taxpaying documents as may be prescribed; [(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37] [Inserted by Finance Act, 2021, w.e.f 1-1-2022 vide Noti. No. 39/2021-Central Tax, dt. 21-12-2021] (b) he has received the goods or services or both. [ Explanation .- For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services- (i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise; (ii) where the services are provided by the supplier to any person on the direction of and on account of such registere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ****] [Words invoice relating to such omitted by the Finance Act, 2020 (12 of 2020), dt.27-3-2020, w.e.f 1-1-2021 vide SO 464(E), dt.22-12-2020.] debit note pertains or furnishing of the relevant annual return, whichever is earlier. [PROVIDED that the registered person shall be entitled to take input tax credit after the due date of furnishing of the return under section 39 for the month of September, 2018 till the due date of furnishing of the return under the said section for the month of March, 2019 in respect of any invoice or invoice relating to such debit note for supply of goods or services or both made during the financial year 2017-18, the details of which have been uploaded by the supplier under sub-section (1) of section 37 till the due date for furnishing the details under sub-section (1) of said section for the month of March, 2019.] [Inserted vide Removal of Difficulties Order, 2018-Central Tax, dt. 31-12-2018, w.e.f. 31-12-2018] 15. On a careful scrutiny, Section 16 of the APGST Act, 2017 prescribes the eligibility and conditions for a GST assessee to claim credit of Input Tax which was charged on any supply of goods or services or both which were use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Notwithstanding anything contained in this Section . The general purpose of a non obstante clause has been explained in a plethora of decisions. (i) In Union of India v. G.M. Kokil and others [1984] (Supp) SCR 196 = MANU/SC/0210/1984 it was observed thus: It is well-known that a non obstane clause is a legislative device which is usually employed to give overriding effect to certain provisions over some contrary provisions that may be found either in the same enactment or some other enactment, that is to say, to avoid the operation and effect of all contrary provisions. (ii) In Chandavarkar Sita Ratna Rao v. Ashalata S. Guram AIR 1987 SC 117 = MANU/SC/0531/1986 the Apex Court held 69. A clause beginning with the expression notwithstanding anything contained in this Act or in some particular provision in the Act or in some particular Act or in any law for the time being in force, or in any contract is more often than not appended to a section in the beginning with a view to give the enacting part of the section in case of conflict an overriding effect over the provision of the Act or the contract mentioned in the non-obstante clause. It is equivale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd stands alone by itself (See p. 236). (vi) In ICICI Bank Ltd v. SIDCO Leathers Ltd., reported in MANU/SC/2337/2006: (2006) 10 SCC 452 , that the wide amplitude of a non-obstante clause must be kept confined to the legislative policy and it can be given effect to, to the extent the Parliament intended and not beyond the same and that in construing the provisions of a non-obstante clause, it was necessary to determine the purpose and object for which it was enacted (See page 465-6). (vii) In Central Bank of India v. State of Kerala reported in MANU/SC/0306/2009 : (2009) 4 SCC 94 , this Court reiterated that while interpreting a non-obstante clause the court is required to find out the extent to which the legislature intended to give it an overriding effect. 18. The above jurimetrical jurisprudence expounds that a non obstante clause is a legislative device usually employed in a statute to give overriding effect to certain provisions over some other contradictory provisions in the same or other statute. The Court shall try to find out the extent to which the legislature had intended to give the overriding effect to the enacting part of the provision succeeding to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions have no inconsistency between them. In R.S. Raghunath, the Apex Court further observed thus: But the non-obstante clause need not necessarily and always be co-extensive with the operative part so as to have the effect of cutting down the clear terms of an enactment and if the words of the enactment are clear and are capable of a clear interpretation on a plain and grammatical construction of the words the non-obstante clause cannot cut down the construction and restrict the scope of its operation. In such cases the non-obstante clause has to be read as clarifying the whole position and must be understood to have been incorporated in the enactment by the Legislature by way of abundant caution and not by way of limiting the ambit and scope of the Special Rules. Further, the influence of a non obstante clause has to be considered on the basis of the context also in which it is used. Therefore, Section 16(4) being a non-contradictory provision and capable of clear interpretation, will not be overridden by non obstante provision U/s 16(2). As already stated supra 16(4) only prescribes time restriction to avail credit. For this reason, the argument that 16(2) ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner s case (supra) the Apex Court with reference to Section (19) of Tamilnadu Value Added Tax Act, 2016 held that ITC is a concession. The Apex Court observed thus: 11.xxxx 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 conditions 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 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 it is a concession granted by virtue of Section 19. As a fortiori, conditions specified in Section 10 must be fulfilled. In that hue, we find that Section 10 makes original tax invoice relevant for the purpose of claiming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit/concession extended to the dealer under the statutory scheme. The concession can be received by the beneficiary only as per the scheme of the statute. Reference is made to the judgment of this Court in Godrej Boyce Mfg. Co. (P) Ltd. v. CST. Rules 41 and 42 of the Bombay Sales Tax Rules, 1959 provided for the set-off of the purchase tax. This Court held that the rule-making authority can provide curtailment while extending the concession. 37 The judgment on which the learned Advocate General of Tamil Nadu had placed much reliance i.e. Jayam Co. v. Commr. is the judgment which is relevant for the present case. In the above case, this Court had the occasion to interpret the provisions of the Tamil Nadu Value Added Tax Act, 2006, 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 the following aspects in para 11: (SCC p. 134) 11. From the aforesaid scheme of Section 19 the 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed cannot be beyond the time prescribed. (Emphasis Supplied) 23. In USA Agencies case (supra) the challenge before High Court of Madras was the vires of Section 19(11) of Tamilnadu VAT Act, 2006 which prescribed modalities and time frame as regards availment of input tax credit. The High Court of Madras held thus: 38. Provision for availing concession is to be strictly construed and followed. Input Tax Credit , which is in the nature of concession or indulgence, could be availed only in the manner prescribed under Section 19. Law is well settled that the person, who claims exemption or concessional rate, must obey and fulfill the mandatory requirements exactly. Unless there is strict compliance with the provisions of the statute, the registered Dealer is not entitled to claim Input Tax Credit . Apart from Section 19 of TN VAT Act, there is no independent right to claim Input Tax Credit . When Section 19(11) stipulates time frame for availment of Input Tax Credit , the registered Dealer must strictly follow the mandatory requirements of the provision . (Emphasis Supplied) 39. The availment of Input Tax Credit is creature of Statute. The conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment to make rules for carrying out the provisions of the Act on recommendations of the Council. Sub-section (2) of Section 164 further provides that without prejudice to the generality of the provisions of sub-section (1), the Government could also make rules for all, or any of the matters, which by this Act are required to be or may be prescribed or in respect of which, provisions are to be or may be made by the rules. Combined effect of the powers conferred to subordinate Legislature under sub-sections (1) and (2) of Section 164 of the CGST Act would convince us that the prescription of time limit under sub-rule (1) of Rule 117 of the CGST Rules is not ultra vires the Act. Likewise, such prescription of time limit cannot be stated to be either unreasonable or arbitrary. When the entire tax structure of the country is being shifted from earlier framework to a new one, there has to be a degree of finality on claims, credits, transfers of such credits and all issues related thereto. The petitioners cannot argue that without any reference to the time limit, such credits should be allowed to be transferred during the process of migration. Any such view would hamper the effective ..... X X X X Extracts X X X X X X X X Extracts X X X X
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