Page 89 - GSTL_7th May 2020_Vol 36_Part 1

2020 ] NELCO LTD. v. UNION OF INDIA 47
but being based on the principle of self-assessment, is open for verification;
which is a different aspect. It is contended that claim of the input tax credit is in
the Returns to be filed and Form is not important, and once this procedure is laid
down, a time-limit cannot be provided. Once it is held that the rule making pow-
er exists and the placing of time-limit on the concession is not ultra vires, then the
further tinkering with the statutory scheme on hypertechnical and academic ar-
guments is neither desirable nor necessary.
47. Thus the time-limit in Rule 117(1) is traceable to the rule-making
power conferred in Section 164(2). The credit envisaged under Section 140(1) be-
ing a concession, it can be regulated by placing a time-limit. Therefore, the time-
limit under Rule 117(1) is not ultra vires of the Act.
48. As regards laying of the Rule before the Parliament, the Petitioner
contends that laying of the Rule before the Parliament will not cure the defect if
there is no rule-making power exist. For this purpose, reliance is placed on the
decision in the case of Hukam Chand v. Union of India [(1972) 2 SCC 601]. It is con-
tended that the fact that the Rules have to be laid before the Parliament does not
confer validity if the rule is made not in conformity with the Act. In view of our
finding that the rule-making power exists for Rule 117 and traceable to Section
164, laying the Rule before the Parliament strengthen the case of the Respondents
for supporting its validity.
49. We now turn to the second part of the discussion that is the chal-
lenge to the Rule on the touchstone of Article 14 of the Constitution of India.
50. The Petitioner contends that the time-limit imposed under Rule 117
is arbitrary, reasonable and in violation of Article 14. It is contended that the
right accrued to the Petitioner of input credit is being taken away by the im-
pugned Rule. The Petitioner contends that Section 140 of the Act, through its sub-
sections, operate in different scenarios, and need to be treated differently. It is
contended that under the CENVAT Credit Rules, 2004, the taxpayer was entitled
to 50% of credit in the earlier year of purchase of capital goods and balance 50%
in the subsequent year and, therefore, on the relevant date right to take the bal-
ance of 50% credit had accrued. It is contended that this right has been saved by
saving clause in Section 174. The Petitioner has placed strong reliance on the de-
cisions of the Supreme Court in the cases of Eicher Motors and Osram Surya (P)
Ltd. It is contended that the time-limit has no nexus to the Act. The Respondents
have supported the impugned legislation contending that without time-limit, the
concept of transitional provisions will become nugatory.
51. This analysis needs be prefixed by referring to the scope of judicial
scrutiny in the matters of economic legislations. When economic legislation is
questioned, the Courts are slow to strike down a provision which may lead to
financial complications. The Supreme Court has sounded a note of caution in the
cases of R.K. Garg v. Union of India [(1981) 4 SCC 675], Bhavesh D. Parish v. Union
of India [(2000) 5 SCC 471], Director General of Foreign Trade v. Kanak Exports
[(2016) 2 SCC 226 = 2015 (326) E.L.T. 26 (S.C.)], Swiss Ribbons Pvt. Ltd. and Ors. v.
Union of India [(2019) 4 SCC 17]. The summary of the principles laid down is as
follows. Taxation issues are highly sensitive and complex. Legislations in the
economic matters are based on experimentations. The Court should decide the
constitutionality of such legislation by the generality of its provisions. The Court
cannot assess or evaluate the impact of provision and whether it would serve the
purpose in view or not. Trial and error method is inherent in the economic en-
GST LAW TIMES  7th May 2020  89