Tax credit certificate scheme limits held ultra vires where a time bar extinguished the statutory benefit.

Paragraph 5(3) of the Tax Credit Certificate (Excise Duty on Excess Clearance) Scheme, 1965 was found to exceed the rule-making power under section 280ZE because the enabling provision allowed only machinery and ancillary rules, not a limitation period that extinguished the statutory benefit. The right to obtain a tax credit certificate on fulfilment of the prescribed conditions was treated as a substantive right, including the consequential adjustment or refund benefit. A 60-day bar on condonation could not defeat that right, and administrative delay in verification could not deprive the assessee of the statutory entitlement. The provision was held ultra vires and void, and the claim had to be considered on merits.

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Issues: Whether paragraph 5(3) of the Tax Credit Certificate (Excise Duty on Excess Clearance) Scheme, 1965, which prescribed a time-limit of 60 days for condonation of delay and barred consideration of applications filed thereafter, was within the rule-making power conferred by section 280ZE of the Income-tax Act, 1961.

Analysis: Section 280ZE authorised the Central Government to frame a scheme for implementing Chapter XXII-B and to regulate matters such as the form, manner, authority, verification of particulars, rates, and other ancillary matters necessary for effective implementation. It did not confer power to prescribe a limitation period that would extinguish the statutory benefit itself. The right to obtain a tax credit certificate on fulfilment of the prescribed conditions was treated as a substantive right, including the consequential right to adjustment of tax liability and refund where applicable. A time-bar that finally defeats that right is not merely procedural. The prescribed officers' delay in verification could not be used to deprive the assessee of the statutory benefit, and the scheme provision went beyond the enabling Act by curtailing a right which Parliament had not made subject to limitation.

Conclusion: Paragraph 5(3) of the Scheme was held to be ultra vires and void, and the assessee was entitled to have the claim for tax credit certificate considered on merits.

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