Holding

Section 19(11) of the Tamil Nadu Value Added Tax Act, 2006 is a valid, mandatory provision that does not contravene constitutional guarantees or Section 3(3), and the assessing authority lacks power to extend its time limit, so the denial of input tax credit stands.

Summary

The appellant, ALD Automotive Pvt. Ltd., a registered dealer under the Tamil Nadu Value Added Tax Act, 2006, claimed input tax credit (ITC) for tax paid on vehicle purchases but could not do so in the original assessment year because tax invoices were delayed. It later filed revised returns claiming ITC, which the Commercial Tax Officer rejected on the ground that the claim was made after the time limit prescribed in Section 19(11) of the Act. The appellant contended that Section 19(11) was unconstitutional, inconsistent with Section 3(3), and merely directory, so the authority could not deny the credit or extend the time. The Supreme Court held that Section 19(11) is a valid, mandatory provision, does not violate Articles 14 or 19(1)(g) of the Constitution, is not inconsistent with Section 3(3), and that no authority has power to extend its time limit. Consequently, the appeals were dismissed and the denial of ITC upheld.

Issues considered

Whether Section 19(11) of the Tamil Nadu VAT Act, 2006 violates Article 14 and Article 19(1)(g) of the Constitution
Whether Section 19(11) is inconsistent with Section 3(3) of the Act
Whether Section 19(11) is a directory provision whose non‑compliance cannot be a ground for denial of input tax credit
Whether denial of input tax credit to the appellant is contrary to the scheme of the VAT Act, 2006
Whether the assessing authority can extend the period for claiming input tax credit beyond that prescribed in Section 19(11)

Legislation cited

Central Sales Tax Act, 1956s. 8
Tamil Nadu Value Added Tax Act, 2006s. 19(10), s. 19(11), s. 19(6), s. 19(7), s. 19(8), s. 19(9), s. 21, s. 3(3)
Tamil Nadu Value Added Tax Rules, 2007s. Rule 10(2), s. Rule 7

Subjects

Input Tax CreditSection 19(11)Tamil Nadu VAT ActConstitutional validityArticle 14Article 19(1)(g)Statutory interpretationMandatory provisionAssessing authorityTime limit

Judgment

[2018] 13 S.C.R. 217 217

ALD AUTOMOTIVE PVT. LTD. A
v.
THE COMMERCIAL TAX OFFICER NOW UPGRADED AS THE
ASSISTANT COMMISSIONER (CT) & ORS.
(Civil Appeal Nos. 10412-10413 of 2018) B
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
C
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 D
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
E
– 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 F
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
G
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
H
217
218 SUPREME COURT REPORTS [2018] 13 S.C.R.

A 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)
B 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
C “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.
D [Para 19][231-B]
1.2 Section 3 (3) provided that 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
specified in Part–B and Part–C of the First Schedule inside the
E 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
F 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
G (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
H
ALD AUTOMOTIVE PVT. LTD. v. THE COMMERCIAL TAX 219
OFFICER

claimed only when conditions as enumerated in Section 19 are A
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 B
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 C
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 D
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 E
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 F
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; G
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.
H
220 SUPREME COURT REPORTS [2018] 13 S.C.R.

A 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
B 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
C 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
D 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
E 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
F 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]
G
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.
H
ALD AUTOMOTIVE PVT. LTD. v. THE COMMERCIAL TAX 221
OFFICER

3. In the scheme of Tamil Nadu Value Added Tax Act, 2006, A
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
B
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] C
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 D

[1982] 1 SCR 947 referred to Para 17

[2002] 1 SCR 605 referred to Para 18
E
AIR (1967) SC 1823 held inapplicable Para 27

[2007] 4 SCR 90 distinguished Para 31

[1992] 3 SCR 683 referred to Para 32
F
[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
G
[1986] 3 SCR 946 distinguished Para 46
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 10412-
10413 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. H
222 SUPREME COURT REPORTS [2018] 13 S.C.R.

A 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, 10529-
B 10532, 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,
C 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,
D 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

E 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,
F 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
G
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
H
ALD AUTOMOTIVE PVT. LTD. v. THE COMMERCIAL TAX 223
OFFICER [ASHOK BHUSHAN, J.]

dealer along with the payment including the tax payable under the Tamil A
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
B
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 C
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
D
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 E
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 F
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 G
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
H
224 SUPREME COURT REPORTS [2018] 13 S.C.R.

A 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
B 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
C 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
D 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
E 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. 10503-
10507 of 2018 arising out of SLP(C) Nos.11319-11323 of 2014 (Sri Devi
Enterprises vs. The Commercial Tax Officer & Anr.).
F 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
G 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
H
ALD AUTOMOTIVE PVT. LTD. v. THE COMMERCIAL TAX 225
OFFICER [ASHOK BHUSHAN, J.]

appropriate writ, order or direction under Article 226 of the A
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
B
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. C
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 D
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 E
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 F
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 full-
filling other mandatory statutory conditions. It is useful to notice the
operative portion of the judgment contained in paragraphs 84,85 and 86, G
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 H
226 SUPREME COURT REPORTS [2018] 13 S.C.R.

A 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
B 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
C 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
D 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.”
E 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.

F 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.
G
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
H
ALD AUTOMOTIVE PVT. LTD. v. THE COMMERCIAL TAX 227
OFFICER [ASHOK BHUSHAN, J.]

Section 3(3) of the Act. In any view of the matter, Section 19(11) is only A
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.
B
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 C
under which Input Tax Credit can be claimed by a dealer, hence, on non-
compliance 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. D
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. E

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 F
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 G
appellants ?
(4) Whether denial of input tax credit to the appellants is contrary
to the scheme of VAT Act, 2006 ?

H
228 SUPREME COURT REPORTS [2018] 13 S.C.R.

A (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
B 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:
C “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:
D “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.
E 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.
F (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
G
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
H in the said clause (a) or (b) of sub-section 1 and if,-
ALD AUTOMOTIVE PVT. LTD. v. THE COMMERCIAL TAX 229
OFFICER [ASHOK BHUSHAN, J.]

(a) such dealer has not collected the tax under this Act, he A
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 B
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 C
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 D
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 E
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 F
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 G
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: - H
230 SUPREME COURT REPORTS [2018] 13 S.C.R.

A “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
B
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
C 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:
D
“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
E 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.””
F 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
G 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,
H more particularly, when the subject-matter dealt with in
ALD AUTOMOTIVE PVT. LTD. v. THE COMMERCIAL TAX 231
OFFICER [ASHOK BHUSHAN, J.]

different sections or parts of the same statute is the same or A
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 B
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:=
C
“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.
D
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] E
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. F
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 G
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
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232 SUPREME COURT REPORTS [2018] 13 S.C.R.

A 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
B
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
C 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.
D [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
E 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
F
(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
G
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.
H
ALD AUTOMOTIVE PVT. LTD. v. THE COMMERCIAL TAX 233
OFFICER [ASHOK BHUSHAN, J.]

(9) No input tax credit shall be available to a registered dealer for A
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 B
(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.
C
(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.
D
(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
E
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.
F
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 G
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
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234 SUPREME COURT REPORTS [2018] 13 S.C.R.

A pay tax under this Act, which shall be one percent of his turnover. Sub-
section (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
B 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
C (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
D 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
E 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
F
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:
G Provided further that the delay in submitting the
declaration forms shall not exceed three months from the date
of sale in question:
Provided also that all declaration forms pending
submission by dealers on 2-5-1960 shall be submitted not later
H than 16-2-1961.”
ALD AUTOMOTIVE PVT. LTD. v. THE COMMERCIAL TAX 235
OFFICER [ASHOK BHUSHAN, J.]

The first proviso to Rule 6 was inserted by notification dated A
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 B
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 C
judgment: -
“6………But the phrase “in the prescribed manner” in
Section 8(4) does not take in the time-element. In other words,
the section does not authorise the rule-making authority to
prescribe a time limit within which the declaration is to be D
filed by the registered dealer. The view that we have taken is
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, E
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 F
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…………”. G
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 H
236 SUPREME COURT REPORTS [2018] 13 S.C.R.

A 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-Section (4) and Section 13 sub-section (4)
and held that non-mention of time in Section 8(4) is for clearly denying
the rule making power to make any rule pertaining to the time. Thus, the
B
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 sub-section (3).
28. Another judgment which needs to be noticed is judgment of
this Court in Commissioner of Central Excise, Madras versus Home
C 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
D assessee was entitled to avail MODVAT credit on differential
duty paid during the period 21-4-1986 to 2-4-1987 in respect
of inputs received in his factory during the year 1986-87 which
inputs were utilised between the period 16-8-1987 and 30-
12-1987. According to the Department, Rule 57-E of the
E Central Excise Rules, 1944 underwent an amendment with
effect from 15-4-1987 which according to the Department
operated prospectively and consequently the claimant was
not entitled to avail MODVAT credit of differential duty paid
during the period 21-4-1986 to 2-4-1987.”

F 29. In paragraph 2 of the judgment this Court noticed that Rule
57-E 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
G been noticed in paragraph 2 which is to the following effect: -
“2....Rule 57-E as it stood when MODVAT was first introduced
on 1-3-1986 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 57-A, is
H
ALD AUTOMOTIVE PVT. LTD. v. THE COMMERCIAL TAX 237
OFFICER [ASHOK BHUSHAN, J.]

varied subsequently due to any reason resulting in refund, A
the credit alone shall be varied accordingly by adjustment in
the credit account maintained under Rule 57-G(3) (with which
we are concerned). Rule 57-E underwent a change on 1-3-
1987 under which it was stipulated that if duty is paid on any
inputs in respect of which credit has been allowed under Rule
B
57-A 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 in the credit
account maintained under Rule 57-G(3). Rule 57-E underwent
a further change on 15-4-1987. This change operated till C
15-4-2000. This case, therefore, falls within the above period
i.e. 15-4-1987 to 15-4-2000. Under this amended Rule 57-E
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
D
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 57-E, as
amended.”
30. In the above case, Rule 57-E was amended w.e.f. 15.04.1987
providing for MODVAT credit but department contended that since the E
amendment shall apply prospectively the respondents were not entitled
to claim MODVAT credit. The High Court had held that Rule 57-E 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: - F
“4. In our view, therefore, the courts below were right in
holding that Rule 57-E 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 G
of the receipt of those inputs. Consequently, the respondent
manufacturer in the present case was entitled to take credit
between the period 16-8-1987 to 30-12-1987 in the sum of
Rs 6,43,994.57.”

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238 SUPREME COURT REPORTS [2018] 13 S.C.R.

A 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,
B
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
C 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 that Rule making
authority can provide curtailment while extending the concession. In
D 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 set-off 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
E 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 set-off. 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 out-State branches and agents and sold there,
F 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 rule-
making authority could well have denied the benefit of set-
off. But it chose to be generous and has extended the said
G benefit to such out-State 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 set-off is
itself a boon or a concession. It was open to the rule-making
H
ALD AUTOMOTIVE PVT. LTD. v. THE COMMERCIAL TAX 239
OFFICER [ASHOK BHUSHAN, J.]

authority to provide for a small abridgement or curtailment A
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 of Maharashtra appears to be beside the point and
B
is unacceptable. So is the argument about apportioning the
sale-price with reference to the proportion in which raw
material was purchased within and outside the State.”
33. A Three-Judge 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 C
Sales Tax (Karnataka) Rules, 1957, which requires furnishing original
Form-C 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: - D
“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 E
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 Central Sales Tax (Karnataka) Rules, 1957 are F
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 G
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.
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240 SUPREME COURT REPORTS [2018] 13 S.C.R.

A 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
B
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
C 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.
However, how much tax credit is to be given and under what
circumstances, is the domain of the legislature and the courts
D
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
E 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: -
F “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.
G
(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
H
ALD AUTOMOTIVE PVT. LTD. v. THE COMMERCIAL TAX 241
OFFICER [ASHOK BHUSHAN, J.]

invoice, completed in all respect, evidencing the amount of A
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: - B
“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, C
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 D
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 E
the plain language of sections of the VAT Act, read along
with other provisions of the said Act as referred to above.”
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 F
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 G
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.

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242 SUPREME COURT REPORTS [2018] 13 S.C.R.

A 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 directory provision, non-compliance of which cannot be
ground of denial of Input Tax Credit to the appellant. The conditions
B 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
C 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
D 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. Rule 7(a) and (b) are as follows: -
E “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 sub-section
(4) of section 3 or section 6 or section 8 including agent of a
non-resident dealer and casual trader, shall file return for
F each month in Form I on or before 20th 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
G sub-section (5) of section 3 shall file a return in Form J on or
before 20th 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:

H
ALD AUTOMOTIVE PVT. LTD. v. THE COMMERCIAL TAX 243
OFFICER [ASHOK BHUSHAN, J.]

[PROVIDED that a registered dealer specified in clause (a) 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
B
accompanied by proof of payment of tax.]”
39. Section 21 of the Act provides for filing of return in following
manner: -
“[21. Filing of returns.
Every dealer, liable to pay tax under this Act, shall file return, C
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 D
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 E
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 F
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 held to be directory. While
considering the above case, following observations were made by this
Court:-
G
“……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
H
244 SUPREME COURT REPORTS [2018] 13 S.C.R.

A 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
B
be held to be directory, so that proof of prejudice in addition
to non-compliance 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
C 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
D
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
E from 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
F
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 non-compliance with the rule was such as
G 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
H
ALD AUTOMOTIVE PVT. LTD. v. THE COMMERCIAL TAX 245
OFFICER [ASHOK BHUSHAN, J.]

Food Adulteration Rules was directory and not A
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 B
to be directory for the reason that on the negligence of those to whom
public duties 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 C
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 D
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 E
Court reported in Surinder Singh versus Central Government and
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 F
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 G
Shri Rajni Kant the officer to whom power under Section 33
was delegated, extending time to enable the appellant to
deposit the auction-sale 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
H
246 SUPREME COURT REPORTS [2018] 13 S.C.R.

A 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
B
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 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
C 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
D 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
E 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
F jurisdiction to set aside the Orders of the sub-ordinate 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:
“11. The power conferred upon the Central Government under
G 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
H
ALD AUTOMOTIVE PVT. LTD. v. THE COMMERCIAL TAX 247
OFFICER [ASHOK BHUSHAN, J.]

not pass any order which may be inconsistent with any of the A
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
B
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 C
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 D
in exercise of residuary power of Central Government, it had jurisdiction
to pass such order in relation thereto as in its opinion the 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, noting is to be E
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 F
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 G
48. We, thus, do not find any error in the judgment of the High
Court. All the appeals are dismissed.

Nidhi Jain Appeals dismissed.
H