Calcutta High Court (Appellete Side)
M/S. Bba Infrastructure Limited vs Senior Joint Commissioner Of State Tax ... on 13 December, 2023
Author: T.S. Sivagnanam
Bench: T.S. Sivagnanam
MAT NO. 1099 OF 2023
REPORTABLE
IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
CIVIL APPELLATE JURISDICTION
APPELLATE SIDE
RESERVED ON: 29.09.2023
DELIVERED ON: 13.12.2023
CORAM:
THE HON'BLE MR. CHIEF JUSTICE T.S. SIVAGNANAM
AND
THE HON'BLE MR. JUSTICE HIRANMAY BHATTACHARYYA
MAT NO. 1099 OF 2023
(I.A. NO. CAN 1 OF 2023)
M/S. BBA INFRASTRUCTURE LIMITED
VERSUS
SENIOR JOINT COMMISSIONER OF STATE TAX AND OTHERS
Appearance:-
Mr. Vinay Shraff, Advocate.
Ms. Priya Sarah Paul, Advocate.
........For the Appellant
Mr. T.M. Siddiqui, Ld. Additional Government Pleader.
Mr. T. Chakraborty, Advocate.
Mr. S. Sanyal, Advocate.
.......For the State
Page 1 of 14
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JUDGMENT
(Judgment of the Court was delivered by T.S. Sivagnanam, CJ.)
1. This intra court appeal filed by the writ petitioner is directed against the
order dated 13.06.2023 in WPA 11339 of 2023. By the said order, the
learned Single Bench held that there is no scope for passing any interim
order and issue involved in the writ petition requires affidavit from the
respondent for final adjudication. Accordingly, the respondents were
directed to file their affidavit-in-opposition within a time frame and the writ
petition as directed to be listed for hearing.
2. Mr. Vinay Shraff, learned Advocate appearing for the appellant
submitted that though this appeal is against an order refusing to grant
interim orders, requested this Court to hear the writ petition as well as
questions of law are involved in the writ petition and may not even require
an affidavit to be filed by the respondent. Mr. T.M. Siddiqui, learned
Additional Government Pleader appearing for the respondent submitted that
one opportunity may be granted to the respondents to file their affidavit-in-
opposition which request was granted by order dated 23.06.2023 and after
the affidavit-in-opposition was filed by the respondent, the appeal as well as
the writ petition were heard and are now disposed of by this common
judgment and order.
3. The appellant filed the writ petition challenging an order-in-appeal dated
04.01.2023 and sought for a consequential direction upon the respondent to
refund the tax amounting to Rs.28,63,680/- which is alleged to have been
recovered by the appellant in excess of 10% of disputed tax amount and to
prohibit the respondents from taking further cohesive action against the
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appellant. The order impugned in the writ petition was passed under Section
107 of the Central Goods and Services Tax Act, 2017 and West Bengal
Goods and Services Tax Act, 2017 (hereinafter referred as the GST Act)
whereby the Input Tax Credit availed by the appellant amounting to Rs.
28,65,780/- from the period from November, 2018 to March 2019 was
denied on the ground that the returns for the said period was filed beyond
the statutory time limit stipulated in Section 16(4) of the GST Act, which
time limit expired on 20.10.2019.
4. Facts leading to the filing of the writ petition are that a show-cause
notice dated 28.10.2020 was issued to the appellant calling upon the
appellant to explain as to why Input Tax Credit amounting to Rs.
28,64,780/- for the period from November, 2018 to March, 2019 should not
be denied as returns for the FY 2018-19 were filed beyond the statutory time
limit that is 29.10.2019. The appellant by a representation dated
25.11.2020 requested for extension of time. On 04.01.2021 the second
respondent passed an order directing the appellant to pay tax, penalty and
interest on the ground that the statute has set down a time frame within
which a taxable registered person can claim ITC. The appellant appears to
have not paid the tax, penalty and interest as demanded and reminder was
sent by the department on 06.09.2021 to deposit the entire dues on or
before 10.09.2021. The appellant did not comply with the demand and
consequently the department on 11.09.2021 debited the amount from the
electronic cash ledger/ credit ledger of the appellant. The appellant filed an
appeal before the statutory appellate authority. On 07.05.2022 the appellant
was intimated by the office of the appellate authority that they have not
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deposited any pre-deposit amount on the disputed demand of tax. The
appellant sent a reply on 01.06.2022 stating that the officer in-charge had
initiated recovery proceedings and debited a sum of Rs. 11,62,099/- from
the CGST Credit ledger and Rs. 11,34,291/- from the SGST credit ledger
along with the interest from each cash ledger balances. The first respondent,
the appellant authority by order dated 04.01.2023 confirmed the order
passed by the second respondent holding that the statute has set a time
frame within which the appellant can avail and utilize input tax credit and
the appellant having done so beyond the time limit i.e. 20.10.2019 is not
entitled for the ITC.
5. We have elaborately heard Mr. Vinay Shraff, learned Advocate
appearing for the appellant assisted by Ms. Priya Sarah Paul, learned
advocate for the appellant and Mr. T.M. Siddiqui, learned Additional
Government Pleader assisted by Mr. T. Chakraborty and Mr. S Sanyal for
the respondent department.
6. The appellant's case is that they had submitted the returns in GSTR-3B
for the period from November, 2018 to March, 209 on 20.10.2019 which is
admittedly beyond the due date of submission of the return for the month of
September, 2019. The department's contention is that the returns having
been filed beyond the statutory time limit the appellant becomes ineligible
for Input Tax Credit and consequently he has to reverse the credit taken and
having willfully mis-stated the particulars and availed the benefit they are
liable to pay penalty. The contention of the appellant is that Input Tax
Credit is not taken through the return but it is taken through the books of
account immediately on receipt of goods and services in terms of first
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proviso to Section 16(2) of the GST Act. Therefore, it is submitted that the
time limit under Section 16(4) cannot supersede or override the scheme of
the statute as operation of Section 16(4) makes the non-obstante provision
namely Section 16(2) meaningless. In other words, it is contended that
Section 16(2) has overriding effect on Section 16(4) as is evident from the
words used in the statute, "entitled to take credit". Thus, it is contended
entitlement of a particular right after fulfilling the prescribed and specified
conditions results into a right, "taking" or "availing" or "utilizing" that right
through procedural formalities or furnishing a return by the person who is
entitled to that right is a matter of his choice. Further, it is the case of the
appellant that in Section 16(1) of the GST Act, there is no mention of any
time limit or time element and there is no visible linkage of Sub-section (1)
with Sub-section (4) of Section 16. The learned Advocate for the appellant
elaborately referred to the minutes of the 18th GST Council meeting held on
30th June, 2017 with particular reference to the type of returns to be filed
etc. Reliance was placed on the decision of the Hon'ble Supreme Court in
Union of India Versus Bharti Airtel Ltd.1 Reference was also made to the
notification issued by the Government in Notification No. 12 of 2019-CT
dated 07.03.2019 and Notification No. 76/2018-CT dated 31.12.2018 which
pertained to the time limit for filing the monthly return from April, 2019 to
June, 2019 which was extended and with regard to period from July, 2017
to September, 2019 wherein the late fee payable under Section 47 of the Act
was waived. With regard to the extreme hardship which will be faced by the
2021 (131) Taxmann.com 319 (SC)
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dealer/ assessee a reference was made to the decision in the case of Indsur
Global Ltd. Versus. Union of India 2.
7. The respondents seek to sustain the orders passed by the authorities
contending that the statute should be interpreted in the light of the entire
text and exception clauses or non-obstante clauses should not be
interpreted in isolation from the main enacting provision. It is submitted
that the purpose of non-obstante clause must be ascertained with which the
legislature has inserted it. Non-obstante clause is employed to give
overriding effect to some contrary provision but not complementary
provision. It is enacted to give the enacting part of the section in case of
conflict and overriding effect over the provision of the Act or the contract
mentioned in the non-obstante clause. The language of Section 16 is clear
that the non-obstante clause in Section 16(2) does not in any manner limit
the operation of Section 16(3) or Section 16(4) and they are not
contradicting, rather they all being to restrict the provisions, are basically
complementing each other and are limiting the scope and operation of
Section 16(4). Further, it is submitted that the legislative intent is not to
make Section 16(4) otiose by applying Section 16(2) of the Act. Conjoint
reading of Section 16(2)(d) and Section 16(4) make it clear that the
entitlement to the credit of any Input Tax in respect of any supply of goods
or services or both arises after filing of return under Section 39 of the Act.
This condition is further qualified by imposing a time limit under Section
16(4). Admittedly, in the case of the appellant the returns were filed well
beyond the period stipulated under Section 16(4). The imposition of penalty
2014 (310) ELT 833 (Guj)
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was well justified as the appellant had committed fraud by making a false
and dishonest representation in GSTR-3B return for the aforementioned
period and claimed ineligible ITC and thereby reducing the net tax liability.
8. This being a fraudulent claim, penalty is liable to be imposed and
rightly imposed. In support of his contention, learned Additional
Government Pleader placed reliance on the decision in The State of Tamil
Nadu Versus M.K. Kandaswami and Others 3 ALD Automotive Private
Limited 4 TVS Motor Company Limited Versus State of Tamil Nadu and
Others 5. The decision of the High Court of Andhra Pradesh in
Thirumalakonda Plywoods Versus The Assistant Commissioner- State
Tax WP 24235 of 2022 dated 18.07.2023 and the decision of the High Court
of Judicature at Patna in Gobinda Construction Versus Union of India
and others in Civil Writ Jurisdiction Case No. 9108 of 2021 dated
08.09.2021.
9. The Hon'ble Supreme Court in ALD Automotive Private Limited while
considering a challenge to Section 19(11) of the Tamil Nadu Value Added
Tax Act, 2006 requiring the claim for Input Tax Credit to be made within 90
days from the date of purchase or before the end of the financial year
whichever is later as being ultra vires to a statutory claim of the Act,
considered as to the principles for interpreting law dealing with economic
activities. While doing so, the Hon'ble Supreme Court referred to the
decision of the Constitution Bench in R.K. Garg and Others Versus Union
(1975) 4 SCC 745
(2019) 13 SCC 225
(2019) 13 SCC 403
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of India and Others 6 wherein it was held 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 was further held 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 straight 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, larger play has to be
allowed to the legislature. Further it was held that 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. The Hon'ble Supreme Court referred to the decision in Kailash
Chandra Versus Mukundi Lal 7 wherein the Hon'ble Supreme Court held
that 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 difference sections or parts of the same statute
is the same or similar in nature. After pointing out about how a taxation
statute has to be interpreted, the Hon'ble Supreme Court proceeded to
examine the provisions of the concern statute and held that input tax credit
is in the nature of benefit/concession extended to the dealers under the
statutory scheme. The concession can be received by the beneficiary only as
per the scheme of the statute. Reference was made to the decision in Godrej
(1981) 4 SCC 675
(2002) 2 SCC 678
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and Boyce Manufacturing Company Private Limited Versus CST 8
wherein the court held that the rule making authority can provide
curtailment while extending a concession. Reference was made to the
decision in India Agencies Versus CCT 9 wherein it was held that when the
rules prescribes the procedure 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, the dealer has to strictly follow the procedure and
produce a relevant material required under the rule. Reference was also
made to the decision in the case of State of Karnataka Versus M.K. Agro
Tech Private Limited 10 wherein the Hon'ble Supreme Court held that it is
a settled proposition of law that taxing statutes are to be interpreted literally
and further it is the domain of the legislature as to how much tax credit is to
given under what circumstances. Reference was made to the decision in
Jayam and Company Versus Assistant Commissioner and Another 11
wherein the court held that whenever concession is given by the statute, the
conditions thereof are to be strictly complied with in order to avail such
concession. Ultimately the Hon'ble Supreme Court upheld the validity of the
Section 19(11) of the said act in the following terms:-
38. This Court further held that it is a trite law that whenever
concession is given by a statute the conditions thereof are to be strictly
complied with in order to avail such concession. In paragraph 12,
following has been laid down:
12. It is a trite law that whenever concession is
given by statute or notification, etc. the
conditions thereof are to be strictly complied
(1992) 3 SCC 624
(2005) 2 SCC 129
(2017) 16 SCC 210
(2016) 15 SCC 125
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with in order to avail such concession. Thus, it
is not the right of the "dealers" to get the benefit
of ITC but it is a concession granted by virtue of
Section 19. As a fortiori, conditions specified in
Section 10 must be fulfilled. In that hue, we
find that Section 10 makes original tax invoice
relevant for the purpose of claiming tax.
Therefore, under the scheme of the VAT Act, it
is not permissible for the dealers to argue that
the price as indicated in the tax invoice should
not have been taken into consideration but the
net purchase price after discount is to be the
basis. If we were dealing with any other aspect
dehors the issue of ITC as per Section 19 of the
VAT Act, possibly the arguments of Mr. Bagaria
would have assumed some relevance. But,
keeping in view the scope of the issue, such a
plea is not admissible having regard to the
plain language of Sections of the VAT Act, read
along with other provisions of the said Act as
referred to above.
37. The Constitutional validity of Section 19(20) was upheld. The above
decision is a clear authority with proposition that Input Tax Credit is
admissible only as per conditions enumerated Under Section 19 of the
Tamil Nadu Value Added Tax Act, 2006. The interpretation put up by
this Court on Section 3(2) and 3(3) and Section 19(2) is fully attracted
while considering the same provisions of Section 3(2) and 3(3) and
provision of Section 19(11) of the Act. The Statutory scheme delineated
by Section 19(11) neither can be said to be arbitrary nor can be said to
violate the right guaranteed to the dealer Under Article 19(1) (g) of the
Constitution. We thus do not find any infirmity in the judgment of the
High Court upholding the validity of Section 19(11) of the Act. Both the
issues are answered accordingly.
10. In the ALD Automotive Private Limited an alternate submission
was made on behalf of the assessee that Section 19(11) of the Tamil Nadu
Value Added Tax Act cannot be held to be mandatory and it is only a
directory provision non-compliance with which cannot be a ground of denial
of Input Tax Credit to the appellant therein. After noting the conditions
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enumerated in Section 19 of the said Act, it was held that the conditions
under which the concession and benefit is given is always to be strictly
construed and if the contention that there is no time period for claiming
Input Tax Credit is accepted, the provision becomes too flexible and gives
rise to a large number of difficulties including difficulty in verification of
claim of Input Tax Credit. Further it was held that the taxing statutes
contain self-contained scheme of levy, computation and collection of taxes.
The time under which a return is to be filed for the purpose of assessment of
tax cannot be dependent on the will of a dealer. Ultimately it was held that
the time period prescribed under Section 19(11) of the Tamil Nadu Value
Added Tax Act was mandatory. The Court also considered the correctness of
the argument that when an assessee has a valid explanation for claiming
Input Tax Credit within the time limit the authority has jurisdiction to
extent a time. This argument was rejected holding that the authority has no
power under the Act to dilute the mandatory requirement of the law and the
taxing statute has to strictly construed, nothing is to be read in, nothing is
to be implied and the language used in the taxing statute had to be looked
into fairly. While on this issue, it will be beneficial to refer to the decision in
the case of The State of Tamil Nadu Versus M.K. Kandaswami and
Others 12 wherein the question which fell for consideration was with regard
to the scope of Section 7A of the Madras General Sales Tax Act, 1959 and
the Hon'ble Supreme Court held that it has to be remembered that Section
7A of the said Act is at once a charging as well as remedial provision. It's
main object is to plug leakage and prevent evasion of tax. In interpreting
(1975) 4 SCC 745
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such a provision a construction which would defeat its purpose and/or
obliterate it from the statute book, should be eschewed. If more than one
construction is possible, that which preserves its workability and efficacy is
to be preferred to the one which would render it otiose or sterile.
11. The Hon'ble Supreme Court in TVS Motor Company Limited after
taking note of the decision in ALD Automotive held that ITC is a form of
concession which is provided by the Act; it cannot be claimed as a matter of
right but only in terms of the provision of the statute; therefore the
conditions mentioned had to be fulfilled by the dealer. Very recently, the
Hon'ble Division Bench of the High Court of Andhra Pradesh had considered
an identical case as that of the case on hand, wherein a pari materia
provision under the Andhra Pradesh General Sales Tax, 2017 namely
Section 16(4) of the Act was considered in a challenge to its validity on the
ground that it violates Article 14, 19(1)(g), and 300A of the Constitution of
India; whether the non-obstante clause in Section 16(2) of the APGST, CGST
Act, 2017 would prevail Section 16(4) of the APGST/CGST Act, 2017.
12. The argument advanced before us by the learned Advocate for the
appellant were identical to that of the arguments which were placed by the
petitioners/assessee in the said case and the same was rejected, in our view
rightly on the ground that Section 16(2) prescribes, the eligibility criteria
which is mandatory and in the absence of fulfillment of the eligibility criteria
the dealer will not be entitled to claim ITC. We are in the respectful
agreement with the view expressed. The contention that non obstante clause
in the Sub Section(2) of Section 16 overrides the other provisions namely
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Section 16(4) was canvassed before the court which was also rightly rejected
after taking note of the various decisions as to how the non obstante clause
should be interpreted and rightly held that Section 16(2) does not appear to
be a provision which allows Input Tax Credit, rather Section 16(1) is the
enabling provision and Section 16(2) restricts the credit which is otherwise
allowed to the dealers who satisfied the condition prescribed the
interpretation given by the court that the stipulation in Section 16(2) is the
restrictive provision is the correct interpretation given to the said provision.
A similar challenge was made to Section 16(4) of the Bihar Goods and
Services Taxes Act, 2017 in the case of a Gobinda Construction wherein
the court held that in the language of Section 16 does not suffer from any
ambiguity and clearly stipulates grants of ITC subject to the condition and
restriction put therein. Further it was held that the right of registered
person to take ITC under Section 16(1) becomes a vested right only if the
conditions to take it are fulfilled, free of restriction prescribe under Sub
Section (2) thereof. Further the court held that the provision under Sub
Section (4) of Section 16 is one of the conditions which makes a registered
person entitled to ITC and by no means Sub Section (4) can be said to be
violative of Article 300A of the Constitution of India. The court noted the
decision in ALD Automotive Private Limited, Godrej and Boyce
Manufacturing Private Limited and Jayam and Company and
ultimately upheld the constitutional validity of Section 16(4) of the Act.
13. Thus, for all the above reasons, we find no ground to grant the relief
sought for by the petitioner in the writ petition.
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14. Consequently, the appeal as well as the writ petition are dismissed.
No costs.
(T.S. SIVAGNANAM, CJ.)
I Agree.
(HIRANMAY BHATTACHARYYA, J.)
(P.A- PRAMITA/SACHIN)
