The main legal point established in the judgment is that the 90-day time limit in Rule 20 of the Punjab Value Added Tax Rules, 2005, for claiming back Input Tax Credit (ITC) reversed for goods sent on job work is directory, not mandatory.

S.J. VAZIFDAR, J.

The petitioner seeks a declaration that Rule 20 of the Punjab Value Added Tax Rules, 2005 (hereinafter referred to as ‘the rules’) is ultra-vires Section 13(3) of the Punjab Value Added Tax Act, 2005 (hereinafter referred to as ‘the Act’) in so far as it prescribes the time limit of 90 days for claiming back the Input Tax Credit (ITC) reversed for the goods which have been sent on job work. The petitioner also seeks a writ of certiorari to quash the order dated 06.07.2015 passed by the Punjab Value Added Tax Tribunal dismissing its appeal for the assessment year 2008-09 upholding the levy of tax, interest and penalty.

2. The petitioner is a dealer duly registered under the provisions of the Act as well as under the provisions of the Central Sales Tax Act, 1956 at Mohali (Punjab). The petitioner was amalgamated with M/s Reliance Fresh Ltd. with effect from 01.07.2013 and with effect from 30.07.2013 it changed its name to M/s Reliance Retail Ltd. The petitioner carries on its business of the manufacturer and sale of jewellery. It is admittedly entitled to Input Tax Credit (ITC) of the tax paid on purchase of gold used in the manufacture of jewellery. The petitioner filed returns for the assessment year 2008-09 in which it claimed ITC in respect of the gold purchased during that year and adjusted the admissible tax credit against its output tax liability and carried forward the balance tax credit to the next year.

3. The respondents by a notice dated 29.08.2012 called upon the petitioner to show cause why penalty and interest be not imposed upon it under sections 56 and 32 of the Act. The notice stated that ITC on purchases amounting to about Rs. 8.23 crores was liable to be rejected as it was not in accordance with Rule 20 read with Section 13(3) of the Act. The petitioner responded to this show cause notice in writing and at the personal hearing. By an assessment order dated 15.11.2012 the respondents imposed tax, penalty and interest aggregating to Rs. 25,80,541/- upon the petitioner. The First Appellate Authority-Deputy Excise and Taxation Commissioner (Appeals) dismissed the appeal by an order dated 14.06.2013. The Value Added Tax Tribunal, Punjab dismissed the appeal by an order dated 06.07.2015. The Tribunal noted that during the assessment year 2008-09, the petitioner claimed ITC on purchase of bullion of the value amounting to Rs. 24,57,78,897/-. However, bullion worth Rs. 8,23,326.38 was not received back by the petitioner from the job workers after it was processed and reconditioned within the period of 90 days stipulated in Rule 20 of the said Rules.

4. The Tribunal noted the contentions on behalf of the petitioner that Rule 20 was merely directory and not mandatory and that the assessment order was time barred. The Tribunal noted that although the bullion was not received within 90 days of it having been sent to the job workers, it was received in the subsequent year. It was also contended on behalf of the petitioner that penalty in any event ought not to be charged inter-alia as the petitioner had no intention to evade or avoid the tax and had also disclosed all the facts. The Tribunal held:-

“……………………………..From the record produced by the appellants as well as the admissions made by them, it is apparent that the appellant had made the purchases and claimed ITC on the value of the bullion and the ornaments amounting to Rs.24,57,78,897/-. It is also a fact that the goods were sent by the appellant for job work in the year 2008-09 outside the State of Punjab. The goods worth Rs.8,23,326.38/- were neither received back within the stipulated period of 90 days nor the same were received during the tax period i.e. year 2008-09. It is not a case where the goods were received after job work within the margin of few days as prescribed in Rule 20 of the Rules. Had the bullion as well as the ornaments been received, after job work within the said financial year and not within 90 days the authorities would