In the High Court of Punjab and Haryana, Chandigarh VATAP No. 17 of 2008 Date of Decision: September 5, 2009 Lahori Mal Bimal Chand Jain …Appellant Versus State of Punjab and another …Respondents CORAM: HON’BLE MR. JUSTICE M.M. KUMAR HON’BLE MR. JUSTICE JASWANT SINGH Present: Mr. Kashmiri Lal Goyal, Senior Advocate, with Mr. Manoj Kumar Rohilla, Advocate, for the appellant. Ms. Sudeepti Sharma, DAG, Punjab, for the respondents 1. To be referred to the Reporters or not? 2. Whether the judgment should be reported in the Digest? M.M. KUMAR, J. This order shall dispose of VATAP Nos. 5 of 2007 and 17 of 2008 as common question of law and facts are involved. 2. These appeals have been filed under Section 68 of the Punjab Value Added Tax Act, 2005 (for brevity, ‘the VAT Act’) against order dated 7.8.2007 passed by the Value Added Tax Tribunal, Punjab, Chandigarh (for brevity, ‘the Tribunal’) in VAT Appeal No. 65 of 2006-07 (subject matter of challenge in VATAP No. 17 of 2008) and order dated 20.4.2006 passed by the Tribunal in VATAP No. 17 of 2008 VAT Appeal No. 17 of 2005-06 (subject matter of challenge in VATAP No. 5 of 2007), rejecting the claim of the dealer-appellant(s) for input tax credit on stocks being time barred. 3. Brief facts necessary for disposal of the controversy raised in these appeals are that the VAT Act has come into force with effect from 1.4.2005, which has repealed the Punjab General Sales Tax Act, 1948 (for brevity, ‘the Sales Tax Act’) with effect from 31.3.2005. Under Section 5(1-A) of the Sales Tax Act the State Government had declared various goods on which tax was levied at the first stage of sale and under proviso to the section, sale of such goods at a subsequent stage was exempted from imposition of tax, which was subject to the condition that the dealer effecting the sale at subsequent stage furnishes to the assessing authority certificate duly filed and signed by the registered dealer from whom the goods were purchased. 4. By Section 14 of the VAT Act, a provision was made to give input tax credit in respect of stock of goods held by dealers on 31.3.2005 on which tax was payable at the first stage of sale under the repealed Sales Tax Act. An important condition was imposed on such a claimant, namely, that it was required to furnish in the prescribed form to the designated officer a statement of tax paid goods held in stock. Such a claim was to be submitted within 30 days i.e. by 30.4.2005. However, the period of 30 days was later extended to 45 days vide Act No. 11 of 2006 with effect from 24.4.2006. 5. The dealer-appellant in VATAP No. 17 of 2008 is a Karyana Merchant and had some closing stock as on 31.3.2005 and 2 VATAP No. 17 of 2008 claimed to have paid tax under the repealed Sales Tax Act. The revenue has claimed that it has failed to file statement of stock of goods taxable at the first stage of sale under the Sales Tax Act within the prescribed period of 45 days i.e. by 15.5.2005. It is conceded position that the stock statement of the dealer-appellant in this case was duly received by the Designated Officer on 23.5.2005, who rejected the claim on the ground of delay, vide order dated 5.12.2005. The appeal filed by the dealer-appellant before the Appellate Authority was dismissed vide order dated 24.4.2006, which has been upheld by the Tribunal vide impugned order dated 7.8.2006. 6. The dealer-appellant in VATAP No. 5 of 2007 is engaged in the business of trading of Lubricant Oils. The claim of input tax credit in this case was filed on 20.5.2005, which was rejected by the Designated Officer treating the same being time barred, vide order dated 24.10.2005. The appeal filed by the dealer- appellant was dismissed by the Appellate Authority vide order dated 23.1.2006. Further appeal filed before the Tribunal met the same fate, which was rejected vide order dated 20.4.2006. Challenging the order dated 20.4.2006, the dealer-appellant initially filed CWP No. 8585 of 2006 in this Court, which was dismissed by the Division Bench as withdrawn. However, liberty was granted to file an appeal under Section 68 of the VAT Act. 7. On 15.1.2008, when VATAP No. 5 of 2007 came up for consideration, the Division Bench of this Court admitted the same on the following two substantial questions of law:- 3 VATAP No. 17 of 2008 “(i) Whether the interpretation taken by the authorities that the claim was to be filed by the 16th of May, 2005 is falsified by the fact that when the Rules were notified in June, 2005, Rule 25 contained the manner in which the claim of ITC on transitional stock was to be made? (ii) Whether assuming that the claim was time barred, the same could be condoned by virtue of Section 29(2) of the Limitation Act which makes Section 5 applicable to all appeals, revisions and applications before the Tribunal and other Authorities under the Punjab General Sales Tax Act, 1948 Act as per the Full Bench decision? VATAP No. 17 of 2008 was also admitted on 10.11.2008 and the same was ordered to be heard along with VATAP No. 5 of 2007. 8. The controversy raised in these appeals is no longer res integra and the same has been set at rest by a Division Bench of this Court (of which one of us, M.M. Kumar, J. was a member) in the case of State of Punjab v. M/s City Petro, (2009) 33 PHT 167 (P&H). In the said case the revenue had preferred an appeal against the order passed by the Tribunal holding that the delay in filing the claim for input tax credit should have been condoned as per the provisions of Section 14 of the VAT Act and Rule 25(1)(b) of the Punjab Value Added Tax Rules, 2005 (for brevity, ‘the VAT Rules’). The respondent-M/s City Petro in that case filed its input tax credit claim 4 VATAP No. 17 of 2008 on 18.6.2005, which was rejected by the Designated Officer on the ground of delay. In the appeal filed under Section 62(1) of the VAT Act, the Appellate Authority set aside the order of the Designated Officer and remanded the case to him for passing a fresh order. The Designated Officer again rejected the claim of M/s City Petro by recording a finding that it was filed after a period of 45 days. The appeal against that order was dismissed by the Appellate Authority. The Tribunal accepted the claim made by M/s City Petro while allowing its appeal filed under Section 63 of the VAT Act. Thereafter matter travelled to this Court after filing of further appeal by the revenue. 9. The Division Bench after noticing the provisions of Rule 25 of the VAT Rules, Section 14 of the VAT Act and judgment of Hon’ble the Supreme Court in the case of Chairman, Indore Vikas Pradhikaran v. Pure Industrial Coke & Chemicals Ltd., (2007) 8 SCC 705, dismissed the appeal filed by the revenue by observing as under:- “9. It is further appropriate to mention that the period of 30 days was extended to 45 days by Act No. 11 of 2006 with effect from 24.4.2006. The respondent had filed its input tax credit claim on 18.6.2005 which was before the date of publication of the VAT Rules. By virtue of the use of expression ‘appointed day’ for counting the period of 30 days, used in Rule 25(1)(b), an argument was raised by the revenue that the period of 30 days or 45 days have to be counted from the ‘appointed 5 VATAP No. 17 of 2008 day’ i.e. 1.4.2005. The Tribunal did not accept the aforementioned argument because by no stretch of imagination an impossible act could be permitted to be done. The VAT Rules were published on 21.6.2005 and the ‘appointed day’ of 1.4.2005 would require a dealer to file his return within 45 days, which would expire on 15.5.2005. This could never be intention of the legislature which has provided by Sections 13 and 14 of the VAT Act that a dealer can file his statement of input tax credit claim subject to certain conditions. Moreover, it is a transitory statute repealing the earlier Sales Tax Act. The goods which have already suffered sales tax could not be subjected to another doze of tax. 10. It is, thus, evident that even if period of 45 days is given from the ‘appointed day’ i.e. 1.4.2005, no dealer could have filed his input tax credit claim nor could the claim be filed w.e.f. 24.4.2006 when further period of 15 days was granted from that date. It is well settled that the law does not contemplate doing of an impossible act. The legislative intent is clear from the reading of Sections 13 and 14 of the VAT Act, which allow a dealer to claim input tax credit subject to various other conditions. It is also clearly made out that period of 45 days is intended to be given to the dealer to make input tax credit claim. However, the period of 45 days has to be counted from the date of publication of the 6 VATAP No. 17 of 2008 VAT Rules on 21.6.2005. Any other interpretation would defeat the basic object of Sections 13 and 14 of the VAT Act and the VAT Rules. If the intention of the legislature and the rule making authorities is gathered from the aforesaid provisions then the period of 45 days have to be granted from the date of publication of the VAT Rules. Therefore, it would be appropriate to apply the rule of purposive construction to a statute of this nature which would make VAT Rules workable, as has been laid down in para 82 of the judgment of Hon’ble the Supreme Court in the case of Chairman, Indore Vikas Pradhikaran v. Pure Industrial Coke & Chemicals Ltd., (2007) 8 SCC 705. Such an interpretation would be consistent with the intention of the legislature and the rule framing authorities and would advance the object of the statute. For the reasons aforementioned, this appeal fails and the same is dismissed.” 10. It is conceded position on record that the dealer- appellant(s) in these appeals have filed their respective statement of claim of input tax credit on 23.5.2005 (in VATAP No. 17 of 2008) and 20.5.2005 (in VATAP No. 5 of 2007), therefore, their cases are squarely covered by the judgment rendered in the case of M/s City Petro (supra). 11. As a sequel to the above discussion, these appeals are allowed in terms of the judgment rendered in the case of M/s City 7 VATAP No. 17 of 2008 Petro (supra). The impugned orders passed by the Tribunal, Appellate Authorities as well as concerned Designated Officers are hereby set aside. The concerned Designated Officers are directed to consider the claims of the dealer-appellant(s) for input tax credit afresh in accordance with law within a period of two months from the date of receipt of a certified copy of this order. 12. The appeals stand disposed of in the above terms. (M.M. KUMAR) JUDGE (JASWANT SINGH) September 5, 2009 JUDGE Pkapoor 8