ALD AUTOMOTIVE PVT. LTD. versus THE COMMERCIAL TAX OFFICER NOW UPGRADED AS THE ASSISTANT COMMISSIONER (CT) & ORS. on 12 October 2018

[2018] 13 S.C.R. 217

ALD AUTOMOTIVE PVT. LTD.

v.

THE COMMERCIAL TAX OFFICER NOW UPGRADED AS THEASSISTANT COMMISSIONER (CT) & ORS.

(Civil Appeal Nos. 10412-10413 of 2018)

OCTOBER 12, 2018

[A. K. SIKRI AND ASHOK BHUSHAN, JJ.]

Tamil Nadu Value Added Tax Act, 2006: s. 19(11) – Input TaxCredit – Claim of – Entitlement to – On facts, appellant-assesseeclaiming input tax credit of the amount of tax paid on the purchases– Appellant could not claim the input tax credit, when it filed itsreturn for the assessment year 2007-2008 for want of tax invoices– Appellant filed revised returns on 6.10.2008 claiming input taxcredit on the receipt of the tax invoices from the dealer – AssessingAuthority relying on time limit u/s. 19(11) denied the benefit of inputtax credit since it was belated – Writ petition by assessee – Rejectionof, upholding validity of s. 19(11) – On appeal, held: There is noinfirmity in the judgment of the High Court upholding the validityof s. 19(11) – Input credit is in nature of benefit/ concession extendedto dealer under the statutory scheme and is to be strictly construed– When the input tax credit is to be allowed and when it is to bedisallowed is elaborated in s. 19 which is self-contained schemeand benefit u/s.3(3) can be claimed only when conditions asenumerated in s. 19 are fulfilled – Statutory scheme delineated bys.19(11) neither can be said to be arbitrary nor can be said toviolate the right guaranteed to the dealer u/Art. 19(1)(g) of theConstitution – S. 19(6) to s.19(10) are not inconsistent to s.3(3)which permits reduction of tax of registered dealer – S. 19(11) allowsan extended period for Input Credit which if not claimed in anymonth can be claimed before the end of the financial year or beforethe 90 days from the date of purchase whichever is later – Provisionof s. 19(11) is an additional benefit given to dealer for claimingInput Credit in extended period – Use of word ‘shall make the claim’needs no other interpretation – Thus, time period as provided in s.19(11) is mandatory – There is no power conferred on any authorityunder the Act to dilute the mandatory requirement u/s.19(11) – Statute

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Ahaving not given any indication for extension of time which is acondition for claiming Input Tax Credit, the period could not havebeen extended by assessing authority.

Dismissing the appeals, the Court

HELD: Whether Section 19(11) violates Article 14 and 19(1)(g)Bof the Constitution of India and whether Section 19(11) isinconsistent to Section 3(3) of the Tamil Nadu Value Added TaxAct, 2006.

1.1. Input Tax Credit is being allowed under Section 3 ofthe Tamil Nadu Value Added Tax Act, 2006 which is provision onC“levy of taxes on sale of goods”. Section 3 is a charging sectionwhich 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 mannerprescribed, to the extent of tax paid on his purchase of goods.D[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 mannerprescribed, to the extent of tax paid on his purchase of goodsspecified in Part–B and Part–C of the First Schedule inside theEState, who is registered dealer who sold the goods to him. Theprovision of Section 3 sub–Section (3) is a provision which entitleda registered dealer to obtain a tax credit which has been explainedin Section 19. The submission that Section 19 is inconsistent toSection 3(3) is wholly misconceived. What is envisaged in Section3 sub–Section (3) is amplified and explained in Section 19. TheFreduction 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 areother various provisions in Section 19 itself where it containsprovisions where no input tax credit is allowable, e.g. Section 19G(6) to Section 19 (10). [Para 21][231-H; 232-A-C]

1.3 Section 19(6) to Section 19(10) are not inconsistent toSection 3(3) which permits reduction of tax of registered dealer.When the input tax credit is to be allowed and when it is to bedisallowed is elaborated in Section 19 which is self–containedscheme and benefit under Section 3 sub–Section (3) can beH

claimed only when conditions as enumerated in Section 19 arefulfilled. [Para 22][233-E]

1.4 In the instant case the time period is prescribed inSection 19(11) itself which is a part of the Act and has to be readwith Section 3 sub–section (3). [Para 27][236-B]

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

1.6 Input Tax Credit is admissible only as per conditionsenumerated under Section 19 of the Tamil Nadu Value AddedTax Act, 2006. The interpretation put up by this Court in Jayamand Company case on Section 3(2) and 3(3) and Section 19(2) isfully attracted while considering the same provisions of Section3(2) and 3(3) and provision of Section 19(11) of the Act. TheStatutory scheme delineated by Section 19(11) neither can besaid to be arbitrary nor can be said to violate the right guaranteedto the dealer under Article 19(1)(g) of the Constitution. Thus,there is no infirmity in the judgment of the High Court upholdingthe validity of Section 19(11) of the Act. [Para 37][241-F-H]

Jayam and Company v. Assistant Commissioner andanother (2016) 15 SCC 125 : [2016] 6 SCR 787 – reliedon.

Sales Tax officer, Ponkunnam and another v. K.I.Abraham AIR (1967) SC 1823 – held inapplicable.

Commissioner of Central Excise, Madras v. Home AshokLeyland 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. Mukundilal 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 SCC624 : [1992] 3 SCR 683; India Agencies (Regd.),Bangalore v. Additional Commissioner of CommercialTaxes, Bangalore (2005) 2 SCC 129 : [2004] 6 Suppl.

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ASCR 1987; State of Karnataka v. M. K. Agro Tech.(P)Ltd. (2017) 16 SCC 210 – referred to.

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

2.1 The conditions under which Input Tax Credit is to begiven are all enumerated in Section 19. The condition under whichthe concession and benefit is given is always to be strictlyconstrued. In event, it is accepted that there is no time periodCfor claiming Input Tax Credit as contained in Section 19(11), theprovision become too flexible and give rise to large number ofdifficulties including difficulty in verification of claim of InputCredit. Taxing Statutes contains self–contained scheme of levy,computation and collection of tax. The time under which a returnis to be filed for purpose of assessment of the tax cannot beDdependent on the will of a dealer. The use of word ‘shall’ in Section19(11) does not admit to any other interpretation except that thesubmission of Input claimed cannot be beyond the timeprescribed. Section 19(11), in fact, gives additional time periodfor claim of Input Credit. The Statutory scheme contemplatesEfiling of the timely return before 20[th] of the succeeding month.Rule 7 of Tamil Nadu Value Added Tax Rules, 2007 deals withfiling of returns. [Para 38][242-B-D]

2.2 Section 19(11) thus allowed an extended period for InputCredit which if not claimed in any month can be claimed beforeFthe end of the financial year or before the 90 days from the dateof purchase whichever is later. The provision of Section 19(11) isthus an additional benefit given to dealer for claiming Input Creditin extended period. The use of word “shall make the claim” needsno other interpretation. Thus time period as provided in Section19(11) is mandatory. [Paras 40, 41, 42][243-D-E; 245-C]G

Dal Chand v. Municipal Corporation, Bhopal andanother (1984) 2 SCC 486 – held inapplicable.

Whether Assessing Authorities could have extended the periodfor claiming input Tax Credit beyond the period as provided inSection 19(11) of Tamil Nadu VAT Act, 2006.H

A

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

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

Case Law Reference

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 10412-10413 of 2018

From the Judgment and Order dated 17.07.2013 of the High Courtof Judicature at Madras in Writ Petition Nos. 5385 and 5386 of 2010.

H

AWITH

Civil Appeal Nos. 10414-10450, 10451-10455, 10498-10499,10456-10481, 10482-10497, 10509-10513, 10503-10507, 10523,10525-10527, 10544, 10522, 10524, 10519-10521, 10500-10502, 10508,10516-10518, 10543, 10514-10515, 10528, 10534-10538, 10529-B10532, 10533, 10539-10542, 10549, 10545-10548, 10550, 10551-10553,10554-10558, 10559 of 2018.

S. K. Bagaria, Sr. Adv., Vijay Narayan, Adv. Gen., Tamil Nadu,Rajeev Mishra, Sanand Ramakrishnan, Madan Mohan Bora,R. Hemalatha, S. Nithin, Ms. Arunima Singh, P. R. Kovilan, V. Vasudevan,CMs. Geetha Kovilan, E. R. Kumar, Ajit Kumar Singh, Aditya Sharma,Akash Jindal for M/s Parekh & Co., T. R. B. Sivakumar, S. Nandakumar,M. Soundarasarankumar, Ms. Deepika Nandakumar, Sugam Kumar Jha,Naresh Kumar, R. Anand Padmanabhan, Shashi Bhushan Kumar,Gautam Narayan, Ms. Mahamaya Chatterjee, Ms. Shivani Vij,K. V. Vijayakumar, Mrs. Prabha Swami, Mahesh Agrawal,DMs. Sadapurna Mukherjee, E. C. Agrawala, Ms. Rashmi Nandakumar,Nikhil Swami, Ms. Divya Swami, Ms. Prabh Swami, Vinodh Kanna B.,A. Sriram, B. Balaji, K. V. Vijayakumar, Advs. for the appearing parties.

The Judgment of the Court was delivered by EASHOK BHUSHAN, J. 1. Delay condoned. Leave granted.

2. All these appeals have been filed against common judgmentdated 17.07.2013 of Madras High Court dismissing a bunch of writpetitions filed by the appellants. The main challenge in the writ petitionswas provision of Section 19(11) of Tamil Nadu Value Added Tax Act,2006 (hereinafter referred to as the “Tamil Nadu VAT Act,2006”). ForFappreciating the issues raised in this batch of appeals it is sufficient tonotice the facts in Civil Appeal Nos. 10412-10413 of 2018 arising out ofSLP(C)Nos. 36112-36113 of 2013(ALD Automotive Pvt. Ltd. vs. TheCommercial Tax Officer and others).

3. The appellant Company is a registered dealer under Tamil NaduGVAT Act, 2006. The appellant Company is engaged in the business ofleasing and fleet management of the motor vehicles and resale of usedmotor vehicles. The head office of the Company is at Mumbai. Thehead office of the appellant negotiates the purchase price with the localregistered dealers in Tamil Nadu and issues the purchase order to the H

dealer along with the payment including the tax payable under the TamilNadu VAT Act, 2006. The registered dealer raises the tax invoice asand when the motor vehicle is ready for delivery to the appellant. Thedate of purchase for the vehicle in the books of the appellant is same asthe date of delivery. The tax invoices of such purchases are receivedafter a considerable delay as the original documents are sent to theRegional Transport Authority for registration of motor vehicles. Theappellant enters the details of the tax invoice containing the payment oftax in its books of accounts. The appellant had outsourced the job ofcollection of original tax invoices to one M/s. MID Controls PrivateLimited, an Agency specialised for collecting documents. The appellantis entitled to claim Input Tax Credit of the amount of tax paid on thepurchases made from the registered dealer of motor vehicle as per Section19(2) of the Tamil Nadu VAT Act, 2006. As per Section 19(11), if adealer has not claimed Input Tax Credit for a particular month, the dealercan claim the Input Tax Credit before the end of the financial year orbefore 90 days from the date of purchase whichever is later. When theappellant filed its returns for the assessment year 2007-2008 for want ofthe tax invoices, the said Input Tax Credit could not be claimed. Theappellant, however, filed revised returns claiming Input Tax Credit onthe receipt of the tax invoices from the dealer. The appellant also filedits monthly returns for the period from April, 2007 to February, 2008.The appellant had filed a monthly return for the month of March, 2008on 06.10.2008. There was delay in filing return. Due to late receipt oforiginal purchase invoices, the appellant revised its returns for the periodfrom March, 2008 to January, 2009 in the month of March, 2009.

4. In the returns filed on 06.10.2008, the appellant claimed InputTax Credit of Rs.42,04,628/-. By order dated 21.11.2008, the CommercialTax Officer rejected the Input Tax Credit claimed by the appellant in themonth of March, 2008. On a writ petition filed by the appellant beingWrit Petition(C) No.18137 of 2009, the High Court set aside the orderconfirming the proposal to disallow the Input Tax Credit and directed theCommercial Tax Officer to pass appropriate orders in accordance withlaw. Notice was issued proposing to reject the appellant’s revised returnswhich was objected. In the objections, the appellant stated that the delayin getting the original tax invoices was only due to the fact that theOriginal Tax Invoices were received belatedly from the registered dealers.Notice dated 01.06.2009 was issued confirming the notice and rejecting AB

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Athe appellant’s objections by treating the entire amount of Input TaxCredit of Rs.1,28,36,822/- as not admissible for the assessment year2008-2009 taking the view that it was a belated claim. The appellantfiled writ petition. In the writ petition following prayers were made:

“For the reasons stated above, it is prayed that this Hon’ble CourtBmay be pleased to issue a Writ of Declaration or any otherappropriate Writ, order or direction in the nature of Writ, declaringSection 19(11) of the Act read with Rule 10(2) of the Tamil NaduValue Added Tax Rules, 2007 as ultra vires the provisions of theAct, arbitrary and violative of Articles 14 and 19(1)(g) of theConstitution of India, pass such other or further orders as thisCHon’ble Court may deem fit and proper on the facts andcircumstances of the case and thus render justice.

For the reasons stated above, it is prayed that this Hon’ble Courtmay be pleased to issue a Writ of Certiorari, Mandamus or anyother appropriate Writ, order or direction or order in the nature ofDwrit, quash the impugned notice issued by the respondent in TN33421463542/08-09 dated 01.06.2009 served on the petitioner on16.06.2009 and direct the respondent to allow the appellant’s claimof Input Tax Credit for the sum of Rs.1,28,36,822/-, pass suchother or further orders as this Hon’ble Court may deem fit andEproper on the facts and circumstances of the case and thus renderjustice.”

5. We may also notice the facts of another Civil Appeal No. 10503-10507 of 2018 arising out of SLP(C) Nos.11319-11323 of 2014 (Sri DeviEnterprises vs. The Commercial Tax Officer & Anr.).F

6. The appellant is a partnership firm which owns petrol pumpand deals in petrol, diesel, Auto LPG and Lubricating Oils (all productsof Bharat Petroleum Corporation Limited). The appellant’s claim forInput Tax Credit was disallowed by order dated 11.04.2011. Therespondent placed reliance on time limit under Section 19(11) of TamilGNadu 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 reliefswere claimed:

“28. It is therefore just and necessary that this Hon’ble Courtmay be pleased to issue a Writ of Declaration or any otherH

appropriate writ, order or direction under Article 226 of theConstitution of India, declaring that 19(11) of the Tamil NaduValue Added Tax Act, 2006 is inconsistent with the charging Section3, and the general scheme of annul assessment under Sections20, 21, 22 and 27 Of the Tamil Nadu Value Added Tax Act, 2006,and void is being arbitrary and irrational infringing the rights of thepetitioner under Article 14 and 19(1)(g) and the resultant taxdemands arising out of disallow of input credit tax are violative ofArticles 265 and 300A of the Constitution of India, 1950, and,therefore, unenforceable, or pass such further or other orders asmay deem fit and proper in the circumstances of this case andrender justice.

29. It is therefore just and necessary that this Hon’ble Court maybe pleased to issue a Writ of Certiorari or and other appropriatewrit order or direction under Article 226 of the Constitution ofIndia quashing the proceedings of the First Respondent herein inhis TIN 33251300045/06-07 dated 11.04.2011 and to quash thesame or pass such further or other orders as may deem fit andproper in the circumstance of the case and render justice.”

7. Similarly, large number of writ petitions were filed in MadrasHigh Court by other writ petitioners where Input Tax Credit wasdisallowed on account of non-compliance of Section 19(11) of the TamilNadu VAT Act, 2006. All the writ petitions were decided by commonjudgment dated 17.07.2013. The Division Bench of the Madras HighCourt by the impugned judgment upheld the validity of Section 19(11) ofthe Tamil Nadu VAT Act, 2006 and upheld the orders passed by therespondents denying the benefit of Input Tax Credit. The High Courtfurther, in the cases where final orders of assessment have beenchallenged, granted liberty to the appellants to prefer statutory appealwithin 60 days from the receipt of a copy of the order, the same was tobe entertained by the appellate authority subject to the assessee full-filling other mandatory statutory conditions. It is useful to notice theoperative portion of the judgment contained in paragraphs 84,85 and 86,which is to the following effect:

“84. The other bunch of writ petitions challenging the assessmentorder/show cause notices denying the credit taken in the revisedreturns involving Section 19(11) of TN VAT Act are notmaintainable. The writ petitions challenging the constitutionality AB

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of Section 19(11) having failed the writ petitions challengingassessment orders/show cause notices have no legs to stand andtherefore, they should necessarily fail.

85. In cases where final orders of assessment have beenchallenged, the assessees shall be entitled to prefer statutory appealBagainst such order and if such appeals are presented, whithin aperiod of 60 days from the date of receipt of a copy of this order,the same shall be entertained by the appellate authority subject tothe assessee full-filling other mandatory statutory conditions exceptrejecting those appeals on the ground of limitation. In ceases wherethe petitioners have challenged show cause notices, they are atCliberty to submit their explanation. If such explanation is submittedwithin a period of 30 days from the date of receipt of a copy ofthis order, the assessing authority shall consider the case inaccordance with law.

86. In the result, all the writ petitions are dismissed holding thatSection 19(11) is a valid piece of legislation, cannot be struckdown as being either unreasonable or discriminatory and violativeof Article 265 and 360A of the Constitution of India. The interimstay granted in all writ petitions stand vacated and themiscellaneous petitions are closed. There is no order as to costs.”

D

E8. All these appeals have been filed challenging common judgmentdated 17.07.2013.

9. We have heard learned counsel for the appellants as well asthe learned Advocate General appearing for the State of Tamil Nadu.

10. Learned counsel for the appellants in support of the appealscontend that substantive and vested right of a registered dealer to claimInput Tax Credit cannot be curtailed and fettered by an unreasonablerestriction imposed under Section 19(11) of the Tamil Nadu VAT Act,2006 requiring claim to be made within 90 days from the date of purchaseor before the end of the financial year whichever is later.

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11. It is submitted that Section 19(11) makes the enforcement ofthe substantive right unreasonable as well as arbitrary and violative ofArticle 14 and 19(1)(g) of the Constitution. Such right under Section3(3) of the Act cannot be taken away by Section 19(11) which is only aprocedural provision. Section 19(11) is inconsistent with the charging H

Section 3(3) of the Act. In any view of the matter, Section 19(11) is onlya directory provision and cannot be held to be mandatory. Sections 3(3)and 19(11) being part of the same scheme that is to allow Input TaxCredit, Section 19(11) has to be construed harmoniously so as not totake away the right which has been given under Section 3(3). Statutorybenefit under Section 3(3) is mandatory being part of charging Section.Section 3 which entitles claim of Input Tax Credit does not contain anylimitation hence such right could not be hedged by any limitation, ascontained in Section 19(11).

12. Learned Advocate-General of the State of Tamil Nadu refutingthe submissions of learned counsel for the appellants contends that Section19(11) of the Tamil Nadu VAT Act, 2006 contains essential conditionsunder which Input Tax Credit can be claimed by a dealer, hence, on non-compliance of the conditions the Input Tax Credit has rightly been deniedto the appellants. Section 19(11) is a part of the same statutory schemeand does not suffer from any ultra-vires. Learned Advocate-Generalsubmits that judgment of this Court in Jayam and Company vs.Assistant Commissioner and another, 2016 (15) SCC 125, wherevalidity of Section 19(20) of the T.N.VAT Act, 2006 has been upheldand it has been laid down that whenever concession is given by thestatute or notification, the conditions thereof should strictly be compliedwith in order to avail such concession, is fully applicable in the facts ofthe present case and all the appeals are liable to be dismissed.

13. From the submissions of the learned counsel for the partiesand evidence on record following are the issues which arise forconsideration in this batch of appeals :

(1) Whether Section 19(11) violates Article 14 and 19(1)(g) of theConstitution of India ?

(2) Whether Section 19(11) is inconsistent to Section 3(3) of theAct ?

(3) Whether Section19(11) is directory provision, non-complianceof which cannot be a ground for denial of input tax credit to theappellants ?

(4) Whether denial of input tax credit to the appellants is contraryto the scheme of VAT Act, 2006 ?

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A(5) Whether Assessing Authorities could have extended the periodfor claiming Input Tax Credit beyond the period as provided inSection 19(11) of Tamil Nadu VAT Act, 2006 ?

14. Before we enter into the submissions of the learned counselof the parties, it is necessary to notice the statutory scheme as delineatedBby the Tamil Nadu Value Added Tax Act, 2006. The Tamil Nadu VATAct, 2006 has been enacted to consolidate and amend the law relating tothe levy of tax on sale and purchase of the goods in the State of TamilNadu. Input Tax Credit has been defined under Section 2(24) in thefollowing words:

“2(24) “input tax” means the tax paid or payable under this Actby a registered dealer to another registered dealer on the purchaseof goods including capital goods in the course of his business;”

C

15. Section 3 is charging Section. Section 3(1), (2) and (3) whichare relevant for the present case, are as follows:

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“3. Levy of Taxes on sales of goods.- (1) (a) Every dealer,other than a casual trader or agent of a non-resident dealer, whosetotal turnover for a year is not less than rupees five lakhs andevery casual trader or agent of a non-resident dealer, whateverbe his total turnover, for a year shall pay tax under this Act.

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1(b) Notwithstanding anything contained in clause (a), every dealer,other than a casual trader or agent of a non-resident dealer, whosetotal turnover in respect of purchase and sale within the State, fora year, is not less than rupees ten lakhs, shall pay tax under thisAct.

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F(1-A) Notwithstanding anything contained in this Act, for thepurpose of assessment of tax under this Act, for the period fromthe 1st day of January 2007 to the 31st day of March 2007 inrespect of dealers referred to in clause (a) or (b) of sub-section(1) the total turnover for the period from the 1st day of April 2006to the 31st day of December 2006 under the repealed Tamil NaduGGeneral Sales Tax Act, 1959 (Tamil Nadu Act 1 of 1959) and thetotal turnover for the period from the 1st day of January 2007 tothe 31st day of March 2007 under this Act, shall be the totalturnover for the year 2006-2007. in respect of such dealer whosetotal turnover for that year exceeds the total turnover referred toHin the said clause (a) or (b) of sub-section 1 and if,- (a) such dealer has not collected the tax under this Act, heis liable to pay tax under this Act, (b) such dealer has collected the tax under this Act, he isliable to pay tax under this Act, and other provisions of thisAct, shall apply to such dealer.]

(2) Subject to the provisions of sub-section (1), in the case ofgoods specified in Part - B or Part - C of the First Schedule, thetax under this Act shall be payable by a dealer on every salemade by him within the State at the rate specified therein:

Provided that all spare parts, components and accessories of suchgoods shall also be taxed at the same rate as that of the goods ifsuch spare parts, components and accessories are not specificallyenumerated in the First Schedule and made liable to tax underthat Schedule.]

(3) The tax payable under sub-section (2) by a registered dealershall be reduced, in the manner prescribed, to the extent of taxpaid on his purchase of goods specified in Part - B or Part - C ofthe First Schedule, inside the State, to the registered dealer, whosold the goods to him.”

16. Section 19 contains a heading “Input Tax Credit”. Section 19contains 20 sub-sections. Section 19 enumerates several sub-sectionswhich provide that no Input Tax Credit is allowed in certain circumstanceswhereas other provisions contain statutory scheme under which InputTax Credit is permissible. In the present case we are concerned withSection 19(11) which is to the following effect:

“19(11) In case any registered dealer fails to claim input tax creditin respect of any transaction of taxable purchase in any month, heshall make the claim before the end of the financial year or beforeninety days from the date of purchase, whichever is later.”

Issue no. 1 and 2

17. The challenge in this batch of appeals is challenge to a fiscallegislation. It is relevant to notice the principles of statutory interpretationof a fiscal legislation. The Constitution Bench of this Court in (1981) 4SCC 675, R.K.Garg versus Union of India, has enumerated establishedprinciples for interpreting law dealing with economic activities. Inparagraph 8 of the judgment following has been held: - A

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“8. Another rule of equal importance is that laws relating toeconomic activities should be viewed with greater latitude thanlaws touching civil rights such as freedom of speech, religionetc. It has been said by no less a person than Holmes, J., thatthe legislature should be allowed some play in the joints,because it has to deal with complex problems which do notadmit of solution through any doctrinaire or strait-jacketformula and this is particularly true in case of legislationdealing with economic matters, where, having regard to thenature of the problems required to be dealt with, greater playin the joints has to be allowed to the legislature. The courtshould feel more inclined to give judicial deference tolegislative judgment in the field of economic regulation thanin other areas where fundamental human rights are involved.Nowhere has this admonition been more felicitously expressedthan in Morey v. Doud[7]where Frankfurter, J., said in hisinimitable style:

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“In the utilities, tax and economic regulation cases, there aregood reasons for judicial self-restraint if not judicialdeference to legislative judgment. The legislature after all hasthe affirmative responsibility. The courts have only the powerto destroy, not to reconstruct. When these are added to thecomplexity of economic regulation, the uncertainty, the liabilityto error, the bewildering conflict of the experts, and the numberof times the judges have been overruled by events — self-limitation can be seen to be the path to judicial wisdom andinstitutional prestige and stability.””

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18. Another principle of statutory interpretation which needs tobe noticed is that a provision in the statute is not to be read in isolationrather it has to read along with other related provisions itself, moreparticularly when the subject matter dealt within different sections orparts of the same statute is the same. This proposition was reiterated byGthis Court in Kailash Chandra and another versus Mukundi lal andothers, 2002 (2) SCC 678. In paragraph 11, following has been laiddown: - “11. A provision in the statute is not to be read in isolation. Ithas to be read with other related provisions in the Act itself,more particularly, when the subject-matter dealt with in H

different sections or parts of the same statute is the same orsimilar in nature.”

19. Here we have noticed that Input Tax Credit is being allowedunder 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 saleof goods. Sub-section (3) is the part of the same scheme where taxpayable under sub-section (2) by registered dealer shall be reduced, inthe manner prescribed, to the extent of tax paid on his purchase of goods.Other provisions of the Act elaborated and explained the wholemechanism of the Act. Section 4 to 12 are various provisions dealingwith following subject matters:=

“Section 4. Levy of tax on right to use any goods.

Section 5. Levy of tax on transfer of goods involved in workscontract.

Section 6. Payment of tax at compounded rates by work contractor.

Section 6A. Payment of tax at compounded rate by brickmanufacturers.

Section 7. Levy of tax on food and drinks.

Section 8. Payment of tax at compounded rate by hotels,restaurants [sweet-stalls and bakeries]

Section 9. Levy of tax on bullion and jewelery.

Section 10. Tax on goods purchased by dealers registered underCentral Sales Tax Act, 1956(Central Act 74 of 1956)

Section 11. Levy of tax on sugarcane.

Section 12. Levy of purchase tax.”

20. Section 13 deals with reduction of tax at source in workscontract, Section 14 deals with reversal of tax credit, Section 15 dealswith exempted sale, Section 16 deals with stages of levy of taxes inrespect of imported and exported goods; Section 17 deals with burdenof proof; Section 18 deals with zero rating; and Section 19 deals withInput Tax Credit.

21. As noted above, Section 3, sub-Section (3) provided that taxpayable under sub-Section (2) by registered dealer shall be reduced, in A

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Athe manner prescribed, to the extent of tax paid on his purchase of goodsspecified 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 ofSection 3 sub-Section (3) is a provision which entitled a registered dealerto obtain a tax credit which has been explained in Section 19. Thesubmission that Section 19 is inconsistent to Section 3(3) is whollyBmisconceived. What is envisaged in Section 3 sub-Section (3) is amplifiedand explained in Section 19. The reduction in the tax as contemplated inSection 3 sub-section (3) has to be in manner and as provided in Section19. Section 19(11) contains a condition for claiming the input tax credit.As noticed above, there are other various provisions in Section 19 itselfCwhere it contains provisions where no input tax credit is allowable, e.g.Section 19(6) to Section 19(10), which are as follows: - “19(6). No input tax credit shall be allowed on purchase of capitalgoods, which are used exclusively in the manufacture of goodsexempted under section 15.

D[PROVIDED that on the purchase of capital goods which areused in the manufacture of exempted goods and taxable goods,input tax credit shall be allowed to the extent of its usage in themanufacture of taxable goods in the manner prescribed.]

(7) No registered dealer shall be entitled to input tax credit inErespect of –

(a) goods purchased and accounted for in business but utilizedfor the purpose of providing facility to the proprietor or partneror director including employees and in any residentialaccommodation; or F

(b) purchase of all automobiles including commercial vehicles,two wheelers and three wheelers and spare parts for repairand maintenance thereof, unless the registered dealer is in thebusiness of dealing in such automobiles or spare parts; or

(c) purchase of air-conditioning units unless the registered dealerGis in the business of dealing in such units.

(8) No input tax credit shall be allowed to any goods purchasedby him for sale but given away by him by way of free sample orgift or goods consumed for personal use.

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(9) No input tax credit shall be available to a registered dealer fortax 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 alreadyavailed input tax credit against purchase of such goods, thereshall be reversal of tax credit, or

(ii) inputs destroyed in fire accident or lost while in storageeven before use in the manufacture of final products; or

(iii) inputs damaged in transit or destroyed at some intermediarystage of manufacture.

(10) (a) The registered dealer shall not claim input tax credit untilthe dealer receives an original tax invoice duly filled, signed andissued by a registered dealer from whom the goods are purchased,containing such particulars, as may be prescribed, of the saleevidencing the amount of input tax.

(b) if the original tax invoice is lost, input tax credit shall beallowed only on the basis of duplicate or carbon copy of such taxinvoice obtained from the selling dealer subject to such conditionsas may be prescribed.”

22. Can it be said that above provisions are inconsistent to Section3(3) which permits reduction of tax of registered dealer, answer, obviouslyis No. When the input tax credit is to be allowed and when it is to bedisallowed is elaborated in Section 19 which is self-contained schemeand benefit under Section 3 sub-Section (3) can be claimed only whenconditions as enumerated in Section 19 are fulfilled.

23. Now, we need to refer to certain judgments of this Courtwhich has been relied by learned Counsel for the appellant. The firstjudgment which needs to be noticed is the judgment of this Court in AIR(1967) SC 1823, Sales Tax officer, Ponkunnam and another versusK.I. Abraham. This Court had occasion to consider Section 8 of theCentral Sales Tax Act, 1956 and Rule 6 of the Central Sales Tax (KeralaRules, 1957). Section 8 sub-Section (1) provided that for dealer who inthe course of inter-State trade or commerce - (a) sells to the governmentany goods; or (b) sells to a registered dealer other than governmentgoods of the description referred to in sub-section (3); shall be liable to A

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Apay tax under this Act, which shall be one percent of his turnover. Sub-section (4) of Section 8 provides: - “8. (4) The provisions of sub-section (1) shall not apply toany sale in the course of inter-State trade or commerce unlessthe dealer selling the goods furnishes to the prescribedauthority in the prescribed manner—

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(a) a declaration duly filled and signed by the registereddealer to whom the goods are sold containing the prescribedparticulars in a prescribed form obtained from theprescribed authority; or

(b) if the goods are sold to the Government, not being aregistered dealer, a certificate in the prescribed form dulyfilled and signed by a duly authorised officer of theGovernment.”

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24. Rule 6 of Central Sales Tax (Kerala Rules) has been noticedDin paragraph 5, which is to the following effect: - “5. Rule 6 of the Central Sales Tax (Kerala) Rules, 1957 readas follows:

“6. (1) Every dealer registered under Section 7 of theAct and every dealer liable to pay under the Act shall submitEa return of all his transaction including those in the courseof export of the goods out of the territory of India in Form IItogether with connected declaration forms so as to reach theassessing authority on or before the 20th of each monthshowing the turnover for the preceding month and the amountor amounts collected by way of tax together with proof forFthe payment of tax due thereon under the Act.

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Provided that in cases of delayed receipt of declarationforms, the dealer may submit the declaration forms at anytime before the assessment is made:

Provided further that the delay in submitting thedeclaration forms shall not exceed three months from the dateof sale in question:

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Provided also that all declaration forms pendingsubmission by dealers on 2-5-1960 shall be submitted not laterthan 16-2-1961.”

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The first proviso to Rule 6 was inserted by notification datedJanuary 3, 1958, the second by notification dated April 26,1960 and the third by notification dated January 16, 1961.”

25. The submission which was raised before this Court was thatphrase “in the prescribed manner used in Section 8(4) does not take inthe time element.” In paragraph 6 of the judgment this Court interpretingthe phrase “in the prescribed” manner occurring in Section 8(4) andheld that it does not take in the time element. This Court also notice theprovision of Section 13(4) which provision empowers the State to makerules for the “time” within which and the manner in which the authoritiesto whom any change in the ownership of any business shall be furnished.It is useful to extract relevant observations made in paragraph 6 of thejudgment: - “6………But the phrase “in the prescribed manner” inSection 8(4) does not take in the time-element. In other words,the section does not authorise the rule-making authority toprescribe a time limit within which the declaration is to befiled by the registered dealer. The view that we have taken issupported by the language of Section 13(4)(g) of the Act whichstates that the State Government may make rules for “the timewithin which, the manner in which and the authorities to whomany change in the ownership of any business or in the name,place or nature of any business carried on by any dealershall be furnished”. This makes it clear that the legislaturewas conscious of the fact that the expression “in the manner”would denote only the mode in which an act was to be done,and if any time limit was to be prescribed for the doing of theact, specific words such as “the time within which” were alsonecessary to be put in the statute. In Stroud’s JudicialDictionary it is said that. the words “manner and form” referonly “to the mode in which the thing is to be done, and do notintroduce anything from the Act referred to as to the thingwhich is to be done or the time for doing it…………”.

26. This Court, in above view of the matter, held that Rule 6(1)was ultra vires to Section 8(4) read with Section 13(3) and 13(4) of theAct.

27. The ground on which Rule 6 was held as ultra vires has beenclearly noticed by this Court in paragraph 6 as noticed above. It is relevant A

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Ato notice that in the same paragraph this Court had noticed Section13(4)(g) of the Act where the State was empowered to make rule withregard to the ‘time’. Thus, this Court noticed the contradiction inphraseology of Section 8 sub-Section (4) and Section 13 sub-section (4)and held that non-mention of time in Section 8(4) is for clearly denyingthe rule making power to make any rule pertaining to the time. Thus, theBabove case has no bearing in the present controversy, since, in the presentcase the time period is prescribed in Section 19(11) itself which is a partof the Act and has to be read with Section 3 sub-section (3).

28. Another judgment which needs to be noticed is judgment ofthis Court in Commissioner of Central Excise, Madras versus HomeCAshok Leyland Ltd., 2007 (4) SCC 51. The issue which came to beconsidered 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 shortquestion which arises for determination is whether theDassessee was entitled to avail MODVAT credit on differentialduty paid during the period 21-4-1986 to 2-4-1987 in respectof inputs received in his factory during the year 1986-87 whichinputs were utilised between the period 16-8-1987 and 30-12-1987. According to the Department, Rule 57-E of theECentral Excise Rules, 1944 underwent an amendment witheffect from 15-4-1987 which according to the Departmentoperated prospectively and consequently the claimant wasnot entitled to avail MODVAT credit of differential duty paidduring the period 21-4-1986 to 2-4-1987.”

F29. In paragraph 2 of the judgment this Court noticed that Rule57-E of the Central Excise Rule, 1944 as first introduced on 01.03.1986provided for adjustment in duty credit. It further provided that duty paidon any inputs is varied subsequently due to any reason credit alone shallvary accordingly by adjustment in the credit account maintained underRule 57G-(3). The relevant provisions of Rule and amendments haveGbeen noticed in paragraph 2 which is to the following effect: - “2....Rule 57-E as it stood when MODVAT was first introducedon 1-3-1986 provided for adjustment in duty credit. Itoriginally provided that if the duty paid on any inputs inrespect of which credit has been allowed under Rule 57-A, is H

varied subsequently due to any reason resulting in refund,the credit alone shall be varied accordingly by adjustment inthe credit account maintained under Rule 57-G(3) (with whichwe are concerned). Rule 57-E underwent a change on 1-3-1987 under which it was stipulated that if duty is paid on anyinputs in respect of which credit has been allowed under Rule57-A and if such duty is varied subsequently due to any reasonresulting in refund or if the duty is varied due to the changein classification resulting in recovery then the credit allowedshall also be varied accordingly by adjudgment in the creditaccount maintained under Rule 57-G(3). Rule 57-E underwenta further change on 15-4-1987. This change operated till15-4-2000. This case, therefore, falls within the above periodi.e. 15-4-1987 to 15-4-2000. Under this amended Rule 57-Ethe right of the manufacturer to obtain additional MODVATcredit in respect of inputs on which further duty had beenpaid for any reason subsequent to the date of the receipt ofinputs by the manufacturer is recognised. However, such rightaccrues to the manufacturer subject to his complying withthe procedure of adjustment contemplated in Rule 57-E, asamended.”

30. In the above case, Rule 57-E was amended w.e.f. 15.04.1987providing for MODVAT credit but department contended that since theamendment shall apply prospectively the respondents were not entitledto claim MODVAT credit. The High Court had held that Rule 57-E asamended was clarificatory in nature and shall not affect the right ofmanufacturer to claim MODVAT credit for duty paid on inputs. Inparagraph 4 following has been held: - “4. In our view, therefore, the courts below were right inholding that Rule 57-E was procedural, clarificatory andtherefore would not affect the substantive rights of themanufacturer of the specified final product to claim MODVATcredit for the duty paid on the inputs subsequent to the dateof the receipt of those inputs. Consequently, the respondentmanufacturer in the present case was entitled to take creditbetween the period 16-8-1987 to 30-12-1987 in the sum ofRs 6,43,994.57.”

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A31. The above case also does not come to help the appellant inthe present appeal. In the above case there was no case thatmanufacturer does not fulfill any essential eligibility to obtain MODVATcredit on the additional duty paid by the manufacturer. The amendmentwhich was made effective w.e.f. 15.04.2017 providing availability ofMODVAT credit on additional duty paid was held to be clarificatory,Bhence, did not affect the right of MODVAT credit. The above case wasthus on its own facts.

32. The input credit is in nature of benefit/ concession extendedto dealer under the statutory scheme. The concession can be receivedby the beneficiary only as per the scheme of the Statute. Reference isCmade to judgment of this Court in Godrej and Boyce Mfg. Co. Pvt.Ltd. and Others versus Commissioner of Sales Tax and Others,(1992) 3 SCC 624. Rule 41 and 42 of Bombay Sales Tax, 1959 providedfor the set off of the purchase tax. This Court held that Rule makingauthority can provide curtailment while extending the concession. InDparagraph 9 of the judgment, following has been laid down: - “9... In law (apart from Rules 41 and 41-A) the appellanthas no legal right to claim set-off of the purchase tax paid byhim on his purchases within the State from out of the sales taxpayable by him on the sale of the goods manufactured byhim. It is only by virtue of the said Rules — which, as statedabove, are conceived mainly in the interest of public — thathe is entitled to such set-off. It is really a concession and anindulgence. More particularly, where the manufactured goodsare not sold within the State of Maharashtra but aredespatched to out-State branches and agents and sold there,no sales tax can be or is levied by the State of Maharashtra.The State of Maharashtra gets nothing in respect of such saleseffected outside the State. In respect of such sales, the rule-making authority could well have denied the benefit of set-off. But it chose to be generous and has extended the saidbenefit to such out-State sales as well, subject, however todeduction of one per cent of the sale price of such goodssent out of the State and sold there. We fail to understandhow a valid grievance can be made in respect of suchdeduction when the very extension of the benefit of set-off isitself a boon or a concession. It was open to the rule-making E

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authority to provide for a small abridgement or curtailmentwhile extending a concession. Viewed from this angle, theargument that providing for such deduction amounts to levyof tax either on purchases of raw material effected outsidethe State or on sale of manufactured goods effected outsidethe State of Maharashtra appears to be beside the point andis unacceptable. So is the argument about apportioning thesale-price with reference to the proportion in which rawmaterial was purchased within and outside the State.”

33. A Three-Judge Bench in (2005) 2 SCC 129, India Agencies(Regd.), Bangalore versus Additional Commissioner of CommercialTaxes, Bangalore had occasion to consider Rule 6(b)(ii) of CentralSales Tax (Karnataka) Rules, 1957, which requires furnishing originalForm-C to claim concessional rate of tax under Section 8(1). This Courtheld that the requirement under the Rule is mandatory and withoutproducing 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, theState Government has prescribed the procedures to befollowed and the documents to be produced for claimingconcessional rate of tax under Section 8(4) of the CentralSales Tax Act. Thus, the dealer has to strictly follow theprocedure and Rule 6(b)(ii) and produce the relevant materialsrequired under the said rule. Without producing the specifieddocuments as prescribed thereunder a dealer cannot claimthe benefits provided under Section 8 of the Act. Therefore,we are of the opinion that the requirements contained in Rule6(b)(ii) of the Central Sales Tax (Karnataka) Rules, 1957 aremandatory......”

34. This court had occasion to consider the Karnataka Value AddedTax Act, 2013 in State of Karnataka versus M.K. Agro Tech.(P) Ltd.,(2017) 16 SCC 210. This Court held that it is a settled proposition oflaw that taxing statute are to be interpreted literally and further it is inthe domain of the legislature as to how much tax credit is to be givenunder what circumstances. Following was stated in paragraph 32: - “32. Fourthly, the entire scheme of the KVAT Act is to bekept in mind and Section 17 is to be applied in that context.

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ASunflower oil cake is subject to input tax. The legislature,however, has incorporated the provision, in the form of Section10, to give tax credit in respect of such goods which are usedas inputs/raw material for manufacturing other goods.Rationale behind the same is simple. When the finishedproduct, after manufacture, is sold, VAT would be againBpayable thereon. This VAT is payable on the price at whichsuch goods are sold, costing whereof is done keeping in viewthe expenses involved in the manufacture of such goods plusthe profits which the manufacturer intends to earn. Insofaras costing is concerned, element of expenses incurred on rawCmaterial would be included. In this manner, when the finalproduct is sold and the VAT paid, component of raw materialwould be included again. Keeping in view this objective, thelegislature has intended to give tax credit to some extent.However, how much tax credit is to be given and under whatcircumstances, is the domain of the legislature and the courtsDare not to tinker with the same.”

35. The judgment on which learned Advocate General of TamilNadu had placed much reliance i.e. Jayam and Company versusAssistant Commissioner and Another, (2016) 15 SCC 125, is thejudgment which is relevant for present case. In the above case, thisCourt had occasion to interpret provisions of Tamil Nadu Value AddedTax Act, 2006, Section 19(20), Section 3(2) and Section 3(3). Validity ofSection 19(20) was under challenge in the said case. This Court afternoticing the scheme under Section 19 noticed following aspects inparagraph 11: - E

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“11. From the aforesaid scheme of Section 19 followingsignificant aspects emerge:

(a) ITC is a form of concession provided by the legislature.It is not admissible to all kinds of sales and certain specifiedsales are specifically excluded.

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(b) Concession of ITC is available on certain conditionsmentioned in this section.

(c) One of the most important condition is that in order toenable the dealer to claim ITC it has to produce original tax H

invoice, completed in all respect, evidencing the amount ofinput tax.”

36. This Court further held that it is a trite law that wheneverconcession is given by a statute the conditions thereof are to be strictlycomplied with in order to avail such concession. In paragraph 12, followinghas been laid down: -

“12. It is a trite law that whenever concession is given bystatute or notification, etc. the conditions thereof are to bestrictly complied with in order to avail such concession. Thus,it is not the right of the “dealers” to get the benefit of ITC butit is a concession granted by virtue of Section 19. As a fortiori,conditions specified in Section 10 must be fulfilled. In thathue, we find that Section 10 makes original tax invoicerelevant for the purpose of claiming tax. Therefore, underthe scheme of the VAT Act, it is not permissible for the dealersto argue that the price as indicated in the tax invoice shouldnot have been taken into consideration but the net purchaseprice after discount is to be the basis. If we were dealing withany other aspect dehors the issue of ITC as per Section 19 ofthe VAT Act, possibly the arguments of Mr Bagaria wouldhave assumed some relevance. But, keeping in view the scopeof the issue, such a plea is not admissible having regard tothe plain language of sections of the VAT Act, read alongwith other provisions of the said Act as referred to above.”

37. The Constitutional validity of Section 19(20) was upheld. Theabove decision is a clear authority with proposition that Input Tax Creditis admissible only as per conditions enumerated under Section 19 of theTamil Nadu Value Added Tax Act, 2006. The interpretation put up bythis Court on Section 3(2) and 3(3) and Section 19(2) is fully attractedwhile considering the same provisions of Section 3(2) and 3(3) andprovision of Section 19(11) of the Act. The Statutory scheme delineatedby Section 19(11) neither can be said to be arbitrary nor can be said toviolate the right guaranteed to the dealer under Article 19(1)(g) of theConstitution. We thus do not find any infirmity in the judgment of theHigh Court upholding the validity of Section 19(11) of the Act. Both theissues are answered accordingly.

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242SUPREME COURT REPORTS

AIssue Number 3 and 4

38. The alternative submission pressed by learned Counsel forthe appellant was that Section 19(11) cannot be held to be mandatoryand it is only a directory provision, non-compliance of which cannot beground of denial of Input Tax Credit to the appellant. The conditionsBunder which Input Tax Credit is to be given are all enumerated in Section19 as noticed above. The condition under which the concession andbenefit is given is always to be strictly construed. In event, it is acceptedthat there is no time period for claiming Input Tax Credit as contained inSection 19(11), the provision become too flexible and give rise to largenumber of difficulties including difficulty in verification of claim of InputCCredit. Taxing Statutes contains self-contained scheme of levy,computation and collection of tax. The time under which a return is to befiled for purpose of assessment of the tax cannot be dependent on thewill of a dealer. The use of word ‘shall’ in Section 19(11) does not admitto any other interpretation except that the submission of Input claimedDcannot be beyond the time prescribed. Section 19(11), in fact, givesadditional time period for claim of Input Credit. The Statutory schemecontemplates filing of the timely return before 20[th] of the succeedingmonth. Rule 7 of Tamil Nadu Value Added Tax Rules, 2007 deals withfiling of returns. Rule 7(a) and (b) are as follows: - E“7. Filing of Returns:

E“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 sub-section(4) of section 3 or section 6 or section 8 including agent of anon-resident dealer and casual trader, shall file return foreach month in Form I on or before 20[th] of the succeedingmonth, to the assessing authority in whose jurisdiction hisprincipal place of business or head office is situated. Suchreturn shall be accompanied by proof of payment of tax.

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(b) Every registered dealer who is liable to pay tax undersub-section (5) of section 3 shall file a return in Form J on orbefore 20[th] of the succeeding month to the assessing authorityin whose jurisdiction his principal place of business or headoffice is situated. Such return shall be accompanied by proofof payment of tax:

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[PROVIDED that a registered dealer specified in clause (a)or (b), whose taxable turnover in the preceding year is twohundred crores of rupees and above, shall file the abovereturns on or before 12[th] of the succeeding month to theassessing authority in whose jurisdiction his principal placeof business or head office is situated. Such return shall beaccompanied by proof of payment of tax.]”

39. Section 21 of the Act provides for filing of return in followingmanner: - “[21. Filing of returns.

Every dealer, liable to pay tax under this Act, shall file return,in the prescribed form showing the total and taxable turnoverwithin the prescribed period, in the prescribed manner, alongwith proof of payment of tax. The tax under this section shallbecome due without any notice of demand to the dealer onthe date of receipt of the return or on the last date of theperiod for filing return as prescribed.]”

40. Section 19(11) thus allowed an extended period for Input Creditwhich if not claimed in any month can be claimed before the end of thefinancial year or before the 90 days from the date of purchase whicheveris later. The provision of Section 19(11) is thus an additional benefitgiven to dealer for claiming Input Credit in extended period. The use ofword “shall make the claim” needs no other interpretation.

41. Learned Counsel for the appellant has referred to judgmentof this Court in Dal Chand versus Municipal Corporation, Bhopaland another, 1984 (2) SCC 486,. This Court in the above case wasconsidering Rule 9(j) of Prevention of Food Adulteration Rules, 1955,which requires supply of copy of the report of the public analyst withinperiod of 10 days. The said rule was held to be directory. Whileconsidering the above case, following observations were made by thisCourt:- “……There are no ready tests or invariable formulae todetermine whether a provision is mandatory or directory. Thebroad purpose of the statute is important. The object of theparticular provision must be considered. The link betweenthe two is most important. The weighing of the consequence AB

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of holding a provision to be mandatory or directory is vitaland, more often than not, determinative of the very questionwhether the provision is mandatory or directory. Where thedesign of the statute is the avoidance or prevention of publicmischief, but the enforcement of a particular provision literallyto its letter will tend to defeat that design, the provision mustbe held to be directory, so that proof of prejudice in additionto non-compliance of the provision is necessary to invalidatethe act complained of. It is well to remember that quite oftenmany rules, though couched in language which appears tobe imperative, are no more than mere instructions to thoseentrusted with the task of discharging statutory duties forpublic benefit. The negligence of those to whom public dutiesare entrusted cannot by statutory interpretation be allowedto promote public mischief and cause public inconvenienceand defeat the main object of the statute. It is as well to realisethat every prescription of a period within which an act mustbe done, is not the prescription of a period of limitation withpainful consequences if the act is not done within that period.Rule 9(j) of the Prevention of Food Adulteration Act, as itthen stood, merely instructed the Food Inspector to send byregistered post copy of the Public Analyst’s report to the personfrom whom the sample was taken within 10 days of the receiptof the report. Quite obviously the period of 10 days was not aperiod of limitation within which an action was to be initiatedor on the expiry of which a vested right accrued. The periodof 10 days was prescribed with a view to expedition and withthe object of giving sufficient time to the person from whomthe sample was taken to make such arrangements as he mightlike to challenge the report of the Public Analyst, for example,by making a request to the Magistrate to send the other sampleto the Director of the Central Food Laboratory for analysis.Where the effect of non-compliance with the rule was such asto wholly deprive the right of the person to challenge thePublic Analyst’s report by obtaining the report of the Directorof the Central Food Laboratory, there might be just cause forcomplaint, as prejudice would then be writ large. Where noprejudice was caused there could be no cause for complaint.I am clearly of the view that Rule 9(j) of the Prevention of Food Adulteration Rules was directory and notmandatory………”

42. This Court in the above case clearly laid down that whetherparticular provision is mandatory or directory has to be determined onthe basis of object of particular provision and design of the statute. Theperiod of 10 days in submitting the report of the public analyst was heldto be directory for the reason that on the negligence of those to whompublic duties are entrusted no one should suffer. Such interpretation shouldnot be put which may promote the public mischief and cause publicinconvenience and defeat the main object of the statute. The interpretationof the Rule 9(j) in the above case was on its own statutory scheme andhas no bearing in the present case. We, thus, are of the view that timeperiod as provided in Section 19(11) is mandatory.

Issue no. 5

Issue no. 5

43. One of the submission advanced by learned counsel for theappellant was that appellant assessee had valid explanation for notclaiming Input Tax Credit within the time provided under Section 19(11),hence, the authority had jurisdiction to extend the time. It is submittedthat time period as contained in Section 19(11) is not akin to the law oflimitation. We have already found that expression “shall” occurring inSection 19(11) is mandatory whose compliance is necessary for claimingInput Tax Credit. The appellant has placed reliance on judgment of thisCourt reported in Surinder Singh versus Central Government andOthers, 1986 (4) SCC 667. Learned Counsel submits that in the abovecase Central Government which was exercising authority under DisplacedPersons (Compensation and Rehabilitation) Act, 1954 was held to beentitled to extend the time which was required for depositing the auctionamount. In the above case, the officials of the Central Government wereexercising Revisional Jurisdiction as conferred under Section 33 of theAct to the Central Government. Facts of the case were noticed inparagraph 9 to the following effect: - “9. The second question relates to the validity of the order ofShri Rajni Kant the officer to whom power under Section 33was delegated, extending time to enable the appellant todeposit the auction-sale money. Shri Rajni Kant by his orderdated February 6, 1970 exercising the delegated powers ofthe Central Government under Section 33 of the Act set aside A

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Athe order cancelling the auction-sale held in August 1959and permitted the appellant to deposit the balance of thepurchase money within fifteen days from the date of the orderwith a default clause that on his failure his petition wouldstand dismissed. In accordance with that order appellant wasentitled to deposit the money till February 21, 1970. It appearsBthat on appellant’s request the office prepared a challan whichwas valid up to February 20, 1970. The appellant went to theState Bank on February 20, 1970 to make the deposit butdue to rush he could not make the deposit. On his applicationShri Rajni Kant extended the time permitting the deposit byCFebruary 28, 1970 as a result of which a fresh challan wasprepared which was valid up to February 28, 1970 and withinthat period appellant deposited the balance purchasemoney………”

44. Section 33 has been extracted in paragraph 10 of the judgmentDwhich is to the following effect: - “10. Section 33 reads as under:

“Certain residuary powers of Central Government. —TheCentral Government may at any time call for the record ofany proceeding under this Act and may pass such order inErelation thereto as in its opinion the circumstances of the caserequire and as is not inconsistent with any of the provisionscontained in this Act or the rules made thereunder.”

45. This Court in the above case held that the officer wasexercising power of Central Government under Section 33 and had ampleFjurisdiction to set aside the Orders of the sub-ordinate authorities cancelingthe order and to permit the appellant to deposit the balance amount ofthe purchase money. Following observations while examining the powergiven under Section 33 had been made:

“11. The power conferred upon the Central Government underGthis provision is a residuary power in nature as the title of thesection itself indicates. By enacting this section Parliamenthas conferred wide powers on the Central Government to callfor the record of any case and to pass any order which it maythink fit in the circumstances of the case. The only limitationon exercise of this power is that the Central Government shallH

not pass any order which may be inconsistent with any of theprovisions of the Act and the rules made thereunder. Therefore,the Central Government or the delegated authority has powerto set aside any order of the subordinate authorities, or toissue directions which it may consider necessary on the factsof a case subject to the aforesaid rider. This power is intendedto be used to do justice and to mitigate hardship to a partyunriddled by technicalities. Shri Rajni Kant while exercisingpowers of the Central Government under Section 33 of theAct had ample jurisdiction to set aside the orders of thesubordinate authorities cancelling the auction held on August24, 1959 and to permit the appellant to deposit the balanceamount of the purchase money and he further had jurisdictionto extend the time initially granted by him. Extension of timeto enable the appellant to deposit the money did not amountto review of the earlier order dated February 6, 1970……….”

46. The above case was thus on its own facts, this Court held thatin exercise of residuary power of Central Government, it had jurisdictionto pass such order in relation thereto as in its opinion the circumstancesin the case require. In the scheme of Tamil Nadu Value Added Tax Act,2006, there is no power conferred on any authority under the Act todilute the mandatory requirement under Section 19(11). The taxing statutehas to be strictly construed. Nothing is to be read in, noting is to beimplied and language used in taxing statute had to be looked into fairly.The benefits envisaged in the taxing statute had to be extended as perthe restrictions and conditions envisaged therein. The statute having notgiven any indication for extension of time which is a condition for claimingInput Tax Credit, the submission that period could have been extendedby assessing authority is unfounded and cannot be accepted. Issuenumber 5 is answered accordingly.

47. The High Court had already granted liberty to writ petitionersin whose cases assessment has been finalized to file statutory appealand objections which substantially protect the interest of the appellants

48. We, thus, do not find any error in the judgment of the HighCourt. All the appeals are dismissed.

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