1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 10412­10413 OF 2018

(ARISING OUT OF SLP(C)NOS.36112­36113 OF 2013)

ALD AUTOMOTIVE PVT. LTD.     ... APPELLANT

VERSUS

THE COMMERCIAL TAX OFFICER 

NOW UPGRADED AS THE ASSISTANT 

COMMISSIONER (CT) & ORS.    ... RESPONDENTS

WITH

Civil   Appeal   Nos.   10414­10450   of   2018   @   SLP(C)

NOS.36590­36626 OF 2013, Civil Appeal Nos. 10451­10455

of   2018   @   SLP(C)NOS.2474­2478   OF   2014,   Civil   Appeal

Nos.   10498­10499   of   2018   @   SLP(C)NOS.10060­10061   OF

2014,  Civil Appeal Nos. 10456­10481 of 2018 @ SLP(C)

Nos. 3675­3700 of 2014, Civil Appeal Nos.10482­10497

of 2018 @ SLP(C) NOS.3702­3717 OF 2014, Civil Appeal

Nos.   10509­10513   of   2018   @   SLP(C)NOS.11313­11317   OF

2014,   Civil   Appeal   Nos.   10503­10507   of   2018   @

SLP(C)NOS.11319­11323 OF 2014, Civil Appeal No. 10523

of 2018 @ SLP(C)NO.13961 OF 2014,   Civil Appeal Nos.

10525­10527 of 2018 @ SLP(C)NOS. 13204­13206 OF 2014,

Civil   Appeal   No.   10544   of   2018   @   SLP(C)NO.30638   OF

2014, Civil Appeal No. 10522 of 2018 @ SLP(C)NO.13960

OF 2014, Civil Appeal No. 10524 of 2018 @ SLP(C)NO.

2

12779 OF 2014, Civil Appeal Nos. 10519­10521 of 2018 @

SLP(C)NOS.12175­12177   OF   2014,   Civil   Appeal   Nos.

10500­10502 of 2018 @ SLP(C)NOS.10506­10508 OF 2014,

Civil Appeal No. 10508 of 2018 @ SLP (C) NO. 11324 OF

2014,   Civil   Appeal   Nos.   10516­10518   of   2018   @

SLP(C)NOS.12163­12165 OF 2014, Civil Appeal No. 10543

of 2018 @ SLP(C)NO.30637 OF 2014, Civil Appeal Nos.

10514­10515 of 2018 @ SLP(C) NOS.12192­12193 OF 2014,

Civil   Appeal   No.   10528   of   2018   @   SLP(C)NO.17467   OF

2014,   Civil   Appeal   Nos.   10534­10538   of   2018   @

SLP(C)NOS.   26044­26048   OF   2014,   Civil   Appeal   Nos.

10529­10532 of 2018 @ SLP(C)NOS.24055­24058 Of 2014,

Civil   Appeal   No.   10533   of   2018   @   SLP(C)NO.24964   OF

2014,   Civil   Appeal   Nos.   10539­10542   of   2018   @

SLP(C)NOS. 29297­29300 OF 2014, Civil Appeal No. 10549

of 2018 @ SLP(C)NO.30673 OF 2015, Civil Appeal Nos.

10545­10548 of 2018 @ SLP(C)NOS. 26924­26927  OF 2015,

Civil Appeal No. 10550 of 2018 @ SLP(C) NO. 14350 OF

2016,   Civil   Appeal   Nos.   10551­10553   of   2018   @

SLP(C)NOS.22612­22614   OF   2016,   Civil   Appeal   Nos.

10554­10558   of   2018   @   SLP(C)NOS.487­491     OF   2017,

Civil Appeal No. 10559 of 2018 @ SLP(C)NO.33303   OF

2017.

J U D G M E N T

ASHOK BHUSHAN, J.

Delay condoned. Leave granted.

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2.All these appeals have been filed against common

judgment   dated   17.07.2013   of   Madras   High   Court

dismissing   a   bunch   of   writ   petitions   filed   by   the

appellants. The main challenge in the writ petitions

was provision of Section 19(11) of Tamil Nadu Value

Added Tax Act, 2006 (hereinafter referred to as the

“Tamil   Nadu   VAT   Act,2006”).   For   appreciating   the

issues   raised   in   this   batch   of   appeals   it   is

sufficient to notice the facts in Civil Appeal Nos.

10412­10413 of 2018 arising out of SLP(C)Nos. 36112­

36113   of   2013(ALD   Automotive   Pvt.   Ltd.   vs.   The

Commercial Tax Officer and others). 

3.The appellant Company is a registered dealer under

Tamil   Nadu   VAT   Act,   2006.   The   appellant   Company   is

engaged   in   the   business   of   leasing   and   fleet

management of the motor vehicles and resale of used

motor vehicles. The head office of the Company is at

Mumbai.   The   head   office   of   the   appellant   negotiates

the purchase price with the local registered dealers

in   Tamil   Nadu  and  issues  the   purchase  order  to   the

dealer   along   with   the   payment   including   the   tax

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payable   under   the   Tamil   Nadu   VAT   Act,   2006.   The

registered dealer raises the tax invoice as and when

the   motor   vehicle   is   ready   for   delivery   to   the

appellant. The date of purchase for the vehicle in the

books   of   the   appellant   is   same   as   the   date   of

delivery.   The   tax   invoices   of   such   purchases   are

received   after   a   considerable   delay   as   the   original

documents are sent to the Regional Transport Authority

for   registration   of   motor   vehicles.   The   appellant

enters the details of the tax invoice containing the

payment of tax in its books of accounts. The appellant

had outsourced the job of collection of original tax

invoices to one M/s. MID Controls Private Limited, an

Agency   specialised   for   collecting   documents.   The

appellant is entitled to claim Input Tax Credit of the

amount   of   tax   paid   on   the   purchases   made   from   the

registered   dealer   of   motor   vehicle   as   per   Section

19(2) of the Tamil Nadu VAT Act, 2006. As per Section

19(11), if a dealer has not claimed Input Tax Credit

for a particular month, the dealer can claim the Input

Tax Credit   before the end of the financial year or

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before 90 days from the date of purchase whichever is

later. When the appellant filed its returns for the

assessment   year   2007­2008   for   want   of   the   tax

invoices,   the   said   Input   Tax   Credit     could   not   be

claimed. The appellant, however, filed revised returns

claiming Input Tax Credit on the receipt of the tax

invoices from the dealer. The appellant also filed its

monthly   returns   for   the   period   from   April,   2007   to

February,   2008.   The   appellant   had   filed   a   monthly

return   for   the   month   of   March,   2008   on   06.10.2008.

There was delay in filing return. Due to late receipt

of original purchase invoices, the appellant revised

its   returns   for   the   period   from   March,   2008   to

January, 2009 in the month of March, 2009.  

4.In the returns filed on 06.10.2008, the appellant

claimed Input Tax Credit  of Rs.42,04,628/­. By order

dated 21.11.2008, the Commercial Tax Officer rejected

the Input Tax Credit  claimed by the appellant in the

month of March, 2008. On a writ petition filed by the

appellant being Writ Petition(C) No.18137 of 2009, the

High Court set aside the order confirming the proposal

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to   disallow   the   Input   Tax   Credit   and   directed   the

Commercial Tax Officer to pass appropriate orders in

accordance   with   law.   Notice   was   issued   proposing   to

reject   the   appellant's   revised   returns   which   was

objected. In the objections, the appellant stated that

the   delay   in   getting   the   original   tax   invoices   was

only due to the fact that the Original Tax Invoices

were received belatedly from the registered dealers.

Notice   dated   01.06.2009   was   issued   confirming   the

notice   and   rejecting   the   appellant's   objections   by

treating   the   entire   amount   of   Input   Tax   Credit   of

Rs.1,28,36,822/­ as not admissible for the assessment

year 2008­2009 taking the view that it was a belated

claim. The appellant filed writ petition. In the writ

petition following prayers were made:

"For the reasons stated above, it is prayed

that   this   Hon'ble   Court   may   be   pleased   to

issue   a   Writ   of   Declaration   or   any   other

appropriate  Writ,   order  or   direction   in  the

nature   of   Writ,  declaring   Section   19(11)   of

the Act read with Rule 10(2) of the Tamil Nadu

Value Added Tax Rules, 2007 as ultra vires the

provisions of the Act, arbitrary and violative

of   Articles   14   and   19(1)(g)   of   the

Constitution   of   India,   pass   such   other   or

further orders as this Hon'ble Court may deem

fit and proper on the facts and circumstances

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of the case and thus render justice.

For   the   reasons   stated   above,   it   is   prayed

that   this   Hon'ble   Court   may   be   pleased   to

issue a Writ of Certiorari, Mandamus or any

other appropriate Writ, order or direction or

order   in   the   nature   of   writ,   quash   the

impugned notice issued by the respondent in TN

33421463542/08­09   dated   01.06.2009   served   on

the  petitioner   on   16.06.2009   and   direct  the

respondent to allow the appellant's claim of

Input   Tax   Credit     for   the   sum   of

Rs.1,28,36,822/­, pass such other or further

orders as this Hon'ble Court may deem fit and

proper on the facts and circumstances of the

case and thus render justice.”

5.We   may   also   notice   the   facts   of   another   Civil

Appeal No. 10503­10507 of 2018 arising out of SLP(C)

Nos.11319­11323 of 2014 (Sri Devi Enterprises vs. The

Commercial Tax Officer & Anr.).

6.The   appellant   is   a   partnership   firm   which   owns

petrol pump and deals in petrol, diesel, Auto LPG and

Lubricating   Oils   (all   products   of   Bharat   Petroleum

Corporation Limited). The appellant's claim for Input

Tax Credit was disallowed by order dated 11.04.2011.

The   respondent   placed   reliance   on   time   limit   under

Section   19(11)   of   Tamil   Nadu   VAT   Act,   2006   for

disallowing   Input   Tax   Credit   to   the   appellant.

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Aggrieved by the aforesaid order dated 11.04.2011 Writ

Petition   (C)   No.10648   of   2011   was   filed   by   the

appellant wherein following reliefs were claimed:

"28.It is therefore just and necessary that

this Hon'ble Court may be pleased to issue a

Writ of Declaration or any other appropriate

writ, order or direction under Article 226 of

the   Constitution   of   India,   declaring   that

19(11) of the Tamil Nadu Value Added Tax Act,

2006   is   inconsistent   with   the   charging

Section 3, and  the general  scheme of annul

assessment under Sections 20, 21, 22 and 27

Of the Tamil Nadu Value Added Tax Act, 2006,

and   void   is   being   arbitrary   and   irrational

infringing the rights of the petitioner under

Article 14 and 19(1)(g) and the resultant tax

demands   arising   out   of   disallow   of   input

credit tax are violative of Articles 265 and

300A of the Constitution of India, 1950, and,

therefore,   unenforceable,   or   pass   such

further or other orders as may deem fit and

proper in the circumstances of this case and

render justice.

29.It is therefore just and necessary that

this Hon'ble Court may be pleased to issue a

Writ of Certiorari or and other appropriate

writ order or direction under Article 226 of

the   Constitution   of   India   quashing   the

proceedings of the First Respondent herein in

his   TIN   33251300045/06­07   dated   11.04.2011

and to quash the same or pass such further or

other orders as may deem fit and proper in

the   circumstance   of   the   case   and   render

justice.”

7.Similarly,   large   number   of   writ   petitions   were

filed in Madras High Court by other writ petitioners

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where Input Tax Credit   was disallowed on account of

non­compliance of Section 19(11) of the Tamil Nadu VAT

Act,   2006.   All   the   writ   petitions   were   decided   by

common judgment dated 17.07.2013. The Division Bench

of   the   Madras   High   Court   by   the   impugned   judgment

upheld   the   validity   of   Section   19(11)   of   the   Tamil

Nadu VAT Act, 2006 and upheld the orders passed by the

respondents denying the benefit of Input Tax Credit.

The   High   Court   further,   in   the   cases   where   final

orders   of   assessment   have   been   challenged,   granted

liberty to the appellants to prefer statutory appeal

within   60   days   from   the   receipt   of   a   copy   of   the

order, the same was to be entertained by the appellate

authority subject to the assessee full­filling other

mandatory statutory conditions. It is useful to notice

the   operative   portion   of   the   judgment   contained   in

paragraphs   84,85   and   86,   which   is   to   the   following

effect:

“84.The   other   bunch   of   writ   petitions

challenging   the   assessment   order/show   cause

notices   denying   the   credit   taken   in   the

revised  returns  involving  Section  19(11)  of

TN   VAT   Act   are   not   maintainable.   The   writ

petitions   challenging   the   constitutionality

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of   Section   19(11)   having   failed   the   writ

petitions   challenging   assessment   orders/show

cause   notices   have   no   legs   to   stand   and

therefore, they should necessarily fail. 

85.In cases where final orders of assessment

have been challenged, the assessees shall  be

entitled  to  prefer   statutory   appeal  against

such order and if such appeals are presented,

whithin a period of 60 days from the date of

receipt   of   a   copy   of   this   order,   the   same

shall   be   entertained   by   the   appellate

authority   subject   to   the   assessee   full­

filling other mandatory statutory conditions

except rejecting those appeals on the ground

of   limitation.   In   ceases   where   the

petitioners   have   challenged   show   cause

notices, they are at liberty to submit their

explanation. If such explanation is submitted

within a period of 30 days from the date of

receipt   of   a   copy   of   this   order,   the

assessing  authority  shall  consider  the   case

in accordance with law.

86.In the result, all the writ petitions are

dismissed   holding   that   Section   19(11)   is   a

valid piece of legislation, cannot be struck

down   as   being   either   unreasonable   or

discriminatory   and  violative  of  Article  265

and 360A  of the Constitution of India.  The

interim   stay   granted   in   all   writ   petitions

stand vacated and the miscellaneous petitions

are closed. There is no order as to costs.”

8.All   these   appeals   have   been   filed   challenging

common judgment dated 17.07.2013.

9.We have heard learned counsel for the appellants

as well as the learned Advocate General appearing for

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the State of Tamil Nadu.

10.Learned counsel for the appellants in support of

the appeals contend that substantive and vested right

of   a   registered   dealer   to   claim   Input   Tax   Credit

cannot   be   curtailed   and   fettered   by   an   unreasonable

restriction imposed under Section 19(11) of the Tamil

Nadu VAT Act, 2006 requiring claim to be made within

90 days from the date of purchase or before the end of

the financial year whichever is later.

11.It   is   submitted   that   Section   19(11)   makes   the

enforcement of the substantive right unreasonable as

well as arbitrary   and   violative of Article 14 and

19(1)(g) of the Constitution. Such right under Section

3(3) of the Act cannot be taken away by Section 19(11)

which is only a procedural provision. Section 19(11)

is inconsistent with the charging  Section 3(3) of the

Act. In any view of the matter, Section 19(11) is only

a   directory   provision   and   cannot   be   held   to   be

mandatory. Sections 3(3) and 19(11) being part of the

same scheme that is to allow  Input Tax Credit, Section

19(11) has to be construed harmoniously so as not to

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take away the right which has been given under Section

3(3).   Statutory   benefit   under   Section   3(3)   is

mandatory   being   part   of   charging   Section.   Section   3

which  entitles  claim  of  Input  Tax  Credit    does   not

contain any limitation hence such right could not be

hedged   by   any   limitation,   as   contained   in

Section 19(11).

12.Learned   Advocate­General   of   the   State   of   Tamil

Nadu refuting the submissions of learned counsel for

the   appellants   contends   that   Section   19(11)   of   the

Tamil Nadu VAT Act, 2006 contains essential conditions

under   which   Input   Tax   Credit   can   be   claimed   by   a

dealer, hence, on non­compliance of the conditions the

Input   Tax   Credit   has   rightly   been   denied   to   the

appellants.   Section   19(11)   is   a   part   of   the   same

statutory scheme and does not suffer from any ultra­

vires. Learned Advocate­General submits that judgment

of   this   Court   in  Jayam   and   Company   vs.   Assistant

Commissioner   and   another,   2016   (15)   SCC   125,  where

validity of Section 19(20) of the T.N.VAT Act, 2006

has   been   upheld   and   it   has   been   laid   down   that

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whenever   concession   is   given   by   the   statute   or

notification,   the   conditions   thereof   should   strictly

be complied with in order to avail such concession, is

fully applicable in the facts of the present case and

all the appeals are liable to be dismissed.

13.From the submissions of the learned counsel for

the parties and evidence on record following are the

issues which arise for consideration in this batch of

appeals :

(1)Whether   Section   19(11)   violates   Article   14

and 19(1)(g) of the Constitution of India ?

(2)Whether   Section   19(11)   is   inconsistent   to

Section 3(3) of the Act ?

(3)Whether Section19(11) is directory provision,

non­compliance   of   which   cannot   be   a   ground   for

denial of input tax credit to the appellants ?

(4)Whether   denial   of   input   tax   credit   to   the

appellants is contrary to the scheme of VAT Act,

2006 ?

(5)Whether   Assessing   Authorities   could   have  

extended the period for claiming Input Tax Credit 

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beyond the period as provided in Section 19(11) of

Tamil Nadu VAT Act, 2006 ?

14.Before   we   enter   into   the   submissions   of   the

learned   counsel   of   the   parties,   it   is   necessary   to

notice the statutory scheme as delineated by the Tamil

Nadu  Value  Added  Tax   Act,  2006.  The  Tamil  Nadu   VAT

Act, 2006 has been enacted to consolidate and amend

the   law   relating   to   the   levy   of   tax   on   sale   and

purchase of the goods in the State   of Tamil Nadu.

Input Tax Credit has been defined under Section 2(24)

in the following words:

"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;”

15.Section 3 is charging Section. Section 3(1), (2)

and (3) which are relevant for the present case, are

as follows:

“3. Levy of Taxes on sales of goods. ­ (1) (a)

Every dealer, other than a casual trader or

agent   of   a  non­resident  dealer,  whose   total

turnover for a year is not less than rupees

five lakhs and every casual trader or agent of

a non­resident dealer, whatever be his total

turnover, for a year shall pay tax under this

Act. 

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1(b)   Notwithstanding   anything   contained   in

clause (a), every dealer, other than a casual

trader   or   agent   of   a   non­resident   dealer,

whose   total  turnover   in  respect  of   purchase

and sale within the State, for a year, is not

less   than   rupees   ten   lakhs,   shall   pay   tax

under this Act. 

(1­A)   Notwithstanding   anything   contained   in

this Act, for the purpose of assessment of tax

under this Act, for the period from the 1st

day of January 2007 to the 31st day of March

2007   in   respect   of   dealers   referred   to   in

clause (a) or (b) of sub­section (1) the total

turnover for the period from the 1st day of

April 2006 to the 31st day of December 2006

under   the   repealed   Tamil   Nadu   General   Sales

Tax Act, 1959 (Tamil Nadu Act 1 of 1959) and

the total turnover for the period from the 1st

day of January 2007 to the 31st day of March

2007   under   this   Act,   shall   be   the   total

turnover for the year 2006­2007. in respect of

such dealer whose total turnover for that year

exceeds the total turnover referred to in the

said clause (a) or (b) of sub­section 1 and

if,­ 

(a)   such   dealer   has   not

collected the tax under this Act, he

is liable to pay tax under this Act,

(b)   such   dealer   has   collected

the tax under this Act, he is liable

to pay tax under this Act, and other

provisions of this Act, shall apply

to such dealer.]

(2) Subject to the provisions of sub­section

(1), in the case of goods specified in Part ­

B or Part ­ C of the First Schedule, the tax

under this Act shall be payable by a dealer on

every sale made by him within the State at the

rate specified therein:

Provided that all spare parts, components

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and accessories of such goods shall also be

taxed at the same rate as that of the goods if

such spare parts, components and accessories

are not specifically enumerated in the First

Schedule   and   made   liable   to   tax   under   that

Schedule.] 

(3) The tax payable under sub­section (2) by a

registered   dealer   shall   be   reduced,   in   the

manner prescribed, to the extent of tax paid

on his purchase of goods specified in Part ­ B

or Part ­ C of the First Schedule, inside the

State, to the registered dealer, who sold the

goods to him.”

16.Section 19 contains a heading “Input Tax Credit”.

Section   19   contains   20   sub­sections.   Section   19

enumerates several sub­sections which provide that no

Input Tax Credit is allowed in certain circumstances

whereas   other   provisions   contain   statutory   scheme

under which Input Tax Credit is permissible. In the

present   case   we   are   concerned   with   Section   19(11)

which  is to the following effect:

“19(11)   In   case   any   registered   dealer

fails to claim input tax credit in respect of

any   transaction   of   taxable   purchase   in   any

month, he shall make the claim before the end

of the financial year or before ninety days

from   the   date   of   purchase,   whichever   is

later.”

17

Issue no. 1 and 2

17.The   challenge   in   this   batch   of   appeals   is

challenge to a fiscal legislation. It is relevant to

notice the principles of statutory interpretation of a

fiscal   legislation.   The   Constitution   Bench   of   this

Court in  (1981) 4 SCC 675, R.K.Garg versus Union of

India,  has   enumerated   established   principles   for

interpreting law dealing with economic activities. In

paragraph 8 of the judgment following has been held: ­

"8. Another rule of equal importance is that

laws relating to economic activities should

be   viewed   with   greater   latitude   than   laws

touching   civil   rights   such   as   freedom   of

speech, religion etc. It has been said by no

less   a   person   than   Holmes,   J.,   that   the

legislature   should   be   allowed   some   play   in

the   joints,   because   it   has   to   deal   with

complex   problems   which   do   not   admit   of

solution through any doctrinaire or strait­

jacket formula and this is particularly true

in case of legislation dealing with economic

matters, where, having regard to the nature

of the problems required to be dealt with,

greater play in the joints has to be allowed

to   the   legislature.   The   court   should   feel

more inclined to give judicial deference to

legislative judgment in the field of economic

regulation   than   in   other   areas   where

fundamental   human   rights   are   involved.

Nowhere   has   this   admonition   been   more

felicitously expressed than in  Morey v. Doud

7

where Frankfurter, J., said in his inimitable

style:

18

“In the utilities, tax and economic

regulation   cases,   there   are   good

reasons for judicial self­restraint if

not judicial deference to legislative

judgment.   The   legislature   after   all

has   the   affirmative   responsibility.

The   courts   have   only   the   power   to

destroy,   not   to   reconstruct.   When

these are added to the complexity of

economic   regulation,   the   uncertainty,

the   liability   to   error,   the

bewildering   conflict   of   the   experts,

and   the   number   of   times   the   judges

have been overruled by events — self­

limitation can be seen to be the path

to   judicial   wisdom   and   institutional

prestige and stability.””

18.Another   principle   of   statutory   interpretation

which needs to be noticed is that a provision in the

statute is not to be read in isolation rather it has

to   read   along   with   other   related   provisions   itself,

more particularly when the subject matter dealt within

different sections or parts of the same statute is the

same. This proposition was reiterated by this Court in

Kailash   Chandra   and   another   versus   Mukundi   lal   and

others, 2002 (2) SCC 678 . In paragraph 11, following

has been laid down: ­

“11. A provision in the statute is not to be

read   in   isolation.   It   has   to   be   read   with

other related provisions in the Act itself,

19

more   particularly,   when   the   subject­matter

dealt with in different sections or parts of

the same statute is the same or similar in

nature.”

19.Here   we   have   noticed   that   Input   Tax   Credit   is

being allowed under Section 3 which is provision on

“levy   of   taxes   on   sale   of   goods”.   Section   3   is   a

charging section which provides for levy of taxes on

sale of goods. Sub­section (3) is the part of the same

scheme   where   tax   payable   under   sub­section   (2)   by

registered   dealer   shall   be   reduced,   in   the   manner

prescribed, to the extent of tax paid on his purchase

of goods. Other provisions of the Act elaborated and

explained the whole mechanism of the Act. Section 4 to

12   are   various   provisions   dealing   with   following

subject matters:=

“Section 4. Levy of tax on right to use any

goods.

Section 5. Levy of tax on transfer of goods

involved in works contract.

Section 6. Payment of tax at compounded rates

by work contractor.

Section 6A. Payment of tax at compounded rate

by brick manufacturers.

20

Section 7. Levy of tax on food and drinks.

Section 8. Payment of tax at compounded rate

by   hotels,   restaurants   [sweet­stalls   and

bakeries] 

Section   9.   Levy   of   tax   on   bullion   and

jewelery.

Section 10. Tax on goods purchased by dealers

registered   under   Central   Sales   Tax   Act,

1956(Central Act 74 of 1956)

Section 11. Levy of tax on sugarcane. 

Section 12. Levy of purchase tax.” 

20.Section 13 deals with  reduction of tax at source

in works contract, Section 14 deals with reversal of

tax   credit,   Section   15   deals   with   exempted   sale,

Section   16   deals   with   stages   of   levy   of   taxes   in

respect   of   imported   and   exported   goods;   Section   17

deals with burden of proof; Section 18 deals with zero

rating; and Section 19 deals with Input Tax Credit. 

21.As   noted   above,   Section   3,   sub­Section   (3)

provided   that   tax   payable   under   sub­Section   (2)   by

registered   dealer   shall   be   reduced,   in   the   manner

prescribed, to the extent of tax paid on his purchase

of goods specified in Part­B and Part­C of the First

21

Schedule   inside   the   State,   who   is   registered   dealer

who sold the goods to him. The provision of Section 3

sub­Section   (3)   is   a   provision   which   entitled   a

registered   dealer   to   obtain   a   tax   credit   which   has

been   explained   in   Section   19.   The   submission   that

Section 19 is inconsistent to Section 3(3) is wholly

misconceived.   What   is   envisaged   in   Section   3   sub­

Section (3) is amplified and explained in Section 19.

The reduction in the tax as contemplated in Section 3

sub­section (3) has to be in manner and as provided in

Section   19.   Section   19(11)   contains   a   condition   for

claiming the input tax credit. As noticed above, there

are   other   various   provisions   in   Section   19   itself

where it contains provisions where no input tax credit

is   allowable,   e.g.   Section   19(6)   to   Section   19(10),

which are as follows: ­

“19(6). No input tax credit shall be allowed

on purchase of capital goods, 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,   input  tax

credit shall be allowed to the extent of its

usage in the manufacture of taxable goods in

22

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 air­conditioning units

unless   the   registered   dealer   is   in

the   business   of   dealing   in   such

units. 

(8) No input tax credit shall be allowed to

any goods purchased by him for sale but given

away by him by way of free sample or gift or

goods consumed for personal use. 

(9) No input tax credit shall be available to

a registered dealer for tax paid or payable at

the time of purchase of goods, if such­

(i) goods are not sold because of any

theft, loss or destruction, for any

reason,   including   natural   calamity.

If a dealer has already availed input

tax credit against purchase of such

goods, there shall be reversal of tax

credit, or

(ii)   inputs   destroyed   in   fire

23

accident   or   lost   while   in   storage

even before use in the manufacture of

final products; or

(iii)   inputs   damaged   in   transit   or

destroyed at some intermediary stage

of manufacture.

(10)(a) The registered dealer shall not claim

input tax credit until the dealer receives an

original tax invoice duly filled, signed and

issued by a registered dealer from whom the

goods   are   purchased,   containing   such

particulars, as may be prescribed, of the sale

evidencing the amount of input tax. 

(b) if the original tax invoice is lost,

input tax credit shall be allowed only on the

basis of duplicate or carbon copy of such tax

invoice   obtained   from   the   selling   dealer

subject   to   such   conditions   as   may   be

prescribed.”

22.Can   it   be   said   that   above   provisions   are

inconsistent to Section 3(3) which permits reduction

of tax of registered dealer, answer, obviously is No.

When the input tax credit is to be allowed and when it

is to be disallowed is elaborated in Section 19 which

is self­contained scheme and benefit under Section 3

sub­Section (3) can be claimed only when conditions as

enumerated in Section 19 are fulfilled.

23.Now, we need to refer to certain judgments of this

Court which has been relied by learned Counsel for the

24

appellant.   The   first   judgment   which   needs   to   be

noticed is the judgment of this Court in  AIR (1967) SC

1823, Sales Tax officer, Ponkunnam and another versus

K.I.   Abraham.   This   Court   had   occasion   to   consider

Section 8 of the Central Sales Tax Act, 1956 and Rule

6   of   the   Central   Sales   Tax   (Kerala   Rules,   1957).

Section 8 sub­Section (1) provided that for dealer who

in the course of inter­State trade or commerce ­ (a)

sells to the government any goods; or (b) sells to a

registered dealer other than government goods of the

description referred to in sub­section (3); shall be

liable to pay tax under this Act, which shall be one

percent of his turnover.  Sub­section (4) of Section 8

provides: ­

“8. (4) The provisions of sub­section (1)

shall not apply to any sale in the course of

inter­State   trade   or   commerce   unless   the

dealer   selling   the   goods   furnishes   to   the

prescribed authority in the prescribed manner—

(a) a declaration duly filled and

signed   by   the   registered   dealer   to

whom   the   goods   are   sold   containing

the   prescribed   particulars   in   a

prescribed   form   obtained   from   the

prescribed authority; or

25

(b) if the goods are sold to the

Government,   not   being   a   registered

dealer,   a   certificate   in   the

prescribed   form   duly   filled   and

signed by a duly authorised officer

of the Government.”

24.Rule   6  of  Central  Sales  Tax  (Kerala  Rules)   has

been noticed in paragraph 5, which is to the following

effect: ­

“5. Rule 6 of the Central Sales Tax (Kerala)

Rules, 1957 read as follows:

“6.   (1)   Every   dealer   registered   under

Section 7 of the Act and every dealer liable

to pay under the Act shall submit a return of

all   his   transaction   including   those   in   the

course   of   export   of   the   goods   out   of   the

territory of India in Form II together with

connected declaration forms so as to reach the

assessing authority on or before the 20th of

each   month   showing   the   turnover   for   the

preceding   month   and   the   amount   or   amounts

collected by way of tax together with proof

for the payment of tax due thereon under the

Act.

Provided that in cases of delayed receipt

of declaration forms, the dealer may submit

the declaration forms at any time before the

assessment is made:

Provided   further   that   the   delay   in

submitting   the   declaration   forms   shall   not

exceed three months from the date of sale in

question:

26

Provided   also   that   all   declaration   forms

pending   submission   by   dealers   on   2­5­1960

shall be submitted not later than 16­2­1961.”

The first proviso to Rule 6 was inserted by

notification dated January 3, 1958, the second

by notification dated April 26, 1960 and the

third by notification dated January 16, 1961.”

25.The submission which was raised before this Court

was   that   phrase   “in   the   prescribed   manner   used   in

Section 8(4) does not take in the   time  element.” In

paragraph   6   of   the   judgment   this   Court   interpreting

the   phrase   “in   the   prescribed”   manner   occurring   in

Section 8(4) and held that it does not take in the

time element. This Court also notice the provision of

Section   13(4)   which   provision   empowers   the   State   to

make rules for the “time” within which and the manner

in   which   the  authorities   to  whom   any  change  in   the

ownership of any business shall be furnished. It is

useful   to   extract   relevant   observations   made   in

paragraph 6 of the judgment: ­

“6………But   the   phrase   “in   the   prescribed

manner” in Section 8(4) does not take in the

time­element. In other words, the section does

not   authorise   the   rule­making   authority   to

prescribe   a   time   limit   within   which   the

declaration is to be filed by the registered

dealer.   The   view   that   we   have   taken   is

27

supported by the language of Section 13(4)( g)

of   the   Act   which   states   that   the   State

Government may make rules for “the time within

which, the manner in which and the authorities

to whom any change in the ownership of any

business or in the name, place or nature of

any business carried on by any dealer shall be

furnished”.   This   makes   it   clear   that   the

legislature was conscious of the fact that the

expression “in the manner” would denote only

the mode in which an act was to be done, and

if any time limit was to be prescribed for the

doing of the act, specific words such as “the

time within which” were also necessary to be

put   in   the   statute.   In  Stroud’s   Judicial

Dictionary it is said that. the words “manner

and form” refer only “to the mode in which the

thing   is   to   be   done,   and   do   not   introduce

anything from the Act referred to as to the

thing   which   is   to   be   done   or   the   time   for

doing it…………”.

26.This Court, in above view of the matter, held that

Rule 6(1) was  ultra vires  to Section 8(4) read with

Section 13(3) and 13(4) of the Act.

27.The ground on which Rule 6 was held as  ultra vires

has been clearly noticed by this Court in paragraph 6

as noticed above. It is relevant to notice that in the

same paragraph this Court had noticed Section 13(4)(g)

of the Act where the State was empowered to make rule

with regard to the 'time'. Thus, this Court noticed

the   contradiction   in   phraseology   of   Section   8   sub­

28

Section (4) and Section 13 sub­section (4) and held

that   non­mention   of   time   in   Section   8(4)   is   for

clearly denying the rule making power to make any rule

pertaining to the time. Thus, the above case has no

bearing   in   the   present   controversy,   since,   in   the

present case the time period is prescribed in Section

19(11) itself which is a part of the Act and has to be

read with Section 3 sub­section (3).

28.Another   judgment   which   needs   to   be   noticed   is

judgment   of   this   Court   in  Commissioner   of   Central

Excise, Madras versus Home Ashok Leyland  Ltd .,  2007

(4) SCC 51.  The issue which came to be considered in

the   above   case   was   noticed   in   paragraph   1   of   the

judgment, which is to the following effect: ­

“1.   In   this   civil   appeal   filed   by   the

Department the short question which arises for

determination   is   whether   the   assessee   was

entitled   to   avail   MODVAT   credit   on

differential duty paid during the period 21­4­

1986 to 2­4­1987 in respect of inputs received

in his factory during the year 1986­87 which

inputs were utilised between the period 16­8­

1987   and   30­12­1987.   According   to   the

Department, Rule 57­E of the Central Excise

Rules, 1944 underwent an amendment with effect

from   15­4­1987   which   according   to   the

Department   operated   prospectively   and

consequently the claimant was not entitled to

29

avail MODVAT credit of differential duty paid

during the period 21­4­1986 to 2­4­1987.”

29.In paragraph 2 of the judgment this Court noticed

that  Rule  57­E  of  the  Central  Excise  Rule,  1944  as

first introduced on 01.03.1986 provided for adjustment

in duty credit. It further provided that duty paid on

any inputs is varied subsequently due to any reason

credit alone shall vary accordingly by adjustment in

the credit account maintained under Rule 57G­(3). The

relevant provisions of Rule and amendments have been

noticed   in   paragraph   2   which   is   to   the   following

effect: ­

“2....Rule 57­E as it stood when MODVAT was

first   introduced   on   1­3­1986   provided   for

adjustment   in   duty   credit.   It   originally

provided that if the duty paid on any inputs

in respect of which credit has been allowed

under Rule 57­A, is varied subsequently due to

any   reason   resulting   in   refund,   the   credit

alone   shall   be   varied   accordingly   by

adjustment   in   the   credit   account   maintained

under   Rule   57­G(3)   (with   which   we   are

concerned). Rule 57­E underwent a change on 1­

3­1987 under which it was stipulated that if

duty is paid on any inputs in respect of which

credit has been allowed under Rule 57­A and if

such duty is varied subsequently due to any

reason resulting in refund or if the duty is

varied   due   to   the   change   in   classification

resulting in recovery then the credit allowed

shall also be varied accordingly by adjudgment

30

in the credit account maintained under Rule

57­G(3). Rule 57­E underwent a further change

on 15­4­1987. This change operated till 15­4­

2000. This case, therefore, falls within the

above   period   i.e.   15­4­1987   to   15­4­2000.

Under this amended Rule 57­E the right of the

manufacturer   to   obtain   additional   MODVAT

credit in respect of inputs on which further

duty had been paid for any reason subsequent

to the date of the receipt of inputs by the

manufacturer   is   recognised.   However,   such

right accrues to the manufacturer subject to

his complying with the procedure of adjustment

contemplated in Rule 57­E, as amended.”

30.In the above case, Rule 57­E was amended w.e.f.

15.04.1987 providing for MODVAT credit but department

contended   that   since   the   amendment   shall   apply

prospectively   the   respondents   were   not   entitled   to

claim MODVAT credit. The High Court had held that Rule

57­E as amended was clarificatory in nature and shall

not affect the right of manufacturer to claim MODVAT

credit   for   duty   paid   on   inputs.   In   paragraph   4

following has been held: ­

“4.  In   our   view,   therefore,   the   courts

below were right in holding that Rule 57­E was

procedural, clarificatory and therefore would

not   affect   the   substantive   rights   of   the

manufacturer of the specified final product to

claim MODVAT credit for the duty paid on the

inputs subsequent to the date of the receipt

of those inputs. Consequently, the respondent

manufacturer in the present case was entitled

31

to take credit between the period 16­8­1987 to

30­12­1987 in the sum of Rs 6,43,994.57.”

31.The   above   case   also   does   not   come   to   help   the

appellant   in   the   present   appeal.   In   the   above   case

there was no case that manufacturer does not fulfill

any essential eligibility to obtain MODVAT credit on

the   additional   duty   paid   by   the   manufacturer.   The

amendment which was made effective w.e.f. 15.04.2017

providing availability of MODVAT credit on additional

duty paid was held to be clarificatory, hence, did not

affect the right of MODVAT credit. The above case was

thus on its own facts.

32.The   input   credit   is   in   nature   of   benefit/

concession   extended   to   dealer   under   the   statutory

scheme.   The   concession   can   be   received   by   the

beneficiary   only   as   per   the   scheme   of   the   Statute.

Reference is made to judgment of this Court in  Godrej

and   Boyce   Mfg.   Co.   Pvt.   Ltd.   and   Others   versus

Commissioner   of   Sales   Tax   and   Others,   (1992)   3   SCC

624. Rule 41 and 42 of Bombay Sales Tax, 1959 provided

for the set off of the purchase tax. This Court held

32

that   Rule   making   authority   can   provide   curtailment

while extending the concession. In paragraph 9 of the

judgment, following has been laid down: ­

 “9... In law (apart from Rules 41 and 41­

A) the appellant has no legal right to claim

set­off of the purchase tax paid by him on his

purchases   within   the   State   from   out   of   the

sales tax payable by him on the sale of the

goods   manufactured   by   him.   It   is   only   by

virtue of the said Rules — which, as stated

above, are conceived mainly in the interest of

public — that he is entitled to such set­off.

It is really a concession and an indulgence.

More   particularly,   where   the   manufactured

goods   are   not   sold   within   the   State   of

Maharashtra   but   are   despatched   to   out­State

branches and agents and sold there, no sales

tax   can   be   or   is   levied   by   the   State   of

Maharashtra.   The   State   of   Maharashtra   gets

nothing   in   respect   of   such   sales   effected

outside the State. In respect of such sales,

the   rule­making   authority   could   well   have

denied the benefit of set­off. But it chose to

be generous and has extended the said benefit

to   such   out­State   sales   as   well,   subject,

however to deduction of one per cent of the

sale price of such goods sent out of the State

and sold there. We fail to understand how a

valid grievance can be made in respect of such

deduction   when   the   very   extension   of   the

benefit   of   set­off   is   itself   a   boon   or   a

concession.   It   was   open   to   the   rule­making

authority to provide for a small abridgement

or curtailment while extending a concession.

Viewed   from   this   angle,   the   argument   that

providing for such deduction amounts to levy

of   tax   either   on   purchases   of   raw   material

effected   outside   the   State   or   on   sale   of

manufactured goods effected outside the State

33

of Maharashtra appears to be beside the point

and is unacceptable. So is the argument about

apportioning the sale­price with reference to

the   proportion   in   which   raw   material   was

purchased within and outside the State.”

33.A Three­Judge Bench in   (2005) 2 SCC 129, India

Agencies   (Regd.),   Bangalore   versus   Additional

Commissioner   of   Commercial   Taxes,   Bangalore   had

occasion   to   consider   Rule   6(b)(ii)   of   Central   Sales

Tax (Karnataka) Rules, 1957, which requires furnishing

original   Form­C   to   claim   concessional   rate   of   tax

under   Section   8(1).   This   Court   held   that   the

requirement   under   the   Rule   is   mandatory   and   without

producing   the   specified   documents,   dealers   cannot

claim   the   benefits.   Following   was   laid   down   in

paragraph 13: ­

“13......Under   Rule   6( b)(ii)   of   the

Karnataka   Rules,   the   State   Government   has

prescribed the procedures to be followed and

the   documents   to   be   produced   for   claiming

concessional rate of tax under Section 8(4) of

the Central Sales Tax Act. Thus, the dealer

has to strictly follow the procedure and Rule

6(b)(ii)   and   produce   the   relevant   materials

required   under   the   said   rule.   Without

producing   the   specified   documents   as

prescribed   thereunder   a   dealer   cannot   claim

the benefits provided under Section 8 of the

Act. Therefore, we are of the opinion that the

requirements contained in Rule 6( b)(ii) of the

34

Central Sales Tax (Karnataka) Rules, 1957 are

mandatory......”

34.This court had occasion to consider the Karnataka

Value Added Tax Act, 2013 in  State of Karnataka versus

M.K. Agro Tech.(P) Ltd., (2017) 16 SCC 210 . This Court

held   that   it   is   a   settled   proposition   of   law   that

taxing   statute   are   to   be   interpreted   literally   and

further it is in the domain of the legislature as to

how   much   tax   credit   is   to   be   given   under   what

circumstances. Following was stated in paragraph 32: ­

“32.  Fourthly,   the   entire   scheme   of   the

KVAT Act is to be kept in mind and Section 17

is to be applied in that context. Sunflower

oil   cake   is   subject   to   input   tax.   The

legislature,   however,   has   incorporated   the

provision, in the form of Section 10, to give

tax credit in respect of such goods which are

used as inputs/raw material for manufacturing

other   goods.   Rationale   behind   the   same   is

simple.   When   the   finished   product,   after

manufacture,   is   sold,   VAT   would   be   again

payable thereon. This VAT is payable on the

price at which such goods are sold, costing

whereof is done keeping in view the expenses

involved in the manufacture of such goods  plus

the profits which the manufacturer intends to

earn. Insofar as costing is concerned, element

of expenses incurred on raw material would be

included.   In   this   manner,   when   the   final

product is sold and the VAT paid, component of

raw material would be included again. Keeping

in view this objective, the legislature has

intended to give tax credit to some extent.

35

However, how much tax credit is to be given

and under what circumstances, is the domain of

the   legislature   and   the   courts   are   not   to

tinker with the same.”

35.The judgment on which learned Advocate General of

Tamil   Nadu   had   placed   much   reliance   i.e.  Jayam   and

Company   versus   Assistant   Commissioner   and   Another,

(2016) 15 SCC 125,   is the judgment which is relevant

for present case. In the above case, this Court had

occasion to interpret provisions of Tamil Nadu Value

Added Tax Act, 2006, Section 19(20), Section 3(2) and

Section   3(3).   Validity   of   Section   19(20)   was   under

challenge in the said case. This Court after noticing

the scheme under Section 19 noticed following aspects

in paragraph 11: ­

“11.  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,

36

completed   in   all   respect,   evidencing   the

amount of input tax.”

36.This Court further held that it is a trite law

that   whenever   concession   is   given   by   a   statute   the

conditions thereof are to be strictly complied with in

order   to   avail   such   concession.   In   paragraph   12,

following has been laid down: ­

“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 it

is a concession granted by virtue of Section

19.   As   a   fortiori,   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 dehors the issue

of   ITC   as   per   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 as

referred to above.”

37

37.The Constitutional validity of Section 19(20) was

upheld. The above decision is a clear authority with

proposition that Input Tax Credit is admissible only

as per conditions enumerated under Section 19 of the

Tamil   Nadu   Value   Added   Tax   Act,   2006.   The

interpretation put up by this Court on Section 3(2)

and 3(3) and Section 19(2) is fully attracted while

considering   the   same   provisions   of   Section   3(2)   and

3(3) and provision of Section 19(11) of the Act. The

Statutory scheme delineated by Section 19(11) neither

can be said to be arbitrary nor can be said to violate

the right guaranteed to the dealer under Article 19(1)

(g)   of   the   Constitution.   We   thus   do   not   find   any

infirmity in the judgment of the High Court upholding

the validity of Section 19(11) of the Act. Both the

issues are answered accordingly.

Issue Number 3 and 4

38.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

38

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 dealer. The use of word ‘shall’ in Section 19(11)

does not admit to any other interpretation except that

the submission of Input claimed cannot be beyond the

time   prescribed.   Section   19(11),   in   fact,   gives

additional time period for claim of Input Credit. The

Statutory   scheme   contemplates   filing   of   the   timely

39

return before 20

th

  of the succeeding month. Rule 7 of

Tamil   Nadu   Value   Added   Tax   Rules,   2007   deals   with

filing of returns. Rule 7(a) and (b) are as follows: ­

“7. Filing of Returns:

(1)(a) Every registered dealer liable to pay

tax under the Act, other than a dealer who

opted   to   pay   tax   under   sub­section   (4)   of

section 3 or section 6 or section 8 including

agent   of   a   non­resident   dealer   and   casual

trader, shall file return for each month in

Form   I   on   or   before   20

th

  of   the   succeeding

month,   to   the   assessing   authority   in   whose

jurisdiction his principal place of business

or head office is situated. Such return shall

be accompanied by proof of payment of tax.

(b) Every registered dealer who is liable to

pay   tax   under   sub­section   (5)   of   section   3

shall file a return in Form J on or before

20

th

  of the succeeding month to the assessing

authority in whose jurisdiction his principal

place of business or head office is situated.

Such return shall be accompanied by proof of

payment of tax:

[PROVIDED that a registered dealer specified

in clause (a) or (b), whose taxable turnover

in the preceding year is two hundred crores of

rupees and above, shall file the above returns

on or before 12

th

  of the succeeding month to

the assessing authority in whose jurisdiction

his principal place of business or head office

is situated. Such return shall be accompanied

by proof of payment of tax.]”

39.Section   21   of   the   Act   provides   for   filing   of

return in following manner: ­

40

“[21. Filing of returns.

Every   dealer,   liable   to   pay   tax   under   this

Act, shall file return, in the prescribed form

showing the total and taxable turnover within

the   prescribed   period,   in   the   prescribed

manner, along with proof of payment of tax.

The tax under this section shall become due

without any notice of demand to the dealer on

the date of receipt of the return or on the

last date of the period for filing return as

prescribed.]”

40.Section 19(11) thus allowed an extended period for

Input Credit which if not claimed in any month can be

claimed before the end of the financial year or before

the  90  days  from   the  date  of  purchase  whichever  is

later.   The   provision   of   Section   19(11)   is   thus   an

additional benefit given to dealer for claiming Input

Credit in extended period. The use of word “shall make

the claim” needs no other interpretation.

41.Learned Counsel for the appellant has referred to

judgment of this Court in   Dal Chand versus Municipal

Corporation,   Bhopal   and   another,   1984   (2)   SCC   486,.

This Court in the above case was considering Rule 9(j)

of Prevention of Food Adulteration Rules, 1955, which

requires supply of copy of the report of the public

analyst within period of 10 days. The said rule was

41

held   to   be   directory.   While   considering   the   above

case, following observations were made by this Court:­

“……There are no ready tests or invariable

formulae to determine whether a provision is

mandatory or directory. The broad purpose of

the statute is important. The object of the

particular provision must be considered. The

link between the two is most important. The

weighing   of   the   consequence   of   holding   a

provision   to   be   mandatory   or   directory   is

vital and, more often than not, determinative

of the very question whether the provision is

mandatory or directory. Where the design of

the statute is the avoidance or prevention of

public   mischief,   but   the   enforcement   of   a

particular provision literally to its letter

will tend to defeat that design, the provision

must be held to be directory, so that proof of

prejudice in addition to non­compliance of the

provision is necessary to invalidate the act

complained   of.   It   is   well   to   remember   that

quite   often   many   rules,   though   couched   in

language which appears to be imperative, are

no   more   than   mere   instructions   to   those

entrusted   with   the   task   of   discharging

statutory   duties   for   public   benefit.   The

negligence of those to whom public duties are

entrusted cannot  by statutory interpretation

be   allowed   to   promote   public   mischief   and

cause public inconvenience and defeat the main

object   of   the   statute.   It   is   as   well   to

realise that every prescription of a period

within which an act must be done, is not the

prescription of a period of limitation with

painful consequences if the act is not done

within   that   period.   Rule   9( j)   of   the

Prevention   of   Food   Adulteration   Act,   as   it

then   stood,   merely   instructed   the   Food

Inspector to send by registered post copy of

the Public Analyst’s report to the person from

42

whom the sample was taken within 10 days of

the receipt of the report. Quite obviously the

period   of   10   days   was   not   a   period   of

limitation within which an action was to be

initiated or on the expiry of which a vested

right   accrued.   The   period   of   10   days   was

prescribed with a view to expedition and with

the object of giving sufficient time to the

person from whom the sample was taken to make

such   arrangements   as   he   might   like   to

challenge the report of the Public Analyst,

for   example,   by   making   a   request   to   the

Magistrate   to   send   the   other   sample   to   the

Director of the Central Food Laboratory for

analysis. Where the effect of non­compliance

with the rule was such as to wholly deprive

the   right   of   the   person   to   challenge   the

Public   Analyst’s   report   by   obtaining   the

report   of   the   Director   of   the   Central   Food

Laboratory,   there   might   be   just   cause   for

complaint,   as   prejudice   would   then   be   writ

large.   Where   no   prejudice   was   caused   there

could be no cause for complaint. I am clearly

of the view that Rule 9( j) of the Prevention

of Food Adulteration Rules was directory and

not mandatory………”

42.This   Court   in  the  above  case  clearly   laid  down

that   whether   particular   provision   is   mandatory   or

directory has to be determined on the basis of object

of particular provision and design of the statute. The

period   of   10   days   in   submitting   the   report   of   the

public analyst was held to be directory for the reason

that on the negligence of those to whom public duties

43

are   entrusted   no   one   should   suffer.   Such

interpretation should not be put which may promote the

public   mischief   and   cause   public   inconvenience   and

defeat   the   main   object   of   the   statute.   The

interpretation of the Rule 9(j) in the above case was

on its own statutory scheme and has no bearing in the

present   case.   We,   thus,   are   of   the   view   that   time

period as provided in Section 19(11) is mandatory.

Issue no. 5

43.One of the submission advanced by learned counsel

for   the   appellant   was   that   appellant   assessee   had

valid   explanation   for   not   claiming   Input   Tax   Credit

within the time provided under Section 19(11), hence,

the authority had jurisdiction to extend the time. It

is submitted that time period as contained in Section

19(11) is not akin to the law of limitation. We have

already   found   that   expression   “shall”   occurring   in

Section   19(11)   is   mandatory   whose   compliance   is

necessary for claiming Input Tax Credit. The appellant

has placed reliance on judgment of this Court reported

in  Surinder   Singh   versus   Central   Government   and

44

Others, 1986 (4) SCC 667 . Learned Counsel submits that

in   the   above   case   Central   Government   which   was

exercising   authority   under   Displaced   Persons

(Compensation and Rehabilitation) Act, 1954 was held

to be entitled to extend the time which was required

for depositing the auction amount. In the above case,

the   officials   of   the   Central   Government   were

exercising Revisional Jurisdiction as conferred under

Section 33 of the Act to the Central Government. Facts

of   the   case   were   noticed   in   paragraph   9   to   the

following effect: ­

“9.  The   second   question   relates   to   the

validity of the order of Shri Rajni Kant the

officer   to   whom   power   under   Section   33   was

delegated,   extending   time   to   enable   the

appellant to deposit the auction­sale money.

Shri Rajni Kant by his order dated February 6,

1970 exercising the delegated powers of the

Central Government under Section 33 of the Act

set aside the order cancelling the auction­

sale   held   in   August   1959   and   permitted   the

appellant   to   deposit   the   balance   of   the

purchase money within fifteen days from the

date of the order with a default clause that

on   his   failure   his   petition   would   stand

dismissed.   In   accordance   with   that   order

appellant was entitled to deposit the money

till   February   21,   1970.   It   appears   that   on

appellant’s   request   the   office   prepared   a

challan   which   was   valid   up   to   February   20,

1970. The appellant went to the State Bank on

45

February 20, 1970 to make the deposit but due

to rush he could not make the deposit. On his

application Shri Rajni Kant extended the time

permitting the deposit by February 28, 1970 as

a result of which a fresh challan was prepared

which was valid up to February 28, 1970 and

within   that   period   appellant   deposited   the

balance purchase money………”

44.Section 33 has been extracted in paragraph 10 of

the judgment which is to the following effect: ­

“10. Section 33 reads as under:

“Certain   residuary   powers   of   Central

Government. —The Central Government may at any

time   call   for   the   record   of   any   proceeding

under   this   Act   and   may   pass   such   order   in

relation   thereto   as   in   its   opinion   the

circumstances of the case require and as is

not inconsistent with any of the provisions

contained   in   this   Act   or   the   rules   made

thereunder.”

45.This Court in the above case held that the officer

was   exercising   power   of   Central   Government   under

Section 33 and had ample jurisdiction to set aside the

Orders of the sub­ordinate authorities canceling the

order   and   to   permit   the   appellant   to   deposit   the

balance   amount   of   the   purchase   money.   Following

observations   while   examining   the   power   given   under

Section 33 had been made:

46

“11.  The power conferred upon the Central

Government under this provision is a residuary

power in nature as the title of the section

itself   indicates.   By   enacting   this   section

Parliament has conferred wide powers on the

Central Government to call for the record of

any case and to pass any order which it may

think fit in the circumstances of the case.

The only limitation on exercise of this power

is that the Central Government shall not pass

any order which may be inconsistent with any

of the provisions of the Act and the rules

made   thereunder.   Therefore,   the   Central

Government   or   the   delegated   authority   has

power   to   set   aside   any   order   of   the

subordinate   authorities,   or   to   issue

directions which it may consider necessary on

the facts of a case subject to the aforesaid

rider. This power is intended to be used to do

justice and to mitigate hardship to a party

unriddled by technicalities. Shri Rajni Kant

while   exercising   powers   of   the   Central

Government   under   Section   33   of   the   Act   had

ample jurisdiction to set aside the orders of

the   subordinate   authorities   cancelling   the

auction held on August 24, 1959 and to permit

the appellant to deposit the balance amount of

the   purchase   money   and   he   further   had

jurisdiction   to   extend   the   time   initially

granted by him. Extension of time to enable

the   appellant   to   deposit   the   money   did   not

amount to review of the earlier order dated

February 6, 1970……….”

46.  The above case was thus on its own facts, this

Court   held   that   in   exercise   of   residuary   power   of

Central Government, it had jurisdiction to   pass such

order   in   relation   thereto   as   in   its   opinion   the

47

circumstances in the case require.     In the scheme of

Tamil   Nadu   Value   Added   Tax   Act,   2006,   there   is   no

power   conferred   on   any   authority   under   the   Act   to

dilute the mandatory requirement under Section 19(11).

The   taxing   statute   has   to   be   strictly   construed.

Nothing is to be read in, nothing is to be implied and

language used in taxing statute had to be looked into

fairly. The benefits envisaged in the taxing statute

had   to   be   extended   as   per   the   restrictions   and

conditions envisaged therein. The statute having not

given any indication for extension of time which is a

condition   for   claiming   Input   Tax   Credit,   the

submission   that   period   could   have   been   extended   by

assessing   authority   is   unfounded   and   cannot   be

accepted. Issue number 5 is answered accordingly.

47.The High Court had already granted liberty to writ

petitioners   in   whose   cases   assessment   has   been

finalized   to   file   statutory   appeal   and   objections

which   substantially   protect   the   interest   of   the

appellants

48

48.We, thus, do not find any error in the judgment of

the High Court. All the appeals are dismissed.

..........................J.

( A.K. SIKRI )

..........................J.

    ( ASHOK BHUSHAN )

NEW DELHI,

OCTOBER 12,2018.