# ALD AUTOMOTIVE PVT. LTD v. THE COMMERCIAL TAX OFFICER NOW UPGRADED AS THE ASSISTANT COMMISSIONER (CT) & ORS

- **Citation:** [2018] 13 S.C.R. 217
- **Court:** Supreme Court of India
- **Decided:** 2018-10-12
- **Case number:** Civil Appeal Nos. 10412-10413 of 2018
- **Bench:** A. K. Sikri, Ashok Bhushan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ald-automotive-pvt-ltd-v-the-commercial-tax-officer-now-upgraded-as-the-32468
- **Pages:** 31

## Headnote

Tamil Nadu Value Added Tax Act, 2006: s. 19(11) - Input Tax
Credit - Claim of - Entitlement to - On facts, appellant-assessee
claiming input tax credit of the amount of tax paid on the purchases
- Appellant could not claim the input tax credit, when it filed its
return for the assessment year 2007-2008 for want of tax invoices
- Appellant filed revised returns on 6.10.2008 claiming input tax
credit on the receipt of the tax invoices from the dealer - Assessing
Authority relying on time limit u/s. 19(11) denied the benefit of input
tax credit since it was belated - Writ petition by assessee - Rejection
of, upholding validity of s. 19(11) - On appeal, held: There is no
infirmity in the judgment of the High Court upholding the validity
of s. 19(11) - Input credit is in nature of benefit/ concession extended
to dealer under the statutory scheme and is to be strictly construed
- When the input tax credit is to be allowed and when it is to be
disallowed is elaborated in s. 19 which is self-contained scheme
and benefit u/s.3(3) can be claimed only when conditions as
enumerated in s. 19 are fulfilled - Statutory scheme delineated by
s.19(11) neither can be said to be arbitrary nor can be said to
violate the right guaranteed to the dealer u/Art. 19(1)(g) of the
Constitution - S. 19(6) to s.19(10) are not inconsistent to s.3(3)
which permits reduction of tax of registered dealer - S. 19(11) allows
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 - Provision
of s. 19(11) is an additional benefit given to dealer for claiming
Input Credit in extended period - Use of word 'shall make the claim'
needs no other interpretation - Thus, time period as provided in s.
19(11) is mandatory - There is no power conferred on any authority
under the Act to dilute the mandatory requirement u/s.19(11) - Statute
[2018] 13 S.C.R. 217
217
A
B
C
D
E
F
G
H
218
SUPREME COURT REPORTS
[2018] 13 S.C.R.
having not given any indication for extension of time which is a
condition for claiming Input Tax Credit, the period could not have
been extended by assessing authority.
Dismissing the appeals, the Court
HELD: Whether Section 19(11) violates Article 14 and 19(1)(g)
of the Constitution of India and whether Section 19(11) is
inconsistent to Section 3(3) of the Tamil Nadu Value Added Tax
Act, 2006.
1.1. Input Tax Credit is being allowed under Section 3 of
the Tamil Nadu Value Added Tax Act, 2006 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. Sub-section
(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.
[Para 19][231-B]
1.2 Section 3 (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 Part-B and Part-C of the First Schedule inside the
State, who is registered dealer who sold the goods to him. The
provision of Section 3 sub-Section (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 sub-section (3)
has to be in manner and as provided in Section 19. Section 19(11)
contains a condition for claiming the input tax credit. 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). [Para 21][231-H; 232-A-C]
1.3 Section 19(6) to Section 19(10) are not inconsistent to
Section 3(3) which per

## Text

_Characters 0–39,040 of 70,395. This is a partial read: ask again with offset=39040 for what follows._

A
B
C
D
E
F
G
H
217
ALD AUTOMOTIVE PVT. LTD.
v.
THE COMMERCIAL TAX OFFICER NOW UPGRADED AS THE
ASSISTANT COMMISSIONER (CT) & ORS.
(Civil Appeal Nos. 10412-10413 of 2018)
OCTOBER 12, 2018
[A. K. SIKRI AND ASHOK BHUSHAN, JJ.]
Tamil Nadu Value Added Tax Act, 2006: s. 19(11) - Input Tax
Credit - Claim of - Entitlement to - On facts, appellant-assessee
claiming input tax credit of the amount of tax paid on the purchases
- Appellant could not claim the input tax credit, when it filed its
return for the assessment year 2007-2008 for want of tax invoices
- Appellant filed revised returns on 6.10.2008 claiming input tax
credit on the receipt of the tax invoices from the dealer - Assessing
Authority relying on time limit u/s. 19(11) denied the benefit of input
tax credit since it was belated - Writ petition by assessee - Rejection
of, upholding validity of s. 19(11) - On appeal, held: There is no
infirmity in the judgment of the High Court upholding the validity
of s. 19(11) - Input credit is in nature of benefit/ concession extended
to dealer under the statutory scheme and is to be strictly construed
- When the input tax credit is to be allowed and when it is to be
disallowed is elaborated in s. 19 which is self-contained scheme
and benefit u/s.3(3) can be claimed only when conditions as
enumerated in s. 19 are fulfilled - Statutory scheme delineated by
s.19(11) neither can be said to be arbitrary nor can be said to
violate the right guaranteed to the dealer u/Art. 19(1)(g) of the
Constitution - S. 19(6) to s.19(10) are not inconsistent to s.3(3)
which permits reduction of tax of registered dealer - S. 19(11) allows
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 - Provision
of s. 19(11) is an additional benefit given to dealer for claiming
Input Credit in extended period - Use of word 'shall make the claim'
needs no other interpretation - Thus, time period as provided in s.
19(11) is mandatory - There is no power conferred on any authority
under the Act to dilute the mandatory requirement u/s.19(11) - Statute
[2018] 13 S.C.R. 217
217
A
B
C
D
E
F
G
H
218
SUPREME COURT REPORTS
[2018] 13 S.C.R.
having not given any indication for extension of time which is a
condition for claiming Input Tax Credit, the period could not have
been extended by assessing authority.
Dismissing the appeals, the Court
HELD: Whether Section 19(11) violates Article 14 and 19(1)(g)
of the Constitution of India and whether Section 19(11) is
inconsistent to Section 3(3) of the Tamil Nadu Value Added Tax
Act, 2006.
1.1. Input Tax Credit is being allowed under Section 3 of
the Tamil Nadu Value Added Tax Act, 2006 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. Sub-section
(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.
[Para 19][231-B]
1.2 Section 3 (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 Part-B and Part-C of the First Schedule inside the
State, who is registered dealer who sold the goods to him. The
provision of Section 3 sub-Section (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 sub-section (3)
has to be in manner and as provided in Section 19. Section 19(11)
contains a condition for claiming the input tax credit. 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). [Para 21][231-H; 232-A-C]
1.3 Section 19(6) to Section 19(10) are not inconsistent to
Section 3(3) which permits reduction of tax of registered dealer.
When the input tax credit is to be allowed and when it is to be
disallowed is elaborated in Section 19 which is self-contained
scheme and benefit under Section 3 sub-Section (3) can be
A
B
C
D
E
F
G
H
219
claimed only when conditions as enumerated in Section 19 are
fulfilled. [Para 22][233-E]
1.4 In the instant 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 sub-section (3). [Para 27][236-B]
1.5 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. [Para 32][238-C]
1.6 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 in Jayam
and Company case 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. Thus,
there is no infirmity in the judgment of the High Court upholding
the validity of Section 19(11) of the Act. [Para 37][241-F-H]
Jayam and Company v. Assistant Commissioner and
another (2016) 15 SCC 125 : [2016] 6 SCR 787 - relied
on.
Sales Tax officer, Ponkunnam and another v. K.I.
Abraham AIR (1967) SC 1823 - held inapplicable.
Commissioner of Central Excise, Madras v. Home Ashok
Leyland Ltd. (2007) 4 SCC 51 : [2007] 4 SCR 90 -
distinguished.
R. K.Garg v. Union of India (1981) 4 SCC 675 : [1982]
1 SCR 947; Kailash Chandra and another v. Mukundi
lal and others (2002) 2 SCC 678 : [2002] 1 SCR 605;
Godrej and Boyce Mfg. Co. Pvt. Ltd. and Others v.
Commissioner of Sales Tax and Others (1992) 3 SCC
624 : [1992] 3 SCR 683; India Agencies (Regd.),
Bangalore v. Additional Commissioner of Commercial
Taxes, Bangalore (2005) 2 SCC 129 : [2004] 6 Suppl.
ALD AUTOMOTIVE PVT. LTD. v. THE COMMERCIAL TAX
OFFICER
A
B
C
D
E
F
G
H
220
SUPREME COURT REPORTS
[2018] 13 S.C.R.
SCR 1987; State of Karnataka v. M. K. Agro Tech.(P)
Ltd. (2017) 16 SCC 210 - referred to.
Whether Section19(11) is directory provision, non-compliance
of which cannot be a ground for denial of input tax credit to the
appellants; and whether denial of input tax credit to the appellants
is contrary to the scheme of VAT Act, 2006.
2.1 The conditions under which Input Tax Credit is to be
given are all enumerated in Section 19. 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 self-contained 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 return before 20th of the succeeding month.
Rule 7 of Tamil Nadu Value Added Tax Rules, 2007 deals with
filing of returns. [Para 38][242-B-D]
2.2 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. Thus time period as provided in Section
19(11) is mandatory. [Paras 40, 41, 42][243-D-E; 245-C]
Dal Chand v. Municipal Corporation, Bhopal and
another (1984) 2 SCC 486 - held inapplicable.
Whether Assessing Authorities could have extended the period
for claiming input Tax Credit beyond the period as provided in
Section 19(11) of Tamil Nadu VAT Act, 2006.
A
B
C
D
E
F
G
H
221
3. 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.
[Para 46][247-E-F]
Surinder Singh v. Central Government and Others
(1986) 4 SCC 667 : [1986] 3 SCR 946 - distinguished.
Case Law Reference
[2016] 6 SCR 787
relied on
Para 37
[1982] 1 SCR 947
referred to
Para 17
[2002] 1 SCR 605
referred to
Para 18
AIR (1967) SC 1823
held inapplicable
Para 27
[2007] 4 SCR 90
distinguished
Para 31
[1992] 3 SCR 683
referred to
Para 32
[2004] 6 Suppl. SCR 1987
referred to
Para 33
(2017) 16 SCC 210
referred to
Para 34
(1984) 2 SCC 486
held inapplicable
Para 42
[1986] 3 SCR 946
distinguished
Para 46
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1041210413 of 2018
From the Judgment and Order dated 17.07.2013 of the High Court
of Judicature at Madras in Writ Petition Nos. 5385 and 5386 of 2010.
ALD AUTOMOTIVE PVT. LTD. v. THE COMMERCIAL TAX
OFFICER
A
B
C
D
E
F
G
H
222
SUPREME COURT REPORTS
[2018] 13 S.C.R.
WITH
Civil Appeal Nos. 10414-10450, 10451-10455, 10498-10499,
10456-10481, 10482-10497, 10509-10513, 10503-10507, 10523,
10525-10527, 10544, 10522, 10524, 10519-10521, 10500-10502, 10508,
10516-10518, 10543, 10514-10515, 10528, 10534-10538, 1052910532, 10533, 10539-10542, 10549, 10545-10548, 10550, 10551-10553,
10554-10558, 10559 of 2018.
S. K. Bagaria, Sr. Adv., Vijay Narayan, Adv. Gen., Tamil Nadu,
Rajeev Mishra, Sanand Ramakrishnan, Madan Mohan Bora,
R. Hemalatha, S. Nithin, Ms. Arunima Singh, P. R. Kovilan, V. Vasudevan,
Ms. Geetha Kovilan, E. R. Kumar, Ajit Kumar Singh, Aditya Sharma,
Akash Jindal for M/s Parekh & Co., T. R. B. Sivakumar, S. Nandakumar,
M. Soundarasarankumar, Ms. Deepika Nandakumar, Sugam Kumar Jha,
Naresh Kumar, R. Anand Padmanabhan, Shashi Bhushan Kumar,
Gautam Narayan, Ms. Mahamaya Chatterjee, Ms. Shivani Vij,
K. V. Vijayakumar, Mrs. Prabha Swami, Mahesh Agrawal,
Ms. Sadapurna Mukherjee, E. C. Agrawala, Ms. Rashmi Nandakumar,
Nikhil Swami, Ms. Divya Swami, Ms. Prabh Swami, Vinodh Kanna B.,
A. Sriram, B. Balaji, K. V. Vijayakumar, Advs. for the appearing parties.
The Judgment of the Court was delivered by
ASHOK BHUSHAN, J. 1. Delay condoned. Leave granted.
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. 10412-10413 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
A
B
C
D
E
F
G
H
223
dealer along with the payment including the tax 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
before 90 days from the date of purchase whichever is later. When the
appellant filed its returns for the assessment year 2007-2008 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 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
ALD AUTOMOTIVE PVT. LTD. v. THE COMMERCIAL TAX
OFFICER [ASHOK BHUSHAN, J.]
A
B
C
D
E
F
G
H
224
SUPREME COURT REPORTS
[2018] 13 S.C.R.
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
2008-2009 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 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
33421463542/08-09 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.11319-11323 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.
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
A
B
C
D
E
F
G
H
225
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 33251300045/06-07 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 where Input Tax Credit was
disallowed on account of non-compliance 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
ALD AUTOMOTIVE PVT. LTD. v. THE COMMERCIAL TAX
OFFICER [ASHOK BHUSHAN, J.]
A
B
C
D
E
F
G
H
226
SUPREME COURT REPORTS
[2018] 13 S.C.R.
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 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
A
B
C
D
E
F
G
H
227
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
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 Advocate-General 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 Advocate-General
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 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, non-compliance
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 ?
ALD AUTOMOTIVE PVT. LTD. v. THE COMMERCIAL TAX
OFFICER [ASHOK BHUSHAN, J.]
A
B
C
D
E
F
G
H
228
SUPREME COURT REPORTS
[2018] 13 S.C.R.
(5) Whether Assessing Authorities could have extended the period
for claiming Input Tax Credit beyond the period as provided in
Section 19(11) of Tamil Nadu VAT Act, 2006 ?
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 non-resident dealer, whose
total turnover for a year is not less than rupees five lakhs and
every casual trader or agent of a non-resident dealer, whatever
be his total turnover, for a year shall pay tax under this Act.
1(b) Notwithstanding anything contained in clause (a), every dealer,
other than a casual trader or agent of a non-resident 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.
(1-A) 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 sub-section
(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 2006-2007. 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 sub-section 1 and if,-
A
B
C
D
E
F
G
H
229
 (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 sub-section (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 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 sub-section (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 sub-sections. Section 19 enumerates several sub-sections
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."
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: -
ALD AUTOMOTIVE PVT. LTD. v. THE COMMERCIAL TAX
OFFICER [ASHOK BHUSHAN, J.]
A
B
C
D
E
F
G
H
230
SUPREME COURT REPORTS
[2018] 13 S.C.R.
"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. Doud7 where Frankfurter, J., said in his
inimitable style:
"In the utilities, tax and economic regulation cases, there are
good reasons for judicial self-restraint 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 - selflimitation 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,
more particularly, when the subject-matter dealt with in
A
B
C
D
E
F
G
H
231
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. Sub-section (3) is the part of the same scheme where tax
payable under sub-section (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.
Section 7. Levy of tax on food and drinks.
Section 8. Payment of tax at compounded rate by hotels,
restaurants [sweet-stalls 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, sub-Section (3) provided that tax
payable under sub-Section (2) by registered dealer shall be reduced, in
ALD AUTOMOTIVE PVT. LTD. v. THE COMMERCIAL TAX
OFFICER [ASHOK BHUSHAN, J.]
A
B
C
D
E
F
G
H
232
SUPREME COURT REPORTS
[2018] 13 S.C.R.
the manner prescribed, to the extent of tax paid on his purchase of goods
specified in Part-B and Part-C of the First Schedule inside the State,
who is registered dealer who sold the goods to him. The provision of
Section 3 sub-Section (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 sub-section (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 the manner prescribed.]
(7) No registered dealer shall be entitled to input tax credit in
respect of -
(a)goods purchased and accounted for in business but utilized
for the purpose of providing facility to the proprietor or partner
or director including employees and in any residential
accommodation; or
(b) purchase of all automobiles including commercial vehicles,
two wheelers and three wheelers and spare parts for repair
and maintenance thereof, unless the registered dealer is in the
business of dealing in such automobiles or spare parts; or
(c)purchase of air-conditioning units unless the registered dealer
is in the business of dealing in such units.
(8) No input tax credit shall be allowed to any goods purchased
by him for sale but given away by him by way of free sample or
gift or goods consumed for personal use.
A
B
C
D
E
F
G
H
233
(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 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 self-contained scheme
and benefit under Section 3 sub-Section (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 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 sub-Section (1) provided that for dealer who in
the course of inter-State 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 sub-section (3); shall be liable to
ALD AUTOMOTIVE PVT. LTD. v. THE COMMERCIAL TAX
OFFICER [ASHOK BHUSHAN, J.]
A
B
C
D
E
F
G
H
234
SUPREME COURT REPORTS
[2018] 13 S.C.R.
pay tax under this Act, which shall be one percent of his turnover. Subsection (4) of Section 8 provides: -
"8. (4) The provisions of sub-section (1) shall not apply to
any sale in the course of inter-State 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
(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.