A two-judge bench of the Supreme Court has held that the statutory scheme delineated by Section 19(11) of the Tamil Nadu Value Added Tax Act can neither be said to be arbitrary or can be said to violate the right guaranteed to the dealer under Article 19(1) (g) of the Constitution.
As per Section 19(11), In case any registered dealer fails to claim input tax credit in respect of any transaction of taxable purchase in any month, he shall make the claim before the end of the financial year or before ninety days from the date of purchase, whichever is later.
The appellant Company is engaged in the business of leasing and fleet management of the motor vehicles and resale of used motor vehicles, having the head office of the Company is at Mumbai. The head office of the appellant negotiates the purchase price with the local registered dealers in Tamil Nadu and issues the purchase order to the dealer along with the payment including the tax payable under the Tamil Nadu VAT Act, 2006. The registered dealer raises the tax invoice as and when the motor vehicle is ready for delivery to the appellant. The date of purchase for the vehicle in the books of the appellant is same as the date of delivery. The tax invoices of such purchases are received after a considerable delay as the original documents are sent to the Regional Transport Authority for registration of motor vehicles. The appellant enters the details of the tax invoice containing the payment of tax in its books of accounts. The appellant had outsourced the job of collection of original tax invoices to one M/s. MID Controls Private Limited, an Agency specialized for collecting documents.
The appellant’s claim for revising returns for claiming Input Tax Credit on the receipt of the tax invoices from the dealer was rejected by the department by invoking Section 19(11) of the VAT Act. The appellant also filed its monthly returns for the period from April 2007 to February 2008. The appellant had filed a monthly return for the month of March 2008 on 06.10.2008. There was a delay in filing return. Due to the late receipt of original purchase invoices, the appellant revised its returns for the period from March 2008 to January 2009 in the month of March 2009.
When the orders were challenged through the writ petition, the High Court set aside the order confirming the proposal to disallow the Input Tax Credit and directed the Commercial Tax Officer to pass appropriate orders in accordance with law.
The bench comprising Justice A K Sikri and Justice Ashok Bhushan held that the input credit is in nature of benefit/ 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.
“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. We thus do not find any infirmity in the judgment of the High Court upholding the validity of Section 19(11) of the Act. Both the issues are answered accordingly,” the bench said.
The bench further held that “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 has 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.”
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