2018 (10) TMI 814 - SC - VAT / Sales Tax

Section 19(11) Tamil Nadu VAT Act time limit for input tax credit claims upheld as constitutional and mandatory

ALD Automotive Pvt. Ltd. Versus The Commercial Tax Officer Now Upgraded As The Assistant Commissioner (CT) & Ors.

ALD Automotive Pvt. Ltd. Versus The Commercial Tax Officer Now Upgraded As The Assistant Commissioner (CT) & Ors. - [2018] 58G S.T.R. 468 (SC), 2018 (364) ... Issues Involved:1. Whether Section 19(11) violates Article 14 and 19(1)(g) of the Constitution of India.2. Whether Section 19(11) is inconsistent with Section 3(3) of the Tamil Nadu VAT Act, 2006.3. Whether Section 19(11) is a directory provision, non-compliance of which cannot be a ground for denial of input tax credit.4. Whether denial of input tax credit to the appellants is contrary to the scheme of the VAT Act, 2006.5. 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.Issue-wise Detailed Analysis:Issue 1: Violation of Article 14 and 19(1)(g)The appellants argued that Section 19(11) imposes an unreasonable restriction on the substantive right to claim Input Tax Credit (ITC), making it violative of Articles 14 and 19(1)(g) of the Constitution. The court held that fiscal legislations should be viewed with greater latitude and that the legislature has the discretion to impose conditions on economic regulations. The court emphasized that the provision in question is part of a statutory scheme aimed at regulating tax credits and does not violate constitutional rights.Issue 2: Inconsistency with Section 3(3)The appellants contended that Section 19(11) is inconsistent with Section 3(3) of the Act, which allows for the reduction of tax payable by a registered dealer. The court clarified that Section 19 elaborates the conditions under which ITC can be claimed and is not inconsistent with Section 3(3). Section 19(11) is an integral part of the statutory scheme and does not contradict the charging section of the Act.Issue 3: Directory vs. Mandatory ProvisionThe appellants argued that Section 19(11) should be considered a directory provision, meaning non-compliance should not result in denial of ITC. The court disagreed, stating that the use of the word 'shall' in Section 19(11) indicates a mandatory requirement. The provision sets a clear time frame for claiming ITC, and non-compliance with this timeframe justifies the denial of the credit. The court emphasized that taxing statutes must be strictly construed, and conditions for claiming benefits must be adhered to.Issue 4: Scheme of VAT ActThe appellants claimed that the denial of ITC was contrary to the overall scheme of the VAT Act. The court reiterated that ITC is a concession provided under specific conditions outlined in the Act. The conditions, including the time frame for claiming ITC, are part of the statutory scheme and must be strictly followed. The court found no inconsistency between the denial of ITC and the scheme of the VAT Act.Issue 5: Extension of Time by Assessing AuthoritiesThe appellants argued that the assessing authorities should have the discretion to extend the time for claiming ITC beyond the period specified in Section 19(11). The court rejected this argument, stating that the statute does not provide any authority the power to extend the time frame. The court emphasized that the language of the statute is clear and must be strictly followed. The provision is mandatory, and no extension of time is permissible under the statutory scheme.Conclusion:The Supreme Court upheld the validity of Section 19(11) of the Tamil Nadu VAT Act, 2006, and dismissed all the appeals. The court found that the provision does not violate constitutional rights, is consistent with the statutory scheme, is mandatory in nature, and does not allow for any extension of the time frame for claiming ITC. The judgment of the High Court was affirmed, and the appeals were dismissed.