The Chhattisgarh High Court held that the Input Tax Credit (ITC) under VAT can be availed only within the stipulated timeline.
The petitioner, M/s Aman Auto is engaged in sale and purchase of all kinds of Moped and Spare parts and was a registered dealer under the “The Chhattisgarh Commercial Tax Act, 1994 as well as The Chhattisgarh Value Added Tax Act 2005 (henceforth called as “The VAT Act, 2005).
Mr. Anumeh Shrivastava, the counsel for the petitioner contended that the petitioner was being assessed regularly, however, in Case, the input tax rebate was not allowed on the stock held by him on 01.04.2006 on the ground that Form-74 Stock Statement was not submitted on time. Consequently on the basis of extra demand, interest was also levied under section 19(4)(a) which was eventually affirmed by the order dated 28.08.2010 passed by the revisional authority, which is under challenge. It is the case of the petitioner that the petitioner had already purchased certain goods on which the tax was paid, as such, when the transitory period came into play and at that time if the return was not filed as per the C.G. VAT Act, 2005 due to certain unavoidable reasons, the double taxation could not be levied.
Mr. Shrivastava added that in any case, the meagre penalty could have been imposed to the extent which is prescribed under the statute, however, the levy of interest and tax again cannot be made. He further submits that the period of time which was prescribed for the transitory period is directory in nature.
On the other hand, Mr. Siddharth Patel, Counsel on behalf of the department contended that that the very object of fixing time-limit is to bring an end to allow the new legislation to come into play. It is stated that after transitory period, the finality of claim cannot be arrived at if the time limit is diluted and shifting from old statute to new statute cannot be made.
The division bench of justice Gautam Bhaduri held that Section 73(1) has used the word ‘shall’ with a further phrase “within such period” meaning thereby time limit has been fixed and Rule 80 of C.G. VAT Act 2006 also used the words in express language that “the registered dealer shall furnish a statement in Form-74 in respect of goods, specified in Schedule II within a stipulated time.
Therefore, the court held that the legislature has used the word ‘shall’ and hence it cannot be interpreted by the Court that it would be directory in nature. The statute and condition of the VAT Act therefore are to be strictly complied with. Furthermore, claiming an input tax credit would be in the nature of concession provided by the legislature on fulfillment of certain conditions. In order to fulfill the condition under the VAT Act and Rules, the dealer has to follow certain time-line as otherwise, to claim the privilege the conditions cannot be said to be fulfilled at the wish and will of the dealer.
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