TaxTMI 
TaxTMI 
2016 (9) TMI 408
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....P (CIVIL) NOS. 830-839/2014), CIVIL APPEAL NOS. 8115-8116 OF 2016 (ARISING OUT OF SLP (CIVIL) NOS. 1576-1577/2014), CIVIL APPEAL NO. 8117 OF 2016 (ARISING OUT OF SLP (CIVIL) NO. 3958/2014), CIVIL APPEAL NO. 8118 OF 2016 (ARISING OUT OF SLP (CIVIL) NO. 4044/2014), CIVIL APPEAL NOS. 8119-8122 OF 2016 (ARISING OUT OF SLP (CIVIL) NOS. 13234-13237/2014), CIVIL APPEAL NOS. 8123 OF 2016 (ARISING OUT OF SLP (CIVIL) NOS. 22464/2014), CIVIL APPEAL NOS. 8124 OF 2016 (ARISING OUT OF SLP (CIVIL) NO. 22465/2014), CIVIL APPEAL NOS. 8125-8126 OF 2016 (ARISING OUT OF SLP (CIVIL) NOS. 24275-24276/2014), CIVIL APPEAL NOS. 8127-8131 OF 2016 (ARISING OUT OF SLP (CIVIL) NOS. 24270-24274/2014), CIVIL APPEAL NOS. 8132-8134 OF 2016 (ARISING OUT OF SLP (CIVIL) NOS. 19860-19862/2014), CIVIL APPEAL NOS. 8135-8138 OF 2016 (ARISING OUT OF SLP (CIVIL) NOS. 1728-1731/2015), CIVIL APPEAL NOS. 8139-8141 OF 2016 (ARISING OUT OF SLP (CIVIL) NOS. 1683-1685/2015), CIVIL APPEAL NO. 8142 OF 2016 (ARISING OUT OF SLP (CIVIL) NO. 28989/2014), CIVIL APPEAL NO. 8143 OF 2016 (ARISING OUT OF SLP (CIVIL) NO. 27134/2014), CIVIL APPEAL NOS. 8144-8146 OF 2016 (ARISING OUT OF SLP (CIVIL) NOS. 28986-28988/2014) A.K. SIKRI AND R.F.....
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....o these two aspects briefly as that discussion would be required in order to understand the question of retrospectivity. 5. The appellants are 'dealers' and registered as such under the provisions of VAT Act. For example, the appellant in Civil Appeal No. 24023-26 of 2013 deals in electronic home appliances. It purchases appliances from local registered dealers on payment of VAT under the VAT invoice issued by the vendors. Thereafter, the appellant re-sells to consumers under VAT invoice charging appropriate VAT on their selling price. It had purchased LCD Televisions from M/s. LG Electronics Private Limited for re-sale. The vendors, i.e., M/s. LG Electronics had charged VAT on the selling price, as per the VAT invoice issued by M/s. LG Electronics to the dealers. Based on the price shown in the invoice, VAT was paid. Under the scheme of VAT Act, as would be seen hereinafter, on re-sale when the VAT is paid by the dealer, the dealer is entitled to avail Input Tax Credit (for short, 'ITC'), i.e., he is entitled to get the credit of the VAT which was paid by the dealer to M/s. LG Electronics on purchase of these T.V. sets from the said vendors. 6. It so happened....
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....t Rs. 95/- (Section 19(20) became applicable). The High Court has accepted the contention of the Revenue. As mentioned above, detailed reasons in this behalf are given. Suffice it to state that as per the scheme of the VAT Act itself, it is the price as per the tax invoice which has to be taken into consideration. In view of this Specific Statutory Scheme, general principles laid down in the Sale of Goods Act would not be applicable. 9. We may mention that Section 19 deals with ITC and this Section is to be understood keeping in view the entire scheme of the VAT Act. VAT Act, obviously, deals with payment of value added tax on the goods sold by the dealers. It is not necessary to go into definitions of various expressions like 'business', 'dealer', 'goods', 'sale', 'turnover' etc. Since we are concerned with grant of ITC, we would reproduce the definitions of those expressions which are relevant for this purpose. These are: "S. 2(24) "input tax" means the tax paid or payable under this Act by a registered dealer to another registered dealer on the purchase of goods including capital goods in the course of his business. S.....
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....ion 13 onward, some concessions/ deductions are allowed. Section 13 deals with deduction of tax at source in works contract. Section 14 is about the reversal of tax credit. Likewise, Section 15 deals with those sales which are exempted from tax. In this scheme of deductions and concessions comes Section 19 which allows grant of ITC. Pertinently, however, scrutiny of this provision reveals that ITC is not allowed on all kinds of transactions. On certain types of sales, no ITC is admissible at all. Nature of those sales where ITC is inadmissible is stipulated in sub-sections (5) to (9) of Section 19. For understanding this pertinent aspect of the scheme, at this juncture, we reproduce Section 19 in its entirety as under: "Input tax credit (1) There shall be input tax credit of the amount of tax paid or payable under this Act, by the registered dealer to the seller on his purchases of taxable goods specified in the First Schedule: PROVIDED that the registered dealer, who claims input tax credit, shall establish that the tax due on such purchases has been paid by him in the manner prescribed. (2) Input tax credit shall be allowed for the purchase of ....
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....which are used exclusively in the manufacture of goods exempted under section 15. Provided that on the purchase of capital goods which are used in the manufacture of exempted goods and taxable goods, in put tax credit shall be allowed to the extent of its usage in the manufacture of taxable goods in the manner prescribed. (7) No registered dealer shall be entitled to input tax credit in respect of- (a) goods purchased and accounted for in business but utilized for the purpose of providing facility to the proprietor or partner or director including employees and in any residential accommodation; or (b) purchase of all automobiles including commercial vehicles, two wheelers and three wheelers and spare parts for repair and maintenance thereof, unless the registered dealer is in the business of dealing in such automobiles or spare parts; or (c) purchase of air-conditioning units unless the registered dealer is in the business of dealing in such units. (8) No input tax credit shall be allowed to any registered dealer in respect of any goods purchased by him for sale but given away by him by way of free sample or gift or goods consumed for pe....
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....ll be entitled to transfer the input tax credit lying unutilized in his accounts to such sold, merged, amalgamated, leased or transferred concern. The transfer of input tax credit shall be allowed only if the stock of inputs, as such, or in process, or the capital goods is also transferred to the new ownership on which credit has been availed of are duly accounted for, subject to the satisfaction of the assessing authority. (15) Where a registered dealer has purchased any taxable goods from another dealer and has availed input tax credit in respect of the said goods and if the registration certificate of the selling dealer is cancelled by the appropriate registering authority, such registered dealer, who has availed by way of input tax credit, shall pay the amount availed on the date from which the order of cancellation of the registration certificate takes effect. Such dealer shall be liable to pay, in addition to the amount due, interest at the rate of two per cent, per month, on the amount of tax so payable, for the period commencing from the date of claim of input tax credit by the dealer to the date of its payment. (16) The input tax credit availed by any reg....
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....has to produce original tax invoice, completed in all respect, evidencing the amount of input tax. 12. It is a trite law that whenever concession is given by statute or notification etc. the conditions thereof are to be strictly complied with in order to avail such concession. Thus, it is not the right of the 'dealers' to get the benefit of ITC but its a concession granted by virtue of Section 19. As a fortiorari, conditions specified in Section 10 must be fulfilled. In that hue, we find that Section 10 makes original tax invoice relevant for the purpose of claiming tax. Therefore, under the scheme of the VAT Act, it is not permissible for the dealers to argue that the price as indicated in the tax invoice should not have been taken into consideration but the net purchase price after discount is to be the basis. If we were dealing with any other aspect do hors the issue of ITC as per the Section 19 of the VAT Act, possibly the arguments of Mr. Bagaria would have assumed some relevance. But, keeping in view the scope of the issue, such a plea is not admissible having regard to the plain language of sections of the VAT Act, read along with other provisions of the said Act ....
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....dit available in the hands of the dealer is being adjusted to their other liabilities and the dealer might also make a claim of refund of Input Tax Credit as per Section 19(18) of the Act which were ultimately resulted in creating dent on the State revenue. 66. To contend as to how the so called discount and reduction of sale price caused revenue loss to the Government, the learned Advocate General has drawn our attention to the illustration stated in paragraph (6) of the counter which reads as under:- "Purchase price of 10 Washing Machines Rs.1,00,000/- Tax paid on purchase at 12.5% (ITC allowed) Rs.12,500/- Sale price after discount . Rs.75,000/- tax payable on sales at 12.5% Rs.9,375/- Excess ITC available (Difference between ITC and Output Tax) Rs.3,125/- Rs.12,500 - Rs. 9,375 Excess ITC Adjusted Rs.3,125/-" 67. As rightly contended by the learned Advocate General, the "Input Tax Credit" adjusted in the above illustration comes to Rs. 3,125/- in a single transaction and that it would run to several lakhs and crores for a year for a single dealer. The excess Input Tax Credit earned by the petitioners is....
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....ocedural machinery for assessment and levy of tax or that is confiscatory, Courts will be justified in striking down the impugned statute as unconstitutional; (v) The other factors being period of retrospectivity and degree of unforseen or unforseeable financial burden imposed for the past period; (vi) Length of time is not by itself decisive to affect retrospectively." 15. At the same time, this Court has also held that retrospective legislation would be admissible in cases of validation laws, i.e., where the laws as initially passed was held to be inoperative by the court and when there is a new provision inserted, it should normally be prospective. We may refer to the judgment of this Court in Tata Motors Ltd. v. State of Maharashtra and others (2004) 5 SCC 783. In that case, the appellant - assessee company, manufactured motor vehicle chassis and spare parts. It procured steel in primary form covered by Entry 6 of Schedule B to the Bombay Sales Tax Act, 1959 for use in the manufacturing process which resulted also in iron and steel crap which was covered by the said entry. Therefore, in Assessment Year 1982-83, the appellant therein claimed set-off of a cer....
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.... In the present case, the High Court sustained the enactment by adverting to Rai Ramkrishna case when the benefit of the rule had been withdrawn for a specific period. The learned counsel for the State contended that the amendments had been made to overcome certain defects arising on account of the decision of the Tribunal in regard to the modalities of working out the relief. But, the impugned amendment brought about by Section 26 is not for that purpose. Assuming that it was the legislative policy not to grant set-off in respect of waste or scrap material generated, it becomes difficult to appreciate the stand of the State in the light of the fact that the original rule continued to be in operation (with certain modifications) subsequent to 1-4-1988. The reason for withdrawal of the benefit retrospectively for a limited period is not forthcoming. It is no doubt true that the State has enormous powers in the matter of legislation and in enacting fiscal laws. Great leverage is allowed in the matter of taxation laws because several fiscal adjustments have to be made by the Government depending upon the needs of the Revenue and the economic circumstances prevailing in the State. Even....
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....Court to entertain a petition for exercising revisional jurisdiction was before the amendment derived from Section 115 of the Code of Civil Procedure, and the legislature has by the amending Act not attempted to explain the meaning of that provision. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meaning of the previous Act." 34. It would also be pertinent to mention that assessment creates a vested right and an assessee cannot be subjected to reassessment unless a provision to that effect inserted by amendment is either expressly or by necessary implication retrospective. (See CED v. M.A. Merchant [1989 Supp (1) SCC 499 : 1989 SCC (Tax) 404] .) 35. We would also like to reproduce hereunder the following observations made by this Court in Govind Das v. ITO [(1976) 1 SCC 906 : 1976 SCC (Tax) 133] , while holding Section 171(6) of the Income Tax Act to be prospective and inapplicable for any assessment year prior to 1-4-1962, the date on which the Income Tax Act came into force: (SCC p. 914, para 11) "11. Now it is a well-settled rule of interpretation hallowed by time and sanctified by judicial decision....