JAYAM & CO. versus ASSISTANT COMMISSIONER & ANR.

Citation: [2016] 6 S.C.R. 787 · Decided: 05-08-2016 · Supreme Court of India · Bench: A.K. SIKRI · Disposal: Case Partly allowed

Cited by 5 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2016) 6 S.C.R. 787 
JAYAM & CO. 
v. 
ASSISTANT COMMISSIONER & ANR. 
(Civil Appeal Nos. 8070-8073of2016) 
AUGUST 05, 2016 
[A.K. SIKRI AND R. F. NARIMAN, JJ.) 
Tamil Nadu Value Added Tax Act, 2006: 
s. 19(20) -
Retrospectivity of, validity -
Input Tax Credit - Sub-section (20) of 
s.19 is altogether new provision introduced for determining the input 
tax in specified situatio1i, i.e., where goods are sold at a lesser price 
than the purchase price of goods - ITC is a form of concession 
granted by virtue of s.19 - When a concession is given by a statute. 
the legislature has power to make the provision stating the form 
and manner in which such concession is to be allowed - Sub-section 
(20) seeks to achieve that - There is no right inherent or otherwise 
vested with dealers to claim the benefit of ITC: but for s. 19 of the 
Act - Therefore, constitutionality of s.19(20) is upheld - However, 
amendment giving retro!>pective effect would seek to take away the 
vested right accrued in favour of dealers in respect of purchases 
and sales made between 1.1.2007 to 19.8.2010 and is, therefore, 
struck down. 
Partly allowing the appeals, the Court 
HELD: 1. Section 19 allows grant-of Input Tax Credit (ITC). 
However, ITC is not allowed on all kinds of transactions. On 
certain types of sales, no ITC is admissible at all. Nature of those 
sales where ITC is inadmissible is stipulated in sub-sections (5) 
to (9) of Section 19. From sub-section (10) onwards, provisions 
are made to follow the procedure and fulfill the requisite conditions 
for availing ITC. Sub-section (10) which is couched in negative 
terms, categorically stipulates that such ITC would be admissible 
to the registered dealer and he would not be entitled to claim 
this credit 'until the dealer receives an original tax invoice duly 
filled, signed and issued by a registered dealer from where the 
goods are purchased ••••.•• '. Further, such original tax invoice 
should evidence the amount of input tax. So much so, even if the 
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SUPREME COURT REPORTS 
[2016] 6 S.C.R. 
original tax invoice is lost, the obligation cast on the, registered 
dealer is to obtain duplicate or carbon copy of such tax invoice 
from the selling dealer and only tlien input tax is allowed. 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 spedfically excluded. (b) Concession of ITC 
is available on certain conditions mentioned in this Section. (c) 
One of the most important conditio,n is that in order to enable 
the dealer to claim ITC it has to produce original tax invoice, 
completed in all respect, evidencing the amount of input tax. 
[Paras 10, 11)(794-G-H; 799-G-H; 800-A-D) 
2. 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 µot 
the right of the 'dealers' to get the benefit of ITC but its a 
concession g-Faftted by virtue of Section 19. Sub-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. When a 
concession is given by a statute, the Legislature has power to 
make the _provision stating the form and manner in which such 
concession is to be allowed. Sub-section (20) seeks to achieve 
c 
that. There was no right, inherent or otherwise, ,vested with 
dealers to claim the benefit of ITC but for Section 19 of the VAT 
. 
. 
Act. That apart, there were valid and cogent reasons for inserting 
Section 19(20). Main pur~ort was to protect the Revenue against 
clandesti,ne transactions resulting in evasion of tax. [Paras 12 
, and 13)(800,D-F, H; 801-A) 
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3. Sub-section (20) of Section 19 is altogether new provision · 
introduce,(} for determining the input tax· in sp¢cified situation, 
i.e., where goods are sold at a lesser price than the purchase 
price of goods. The manner of calculation of the ITC was entirelf 
different before this amendment. This is a provision which is 
· made for the first 'time to the detriment of the dealers. Such a 
provisio

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