Ald Automotive Pvt. Ltd. vs The Commercial Tax Officer Now Upgraded As the Assistant Commissioner (Ct) & Ors.

1.1. Input Tax Credit is being allowed under Section 3 of the Tamil Nadu Value Added Tax Act, 2006 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. Sub–section

(3) is the part of the same scheme where tax payable under sub– section (2) by registered dealer shall be reduced, in the manner prescribed, to the extent of tax paid on his purchase of goods. [Para 19][231-B]

1.2 Section 3 (3) provided that tax payable under sub– Section (2) by registered dealer shall be reduced, in the manner prescribed, to the extent of tax paid on his purchase of goods specified in Part–B and Part–C of the First Schedule inside the State, who is registered dealer who sold the goods to him. The provision of Section 3 sub–Section (3) is a provision which entitled a registered dealer to obtain a tax credit which has been explained in Section 19. The submission that Section 19 is inconsistent to Section 3(3) is wholly misconceived. What is envisaged in Section

3 sub–Section (3) is amplified and explained in Section 19. The reduction in the tax as contemplated in Section 3 sub–section (3) has to be in manner and as provided in Section 19. Section 19(11) contains a condition for claiming the input tax credit. There are other various provisions in Section 19 itself where it contains provisions where no input tax credit is allowable, e.g. Section 19

(6) to Section 19 (10). [Para 21][231-H; 232-A-C]

1.3 Section 19(6) to Section 19(10) are not inconsistent to Section 3(3) which permits reduction of tax of registered dealer. When the input tax credit is to be allowed and when it is to be disallowed is elaborated in Section 19 which is self–contained scheme and benefit under Section 3 sub–Section (3) can be claimed only when conditions as enumerated in Section 19 are fulfilled. [Para 22][233-E]

1.4 In the instant 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 sub–section (3). [Para 27][236-B]

1.5 The input credit is in nature of benefit/ concession extended to dealer under the statutory scheme. The concession can be received by the beneficiary only as per the scheme of the Statute. [Para 32][238-C]

1.6 Input Tax Credit is admissible only as per conditions enumerated under Section 19 of the Tamil Nadu Value Added Tax Act, 2006. The interpretation put up by this Court in Jayam and Company case on Section 3(2) and 3(3) and Section 19(2) is fully attracted while considering the same provisions of Section 3(2) and 3(3) and provision of Section 19(11) of the Act. The Statutory scheme delineated by Section 19(11) neither can be said to be arbitrary nor can be said to violate the right guaranteed to the dealer under Article 19(1)(g) of the Constitution. Thus, there is no infirmity in the judgment of the High Court upholding the validity of Section 19(11) of the Act. [Para 37][241-F-H] Jayam and Company v. Assistant Commissioner and another (2016) 15 SCC 125 : [2016] 6 SCR 787 – relied on.

Sales Tax officer, Ponkunnam and another v. K.I. Abraham AIR (1967) SC 1823 – held inapplicable. Commissioner of Central Excise, Madras v. Home Ashok Leyland Ltd. (2007) 4 SCC 51 : [2007] 4 SCR 90 – distinguished.

R. K.Garg v. Union of India (1981) 4 SCC 675 : [1982]

1 SCR 947; Kailash Chandra and another v. Mukundi lal and others (2002) 2 SCC 678 : [2002] 1 SCR 605; Godrej and Boyce Mfg. Co. Pvt. Ltd. and Others v. Commissioner of Sales Tax and Others (1992) 3 SCC

624 : [1992] 3 SCR 683; India Agencies (Regd.), Bangalore v. Additional Commissioner of Commercial Taxes, Bangalore (2005) 2 SCC 129 : [2004] 6 Suppl. SCR 1987; State of Karnataka v. M. K. Agro Tech.(P) Ltd. (2017) 16 SCC 210 – referred to.

Whether Section19(11) is directory provision, non–compliance of which cannot be a ground for denial of input tax credit to the appellants; and whether denial of input tax credit to the appellants is contrary to the scheme of VAT Act, 2006.

2.1 The conditions under which Input Tax Credit is to be given are all enumerated in Section 19. The condition under which the concession and benefit is given is always to be strictly construed. In event, it is accepted that there is no time period for claiming Input Tax Credit as 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 self–contained 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. [Para 38][242-B-D]

2.2 Section 19(11) thus allowed an extended period for Input Credit which if not claimed in any month can be claimed before the end of the financial year or before the 90 days from the date of purchase whichever is later. The provision of Section 19(11) is thus an additional benefit given to dealer for claiming Input Credit in extended period. The use of word “shall make the claim” needs no other interpretation. Thus time period as provided in Section 19(11) is mandatory. [Paras 40, 41, 42][243-D-E; 245-C] Dal Chand v. Municipal Corporation, Bhopal and another (1984) 2 SCC 486 – held inapplicable.

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.

3. In the scheme of Tamil Nadu Value Added Tax Act, 2006, there is no power conferred on any authority under the Act to dilute the mandatory requirement under Section 19(11). The taxing statute has to be strictly construed. Nothing is to be read in, nothing is to be implied and language used in taxing statute had to be looked into fairly. The benefits envisaged in the taxing statute had to be extended as per the restrictions and conditions envisaged therein. The statute having not given any indication for extension of time which is a condition for claiming Input Tax Credit, the submission that period could have been extended by assessing authority is unfounded and cannot be accepted. [Para 46][247-E-F]

Surinder Singh v. Central Government and Others (1986) 4 SCC 667 : [1986] 3 SCR 946 – distinguished.