Page 87 - GSTL_7th May 2020_Vol 36_Part 1

2020 ] NELCO LTD. v. UNION OF INDIA 45
purchased them from local registered dealers on payment of VAT under
the VAT invoice issued by the vendors. Thereafter, there was a resale to
consumers under the VAT invoice charging appropriate VAT on their sell-
ing price. On resale, VAT is paid by the dealer. The dealer is entitled to
avail input VAT credit and he is entitled to credit on VAT which was paid
to the vendors on purchase of TV sets from the vendors. What had hap-
pened was, after the original tax invoice and availing the input tax credit,
the vendor gave a discount and purchase credit note was issued for a lesser
price. The dealer took into account the price which it had paid to the ven-
dor after adjusting the discount that was subsequently given to the dealer
to arrive at net cost and adding VAT which was limited to the vendors by
the dealers. The goods were resold at a lesser price. After the introduction
of sub-section (20) in Section 19 and once again, which has a non-obstante
clause, the obligation was to reverse the input tax credit. In other words, if
the registered dealer sold goods at a price lesser than the price of the goods
purchased by him, he had to reverse the amount of input tax credit over
and above the output tax of those goods. It was such an issue which was
considered and in considering that the definitions and substantive provi-
sions of the Tamil Nadu Value Added Tax Act, 2006 were referred. The Su-
preme Court noted that input tax credit is a form of concession provided by
the Legislature. It is not permissible to all kinds of sales and certain speci-
fied sales are specifically excluded. The concession of input tax credit is
available on certain conditions mentioned in this section, namely, Section
19 and one of the most important condition was that, in order to enable the
dealer to claim that credit it has to produce the original tax invoice, com-
plete in all respect, evidencing the amount of input tax. It is in these cir-
cumstances that the Hon’ble Supreme Court held that the challenge to the
constitutional validity had to fail. It clearly held that when there was a con-
cession given by the statute, the Legislature has to make provision stating
the form and manner in which the concession is to be allowed and the sub-
section (20) seeks to achieve that. There was no right, inherent or otherwise,
vested with dealers to claim the benefit of input tax credit but for Section 19
of the VAT Act. We, therefore, do not see how de hors this position a reli-
ance can be placed only on some paras of this Judgment. We cannot ignore
what was essentially decided. This is not a matter of retrospective operation
of a fiscal statute, as was projected before us in the passing. This is a clear
case as operating within the ambit of Jayam & Company itself. As is before
us, a concession is being provided by the Legislature which but for the pro-
vision granting such concession could have not been availed. The availment
of CENVAT credit or input tax credit is clearly termed as a concession.
With the conditions imposed, the concession could have been availed of. In
the absence of a substantive provision granting such concession, there
would have been no concession at all. Thus, one cannot pick and choose a
condition for challenge by alleging that the availment is undisputedly con-
ditional but one of the conditions, though having nexus with the availment,
is unconstitutional or arbitrary and excessive. The nature of that condition,
its placement consistent with the scheme is then conveniently ignored. We
cannot allow this argument to be built on the basis of reliance on para 18 of
the Judgment in Jayam (supra).
(emphasis supplied)
The ratio laid down by the Division Bench in JCB India Ltd. interpreting the Tran-
sitional Provisions and distinguishing the other decisions, is unequivocal.

GST LAW TIMES  7th May 2020  87