TaxTMI 
TaxTMI 
2016 (11) TMI 751
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....lenging vires of Section 42(4) and 42(5) of U.P. Value Added Tax Act, 2008 (hereinafter referred to as the 'Act, 2008') as substituted vide U.P. VAT (Amendment) Ordinance, 2008 which came to be substituted by U.P. VAT (Amendment) Act, 2008 i.e. U.P. Act No. 11 of 2008 (hereinafter referred to as the 'Amendment Act, 2008'). Some of the petitioners have also challenged validity of Rule 70(5) of U.P. Value Added Tax Rules, 2008 (hereinafter referred to as the 'Rules, 2008') as stands substituted by U.P. VAT (First Amendment) Rules, 2009. 3. In writ petition no. 1448 of 2009, writ of certiorari for quashing order dated 05.06.2009 passed by Joint Commissioner, Corporate Circle, Commercial Tax, Noida has also been prayed whereby respondent 3 has found that in view of amended provision, petitioner was supposed to deposit admitted tax of January 2008 to March 2008 by 20th October 2008 but it has been deposited late i.e. on 18.12.2008, 24.12.2008 and 31.12.2008. Hence petitioner is liable to pay interest on the aforesaid delayed payment. Respondent no. 3 has held petitioner liable to pay penalty under Section 54(1)(1) at the rate of 20 per cent of tax paid that is....
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....ed and unprinted multi layer laminated metal and non metal plastic films etc. It has its unit established at Plot No. A-1, Sector-60 and D-1 to 15, 16 Sector 59, New Okhla Industrial Development Authority (hereinafter referred to as the 'NOIDA'). Since petitioner satisfied all the requirements of tax exemption, it was granted eligibility certificate under Section 4-A of U.P. Trade Tax Act, 1948 (hereinafter referred to as the 'Act, 1948') for a period of 15 years or to the extent of Rs. 959,51,76,417/- which ever is earlier. The exemption was granted w.e.f. 16.02.1995. 11. In normal circumstances, petitioner was entitled to avail aforesaid exemption up to 15.02.2010 or till the amount of exemption of tax reaches to the extent of Rs. 959,51,76,417/-, which ever is earlier. 12. The facts in all other writ petitions are similar, inasmuch as, all the petitioners have been granted eligibility certificate entitled for exemption and for the period of dispute i.e. from January 2008 to June 2008 it is admitted by respondents that exemption benefit was available to all the petitioners. 13. It so happened that Act, 1948 was repealed and a new Act i.e. Act, 2008 came t....
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....eferred to as the 'Amendment Ordinance, 2008') was enacted vide notification dated 16.07.2008 by which Section 42 was substituted w.e.f. 01.01.2008. Relevant Section 42 (4), (5), (6) and (7) are reproduced as under: "42-- Treatment of industrial units availing exemption or reduction in the rate of tax under erstwhile Act - .............. (4) The industrial unit availing benefit of exemption from, or reduction in the rate of, tax on the turnover of sales before the date of commencement of this Act or an industrial unit which is granted the facility of exemption from, or reduction in the rate of, tax on or after such commencement, on the turnover of sales under the erstwhile Act or the Central Sales Tax Act, 1956, shall be entitled for exemption by way of refund of net tax paid along with the return of tax period in prescribed manner and on fulfilling the conditions that,- (a) the unit shall hold valid registration certificate issued under this Act or under the Central Sales Tax Act, 1956 (b) the unit shall have a valid Certificate of Entitlement issued by the Commissioner, (c) the amount of refund shall not be more than a....
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....mption or reduction in the rate of tax before the commencement of this Act. (b) The total period of the refund shall not exceed difference of the total period available for exemption or reduction in the rate of tax and the period exhausted before the commencement of this Act. (7) If any amount is found refundable and is not refunded within the prescribed time, the industrial unit shall be entitled to simple interest at the rate of twelve percent per annum from the last date prescribed for refund. The amount of interest shall be refunded in such manner as may be prescribed." (Emphasis added) 16. The aforesaid amendment of Section 42 by substitution was given effect from 01.01.2008. Amended Section 42(1) provided that no industrial unit availing benefit of exemption or of reduction in the rate of tax or granted benefit of tax from exemption or reduction in the rate of tax under Act, 1948 and Central Sales Tax Act, 1956 shall be permitted to avail benefit of exemption or reduction in the rate of tax on the turn over of sale and purchase or both, as the case may be, on or after the commencement of Act, 2008. Sub Section (3) however, provided such units ava....
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....anner prescribed, deposit the net amount of tax payable shown in such tax return alongwith amount, if any, realized in excess of amount of tax due under this Act from purchasers of goods during the tax period. (3)Every person or dealer to whom provisions of section 34 apply, shall, in respect of dealers from whom any amount of tax has been deducted, submit such statement within such time as may be prescribed. (4)Where as a consequence of the date for the submission of return being extended under subsection (1) on the application of the dealer, the deposit of tax under sub-section (2) is deferred, there shall be payable simple interest at the rate of one and quarter percent per men sum on such deposit for the period commencing on the last date prescribed for submission of the tax return and ending with the date of deposit of such amount. (5) If any dealer discovers any omission or other error in any tax return submitted by him, he may, at any time before the expiry of the time prescribed for submitting the next tax return, submit a revised tax return. If the revised tax return shows a greater amount of tax to be due than was shown in the original return, t....
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....lause (b) of subrule (1), deposit amount of net tax payable by him and Treasury Challan of such deposit shall be submitted to the assessing authority and shall submit to his assessing authority tax return within twenty days after expiry of the quarter along with proof of deposit of net amount of tax payable by him. (4) Before submitting the return under sub-rule (2) for a tax period, the dealer shall in the manner laid down in these rules, deposit the net amount of tax payable by him under the Act as disclosed in the return and shall submit to the assessing authority, along with the return a copy of the treasury challan in Form I: Provided that where a Government department wants to deposit the tax by book transfer, such department shall, before submitting such return, prepare a bill, in triplicate, for the net amount of tax payable, endorse it to the assessing authority in accordance with the financial rules on the subject and two copies thereof with such return. One of the copies shall be retained by the assessing authority and the other copy shall be sent to the Accountant General, Uttar Pradesh for crediting the amount to the account of the Commercial Tax Depa....
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....o comply with the requirements of Section 42 as amended. 24. Thereafter, Rule 70 was also amended by Amendment Rules, 2009 vide notification dated 30.01.2009 which came into force from the date of publication in gazette. Rule 70 as it existed earlier and stood after amendment by notification dated 30.01.2009 is reproduced as under: Column-I Existing rule Column-II Rule as hereby substituted (1) Subject to other provisions of this rule, dealers holding eligibility certificate, granted before, on or after the date of commencement of the Act, shall be eligible for tax deferment, referred to in section 42 to the extent and for the period, whichever expires earlier, as under: (a)(i) In case of an industrial unit referred to in first paragraph of sub-section (1), to the extent of the difference of the amount of exemption from tax mentioned in the eligibility certificate and the aggregate of amounts of exemption from payment of tax that has been availed, either under the Uttar Pradesh Trade Tax Act, 1948 or under the Central Sales Tax Act, 1956, before the date of the commencement of the Act; and (ii) In case of an industrial unit referred to in second paragraph of sub-section....
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.... under erstwhile Act, may apply to the Commissioner for issue of certificate of entitlement duly filled and signed by the person authorized under sub-rule (6) of rule 32, in form XLV up to 31st August 2008 or within thirty days from the date of publication of this rule whichever is later. (2) A copy of the application along with enclosures, if any, shall be served to the assessing authority and certified copy of such receipt shall be annexed to the application. (3) The assessing authority shall, after examining relevant record and after giving the dealer a reasonable opportunity of being heard if necessary, send to the Commissioner a report in form XLVI within a period of thirty days from the date of receipt of the application. (4) If the Commissioner is satisfied that information furnished is correct and complete and report of the assessing authority confirms the particulars of the application, he shall issue the certificate of entitlement in form XLVII within sixty days of the receipt of the application. (5) If the net tax payable for tax periods commencing on January2008 and ending with 30th June 2008,has not been deposited along with return of the tax period the same shall be d....
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....ns is that compliance of deposit of net tax to which petitioners were entitled for exemption with regard to period of January 2008 to June 2008 was practically impossible for the reason that Section 42 for the first time making such different procedure came to be enacted on 16.07.2008 and relevant rule came to be enacted on 30.01.2009 by which date time for deposit of tax along with return had already elapsed. The submission is that petitioners and other similarly placed industries could have never imagined or dreamt that in future legislature will change scheme for entitlement of tax benefit for remaining period/ amount in a totally different manner i.e. first amount of tax along with return would be deposited and thereafter refund would be claimed. Before enactment of Ordinance of 16.07.2008, petitioners had strictly and honestly followed requirement of statute as it was. Even the requirement of amended provision is not objectionable to petitioners but impossibility in the manner of compliance required by legislature renders the said provisions illogical, irrational and arbitrary. It is also contended that in case the provisions are not irrational or arbitrary yet for observance ....
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....reasonable. 30. Section 42(4)(d) as amended by Amendment Act, 2008 seeks compliance in the "prescribed manner". Under existing Act, 2008, and Rules 2008, there was no provision with regard to deposit of tax, by industrial units having certificate of entitlement for exemption of tax along with return, therefore, no procedure or scheme was prescribed till Rule 70 was amended by U.P. VAT (First Amendment) Rules, 2009. The amended Rule 70 provides the manner in which net tax payable along with return shall be paid and thus for the first time requirement of Section 42(4)(d) as amended by Amendment Act, 2008 satisfied 'prescribed manner' only on 30.01.2009 and not before that. 31. Now, rule framing authority in its wisdom requires deposit of tax and filing of return for January 2008 by September 2008, March 2008 by October 2008, April 2008 by November 2008, May 2008 by December 2008 and for the month of June 2008 since amendment by Ordinance was made by notification dated 16.07.2008, therefore, time was prescribed upto 31.07.2008. Unfortunately, rule framing authority completely missed and erred in failing to appreciate that the period by which compliance under amended Rule....
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....A Constitution Bench of seven Hon'ble Judges in Re: Presential Pool 1974 (2) SCC 33: (AIR 1974 SC 1682) held as under: "The maxim of law impotentia excusat legam is intimately connected with another maxim of law lex non cogit and impossibilia. Impotenia excusat legam is that when there is a necessary or invincible disability to perform the mandatory part of the law that impotentia excuses. The law does not compel one to do that which one cannot possibly perform. "Where that law creates a duty or charge, and the party is disabled to perform it, without any default in him, and has no remedy over it, there the law will in general excuse him." Therefore, when it appears that the performance of the formalities prescribed by a statute has been rendered impossible by circumstances over which the persons interested had no control, like the act of God, the circumstances will be taken as a valid excuse. Where the act of God prevents the compliance of the words of a statute, the statutory provision is not denuded of its mandatory character because of supervening impossibility caused by the act of God. (See Broom's Legal Maxim 10th Edition at PP. 162-163 and Craies on Statute ....
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.... excusat legem is that when there is a necessary or invincible disability to perform the mandatory party of the law that impotentia excuses. The law does not compel one to do that which one cannot possibly perform. "Where the law creates a duty or charge, and the party is disabled to perform it, without any default in him, and has no remedy over it, there the law will in general excuse him". Therefore, when it appears that the performance of the formalities prescribed by a statute has been rendered impossible by circumstances over which the persons interested had no control, like the act of God, the circumstances will be taken as a valid excuse. Where the act of God prevents the compliance of the words of a statute, the statutory provision is not denuded of its mandatory character because of supervening impossibility caused by the act of God. (See Broom's Legal Maxims 10th Edition at pp. 1962-63 and Craies on Statute Law 6th Ed. p. 268.) These aspects were highlighted by this Court in Special Reference 1 of 1974 (1975 (1) SCR 504). Situations may be created by interested persons to see that elections do not take place and the caretaker government continue in office. This certai....
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....t is equally important that the court should also, as far as possible, avoid any decision or interpretation of a statutory provision, rule or by law which would bring about the result of rendering the system uunworkable in practice". 43. We may add that the aforesaid principle has been followed by Division Bench of this Court in Inter College, Kasmali 2006 (2) ALJ 601. 44. When issues of a statute is challenged, Court presumes constitutionality unless shown otherwise but presumption cannot go to uphold a provision whereof compliance is impossible by any person and still that statute hold one guilty and further liable of penalty and other dues for non compliance. 45. In Maharashtra State Board of Secondary and Higher Education (supra) Court in para 21, 22 and 28 said: "21. If of instance, they were found to be partial and unequal in their operation as between different classes; if they were manifestly unjust; if they disclosed bad faith; if they involved such oppressive or gratuitous interference with the rights of those subject to them as could find no justification in the minds of reasonable men, the court might well say parliament never intended to given authori....