Provisions for claiming ITC under Tamil Nadu VAT Act not-violative of COI: SC

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Fact: M/s. ALD Automotive Pvt. Ltd (“the assessee”), was engaged in the business of leasing and fleet management of the motor vehicles and resale of used motor vehicles. In the original returns filed for the assessment year 2007-08, it could not claim input tax credit of the amount of tax paid on the purchases made from the dealer of motor vehicle because the tax invoices of such purchases were not received upto the date of filing of the returns.

Subsequently the assessee filed the revised returns claiming input tax credit on the receipt of the tax invoices from the dealer. The Assessing Authority denied the benefit of input tax credit to the assessee on ground that as per the provisions of section 19(11) it was a belated claim. Aggrieved by the order passed by the dated 11.04.2011 Writ Petition was filed by the assessee.

Assesse’s Interpretation of law: The assesse’s 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 Input Tax Credit of such products was disallowed by order dated 11.04.2011. The authority placed reliance on time limit under Section 19(11) of Tamil Nadu VAT Act, 2006 for disallowing Input Tax Credit to the assesses.

Held: The Hon’ble Supreme Court in the case of M/s. ALD Automotive Pvt. Ltd Vs. The Commercial Tax Officer held that statutory scheme delineated by Section 19(11) can neither 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. The bench also held that time period as provided in Section 19(11) is mandatory and there is no power conferred on any authority under the Act to dilute the mandatory requirement.

Further, in the scheme of Tamil Nadu VAT Act, 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, noting 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.

Citation: [2018] 99 taxmann.com 202 (SC)