AI Drafter 
TaxTMI 
TaxTMI 
2025 (3) TMI 561
X X X X Extracts X X X X
X X X X Extracts X X X X
....s April 2008 to March 2009 and April 2009 to March 2010, the Assessee had filed his Returns inter alia claiming Input Tax Credit on purchase of goods which were used in the manufacture and sale/stock-transfer. In terms of Sections 11(a)(5) and 14 of the Act read with Notification No. FD 507 CSL 2007 (IX) dated 01.04.2008 (KVAT Notification) issued under 2003 Act and other Notification No.1/2008-CST-F.No.28/11/2007-ST dated 30.05.2008 ('CST Notification') issued under the provisions of the Central Goods and Services Tax Act, 2017, Assessee claimed to be eligible to deduct input tax paid on the purchase of subject goods used as inputs in the manufacture of taxable goods stock-transferred outside the State to the extent of input tax charged at a rate higher than 3% with effect from 01.04.2008 and at a rate higher than 2% with effect from 01.06.2008 while calculating his net tax liability under the Act. (b) On his purchases of goods which were chargeable to VAT at 12.5% which were used in the manufacture of goods that were stock-transferred outside the State, the Assessee availed Input Tax Credit at the rate of 10.5% (12.5%-2%), under a wrong impression that the aforesaid ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rnataka Appellate Tribunal was right in upholding that the order passed by the Assessing Authority extending the special rebating scheme to the Respondent? (2) Whether pursuant to Section 35 of the KVAT Act, the Respondent could have availed the benefit of special rebating scheme without filing revised Returns when the Respondent has not claimed for it in the Returns filed for the said assessment period? IN STRP 26/2023: (3) Whether on the facts and in the circumstances of the Petitioners' case, the Appellate Tribunal was right in law, in allowing the Respondent's Appeal by setting aside the order passed by the Revisional Authority and restoring the order of reassessment/ rectification ? (4) Whether on the facts and in the circumstances of the Petitioners' case, the Appellate Tribunal was right in law, in allowing the Respondent's Appeal and holding that the Respondent was eligible for deduction of Input Tax Credit tax at 2% on the input purchased locally at 4% used in the manufacture of stock transferred out goods as envisaged as per the provisions of Section 14 of the Act ? (5) Whether on the facts and in the circumstances of the Petit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y law. (C) Both the sides in support of their contentions, passionately pressed into service an avalanche of decisions and we have treated only those relevant of them. V. In the light of pleadings of the parties coupled with the above submissions, the questions that arise for our consideration are as under: (i) If Input Tax Credit is a concession as distinguished from a right under the scheme of 2003 Act, what really is meant by and follows from that...? (ii) Whether the claim for Input Tax Credit cannot be entertained unless made in the Return or revised Return...? (iii) Whether claim for Input Tax Credit can be rectified under section 39 of the Act even when it is disadvantageous to the State Exchequer...? (iv) Whether there is any limitation period for claiming the Input Tax Credit...? The above questions have been articulated after putting them to the counsel representing the parties who had advanced Marathon submissions. VI. Our discussion follows as under: (A) A THUMBNAIL DESCRIPTION OF TAXATION: (a) Power to tax is one of the attributes of State sovereignty. Tax is a price a person pays for being a member of c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....able sale of goods; sub-section (2) defines input tax to mean the tax collected or payable under the Act on the sale to a registered dealer of any goods for use in the course of his business. Both these taxes are inclusively defined, is apparent from their text. Sub-section (3) mandates payment of net tax which is arrived at by deducting input tax from output tax. (b) Sub-section (3) of section 10 has certain special features and therefore, for ease of understanding, the same is reproduced below: "[(3) Subject to input tax restriction specified in sections 11, 12, 14, 17, 18 and 19, the net tax payable by a registered dealer in respect of each tax period shall be the amount of output tax payable by him in that period less the input tax deductible by him as may be prescribed in that period and shall be accounted for in accordance with the provisions of this Act.] [Provided that, a registered dealer while calculating the net tax payable on or after first day of April 2015 may claim input tax relatable to goods purchased during the period immediately preceding five tax periods of such tax period, if input tax of such goods is not claimed in any of such five preced....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and even contrasting shades of meaning, depending upon the scheme of the statute. Roughly concession is ordinarily something between right and gratis and that beyond this, the term has no definite meaning in the law; concession is a legal creature given to various fact situations, particularly economic ones. Be it a right or a concession, they are not absolute. If a concession is enacted by the State, ordinarily it ceases to be a gratis or privilege. Merely because something is called as a 'concession' and the claim for that is conditioned, that per se may not rob elements that usually animate the right created by law. As already discussed above, subsection (5) provides for adjustment or refund of amount when Input Tax exceeds Output Tax payable. Added, it is with interest that such adjustment/refund has to be made. If it was a mere concession, how is that the State is mandating to pay the interest, whatever be its rate as may be prescribed by Rules...? Thus, a right is created to the refund and to that is superadded the right to interest on the delay brooked in making refund/adjustment. (b) Grant of concession arguably may involve discretion. However, it is not Moghul's discre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erved as under: " From the aforesaid scheme of Section 19 following significant aspects emerge:- (a) ITC is a form of concession provided by the Legislature. It is not admissible to all kinds of sales and certain specified sales are specifically excluded. (b) Concession of ITC is available on certain conditions mentioned in this Section. (c) One of the most important condition is that in order to enable the dealer to claim ITC it 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..." (c) The third decision cited by AGA is a Division Bench decision of Madras High Court in ASSISTANT COMMISSIONER OF GST & CENTRAL EXCISE vs. SUTHERLAND GLOBAL SERVICES PRIVATE LIMITED (2020) 83 GSTR 259. The case essentially in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e light of decisions discussed above. (f) The above observations of the learned Single Judge in KIRLOSKAR supra, run counter to what is said by Apex Court in ALD AUTOMOTIVE PRIVATE LIMITED vs. COMMERCIAL TAX OFFICER (2019) 13 SCC 225 paragraph 40: "The alternative submission pressed by learned Counsel for the appellant was that Section 19(11) cannot be held to be mandatory and it is only a directory provision, noncompliance of which cannot be ground of denial of Input Tax Credit to the appellant. The conditions under which Input Tax Credit is to be given are all enumerated in Section 19 as noticed above. The condition under which the concession and benefit is given is always to be strictly construed. In event, it is accepted that there is no time period for claiming Input Tax Credit as contained in Section 19(11), the provision become too flexible and give rise to large number of difficulties including difficulty in verification of claim of Input Credit. Taxing Statutes contains selfcontained scheme of levy, computation and collection of tax. The time under which a return is to be filed for purpose of assessment of the tax cannot be dependent on the will of a deal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....does not much come to our aid. This apart, it is tritely said that laws are not the slaves of dictionaries. However, that does not dispense with the duty to derive meaning from the statutes and decisions interpreting the statutes, although principles applicable to them may be bit variable. Justice Oliver Wendell Holmes in TOWNE vs. EISNER 245 US 418 observed: "A word is not a crystal, transparent and unchanged; it is the skin of a living thought and may vary greatly in colour and content according to the circumstances and time in which it is used..." (d) As to what Apex Court said about the meaning of concession and its invocation: (i) In INDIAN ALUMINIUM COMPANY LIMITED vs. THANE MUNICIPAL CORPN 1992 Supp.(1) SCC 480, paras 5, 6, it is observed as under: "However, a concession has to be availed at the time when it was available and in the manner prescribed. The common dictionary meaning of the word "concession" is the act of yielding or conceding as a demand or argument, something conceded; usually implying a demand, claim, or request, "a thing yielded", "a grant". In the Dictionary of English Law by Earl Jowitt, the meaning of "concession" is give....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ax Credit is only a concession is that: An Assessee cannot claim Input Tax Credit unless the conditions prescribed by the statute are strictly complied with. To put it differently, Input Tax Credit is not unconditional or unqualified, since it is made available as an exception to the general rule that no input tax deduction would be granted, as said in section 11 of the Act read with Rule 38 of 2005 Rules. This accords with the constitutional mandate enacted in Article 265, as broadly construed by the Apex Court. If tax cannot be levied and collected except with the authority of law, then as a corollary of this, any excess exaction also cannot be retained by the State subject to exceptions such as unjust enrichment, delay & latches, non-compliance of mandatory form, etc. It is more so because section 10(5) mandates refund/adjustment of excess of Input Tax Credit that too with interest. (f) Merit and legality of a proposition like the above can be better understood by contemplating the consequences of the contra. With all this in mind, we ask ourselves now: 'Despite strict compliance of all conditions, can the claim for Input Tax Credit be denied to the Assessee...?' Answer has t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the preceding month or any other tax period as may be prescribed. (3) Subject to such terms and conditions as may be specified, the prescribed authority may require any registered dealer.- (a) to furnish a return for such periods, or (b) to furnish separate branch returns where the registered dealer has more than one place of business. (4) If any dealer having furnished a return under this Act, other than a return furnished under sub-section (3) of Section 38, discovers any omission or incorrect statement therein, other than as a result of an inspection or receipt of any other information or evidence by the prescribed authority, (a) he shall furnish a revised return within the time prescribed for filing the return for the succeeding tax period; and (b) he shall furnish a revised return any time thereafter but within six months from the end of the relevant tax period, if so permitted by the prescribed authority." (c) Sub-section (1) of section 35 mandates filing of Return in prescribed form & manner and paying of tax due on such Return within a specified period. Sub-section (3) empowers the prescribed authority to call for a Return for specific....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... (F) AS TO ABSENCE OF CLAIM FOR INPUT TAX CREDIT IN RETURN/REVISED RETURN: (a) As a matter of norm, Input Tax Credit cannot be availed unless the conditions are complied with. As already mentioned above, section 35 of 2003 Act read with Rule 38 of 2005 Rules gives full particulars to be furnished in the Return/Revised Return in Form VAT 100. Rule 38(1) which learned AGA relied upon strongly, has the following text: "Every registered dealer shall submit a monthly return, containing particulars of net values of sales, purchases and other transactions, including input and output tax claimed or collected and net tax relating to all of his places of business, and accompanied by proof of full payment of any tax due, to the jurisdictional Local VAT officer or VAT sub-officer in Form VAT 100 within twenty days after the end of the relevant tax period." Relevant part of prescribed Form VAT 100 namely paragraphs 4.1, 4.2, 4.3 & 4.9 reads as under: 4.1 Output tax payable (Refer Box No. 8.3) 4.2 Brought forward credit of/excess payment made during previous month/quarter (Refer Box No.4.10) 4.3 Input Tax Credit (Refer Box No.11) 4.9 Refund [Other co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s land cost. Though Assessing Officer allowed only 40%, the first appellate authority granted the benefit of 45% towards land cost. The question now to be decided is whether unless a claim is made by the assessee in its return (and without the same being revised or modified by filing a revised return), any benefit beyond the benefit claimed in the return can be considered and allowed by the authorities. In our view the answer would be a clear No...." This decision in turn referred to Centum Industries supra, and INFINITE BUILDERS & DEVELOPERS vs. ADDITIONAL CCT (2013) 76 Kar.L.J 390. (c) In the above decisions, it is apparent that no claim for Input Tax Credit was made in the Return, nor any Revised Return was furnished. Limitation period as prescribed by law is also discussed for filing of Return or Revised Return. However, Mr.Suryanarayana is right in telling us that the case of his client is markedly different from the fact matrix of those decisions inasmuch as Input Tax Credit was specifically claimed in the Returns filed in time. Since the matter went for re-assessment, the Assessee before closure of the said process had sent the letters for rectifying the mistake by rec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by way of amendment ? It would be superfluous. This is where the maxim expressio unius est exclusio alterius becomes invocable: the expression of one thing is the exclusion of another. (G) AS TO WHAT IS CONSPICUOUSLY LACKING IN THE RULINGS CITED ON BEHALF OF REVENUE: (a) Learned AGA Mr.Aditya Vikram Bhat in support of his contention that no claim for Input Tax Credit can be entertained unless made in the Return or in the Revised Return, heavily banked upon four important decisions rendered by different Coordinate Benches of this Court. They are (i) M/s Centum Industries, (ii) Nandi Constructions, (iii) Infinite Builders & Developers & (iv) MANASA ELECTRICALS COMPANY vs. STATE OF KARNATAKA 2016 SCC OnLine Kar 9412. (b) We very carefully perused these decisions which consistently suggest, if not hold that in the absence of claim being made in the Return, amended Return or Revised Return, Input Tax Credit can be denied. This broad proposition is structured keeping in view inter alia sections 10, 11, 14, 35, 38 & 39 of 2003 Act read with Rule 38 and Form VAT 100 of 2005 Rules. However, reference to Rule 130A which is on the Rule book since April 2007 is conspicuously absent. A....