Rajasthan High Court - Jodhpur
M/S Panwar Trading Corporation vs . State Of Rajasthan & Ors. on 12 November, 2014
Bench: Sunil Ambwani, Vijay Bishnoi
1
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN ATJODHPUR
ORDER
D.B. CIVIL WRIT PETITION NO.5521/2014
M/s Panwar Trading Corporation Vs. State of Rajasthan & Ors.
DATE :: NOVEMBER 12th , 2014
HON'BLE THE ACTING CHIEF JUSTICE MR. SUNIL AMBWANI
HON'BLE MR.JUSTICE VIJAY BISHNOI
Mr.Dinesh Mehta )
Mr.Lalit Pareek ) for the petitioner.
*****
BY THE COURT:(PER HON'BLE THE ACTING CHIEF JUSTICE)
1. We have heard learned counsel appearing for the assessee.
2. The petitioner is a partnership firm carrying on business of purchase and sale of cement. A survey was made by Assistant Commercial Taxes Officer, Ward-II, Anti Evasion, Bikaner, in which the petitioner was found to be selling cement on lesser price than the total purchase price of the cement. A show cause notice dated 6.6.2014 was issued, calling upon the petitioner as to why input tax credit of Rs.16,31,935/-, being difference in purchase value and sale value of the cement, may not be denied, and for levy of penalty under Section 61 of the Rajasthan Value Added Tax Act, 2003 (for short, 'the VAT Act, 2003'). The petitioner filed a detailed reply on 17.6.2014, alongwith trading account, and submitted that he has not sold the product on subsidized price.
3. The petitioner was subjected to assessment for the year 2 2014-15, in which the Assessing Officer, by his order dated 17.6.2014, levied penalty under Section 61 of the VAT Act, 2003 to the tune of Rs.4,73,520/-.
4. By this writ petition, the petitioner has prayed for declaring sub-section (3A) of Section 18 of the Rajasthan VAT Act, 2003, inserted by Section 7(iii) of the Finance Act, 2011 with effect from 9.3.2011, as arbitrary, illegal and violative of Articles 14, 19(1)(g) and 300A of the Constitution of India. The petitioner has also prayed for a declaration that the sales made by him at lesser rates do not amount to sale at 'subsidized rates', falling foul to Section 18(3A) of the VAT Act, 2003, and also to set aside the assessment order dated 17.6.2014.
5. The assessment order is subject to appeal under the VAT Act, 2003, and thus, we do not propose to interfere with the assessment made by the Assessing Officer under the VAT Act, 2003.
6. Learned counsel appearing for the petitioner submits that since the authorities constituted under the Act, namely, the Assessing Officer, the Appellate Authority and the Tribunal, do not have powers to declare any provision of law, including sub-section (3A) of Section 18 of Rajasthan VAT Act, 2003, to be ultra vires Articles 14, 19(1)(g) and 300A of the Constitution of India, the petitioner has been constrained to file this writ petition, for a declaration to that effect.
7. In order to appreciate the contention of learned counsel appearing for the petitioner, we find it appropriate to quote the 3 definitions of 'Input Tax' & 'Reverse Tax', and Section 18, including the amended sub-section (3A) of Section 18 of the VAT Act, 2003 inserted by Section 7(iii) of the Finance Act, 2011, as follows:-
"Section 2(17):- 'Input Tax' means tax paid or payable by a registered dealer in the course of business, on the purchase of any goods made from a registered dealer. Section 2(33):- 'Reverse Tax' means that part of the input tax for which credit has been availed in contravention of the provisions of section 18. "Section 18. Input Tax Credit.-(1) Input tax credit shall be allowed, to registered dealers, other than the dealers covered by sub-section (2) of section 3 or 5, in respect of purchase of any taxable goods made within the State from a registered dealer to the extent and in such manner as may be prescribed, for the purpose of -
(a) sale within the State of Rajasthan; or
(b) sale in the course of Inter-state trade and commerce; or
(c) sale in the course of export outside the territory of India; or
(d) being used as packing material of goods, other than exempted goods, for sale; or
(e) being used as raw material except those as may be notified by the State Government in the manufacture of goods other than exempted goods, for sale within the State or in the course of Inter-state trade or commerce; or
(f) being used as packing material of goods or as raw material in the manufacture of goods for sale in the course of export outside the territory of India; or
(g) being used in the State as capital goods in manufacture of goods other than exempted goods, 4 however, if the goods purchased are used partly for the purposes specified in this sub-section and partly as otherwise, input tax credit shall be allowed proportionate to the extent they are used for the purposes specified in this sub-section. (2) The claim of input tax credit shall be allowed on the tax deposited on the basis of original VAT invoice within three months from the date of issuance of such invoice.
However, claim of input tax credit of the additional tax deposited may be allowed on the basis of VAT invoice which has been issued subsequently in compliance with the decision of any competent court or authority, showing the tax at higher rate. If the first original VAT invoice is lost, input tax credit may be allowed on the basis of a duplicate copy thereof, subject to such conditions as may be prescribed.
(3) Notwithstanding anything contained in this Act, no input tax credit shall be allowed on the purchases.
(i) from a registered dealer who is liable to pay tax under sub-section (2) of section 3 or who has opted to pay tax under section 5 of this Act; or
(ii) of goods made in the course of import from outside the State; or (iia) of goods taxable at first point in the series of sales, from a registered dealer who pays tax at the first point; Explanation.- For the purpose of this clause, "first point in the series of sales" means the first sale made by a registered dealer in the State; or
(iii) where the original VAT invoice or duplicate copy thereof is not available with the claimant, or there is evidence that the same has not been issued by the selling registered dealer from whom the goods are purported to have been purchased; or 5
(iv) of goods where invoice does not show the amount of tax separately; or
(v) where the purchasing dealer fails to prove the genuineness of the purchase transaction, on being asked to do so by an officer not below the rank of Assistant Commercial Taxes Officer authorised by the Commissioner.
(3A) Notwithstanding anything contained in this Act, where any goods purchased in the State are subsequently sold at subsidized price, the input tax allowable under this section in respect of such goods shall not exceed the output tax payable on such goods.
(4) The State Government may notify cases in which partial input tax credit may be allowed subject to such conditions, as may be notified by it."
8. It is submitted that the insertion of Section 18(3A) in the Rajasthan VAT Act, 2003, is totally against the basic concept of law, governing Input Tax Credit. While inserting such a provision, the legislature has failed to consider the prevailing market practice and the nature of trade. It has curtailed the vested rights of the dealer.
9. It is submitted that the claim of credit of the tax paid at the time of purchase, that is, Input Tax Credit is an indefeasible and concrete right of the assessee. The assessee is entitled for claiming credit of the tax paid at the time of purchase on the goods, and such right cannot be taken away, curtailed or clipped by executive 6 authorities, or even by legislature. The practice prevailing since the time of trading, is that a manufacturer gives quantity discount and sales incentive to its stockists, dealers or selling agent, based on the targeted quantity lifted by him. At the time of supply of the goods, the manufacturer supplies the goods at a particular price and charges applicable VAT thereupon. The dealer, distributor or seller, being conscious of the marketing or incentive scheme floated by the manufacturer, takes a decision to sell the goods at competitive price, and even at lesser price than the purchase price in anticipation of getting quantity discount or sales incentive, on achieving a particular sale figure or reaching the target. Such reduction in price can, by no stretch of imagination, be treated to be a sale at subsidized price.
10. It is submitted that the subsidized price itself suggests that it is indicative of an incidence, when the seller decides to sell his goods at a substantial lower price, bearing a loss or share the cost, or burden from his own pocket. Where however, dealer sells the goods at competitive price, keeping in view the ultimate quantity discount or sales incentive, such sale cannot be termed, or alleged as sale at subsidized price, attracting Section 18(3A) of the VAT Act, 2003.
11. It is submitted that Section 18(3A) would lead to disastrous results. Many times, price of a commodity goes down, on account of market conditions, economic conditions, or perishable nature of the product. A dealer may be required to sell his goods at lesser 7 price, or concessional price than its purchase price. In such a situation, if Section 18(3A) is applied, and the input tax credit is confined to the selling price, it would lead to a double loss to the assessee.
12. On the question of interest, on the demand raised in the impugned order, it is submitted that Section 55 of the VAT Act, 2003 imposes tax only when a dealer commits a default in making the payment of tax leviable, or payable. It is submitted that in absence of default in payment of tax levied, imposition of interest under Section 55 is not legally sustainable. The Supreme Court in J.K. Synthetics Limited Vs. Commercial Taxes Officer with Birla Cement Works & Anr. Vs. State of Rajathan & Anr., (1994) 4 SCC 276, has taken a view that where there is no enhancement of tax liability, which was subsequently demanded alongwith interest, the interest is payable only from the expiry of the date, on which the amount becomes due for payment, as per the revised demand notice. In the present case, there is no default in making payment of the tax payable by the petitioner.
13. We do not propose to decide the question about the demand of interest in the assessment order, for such demand is sought to be challenged on the ground that it is illegal, and violative of the provisions of Section 55 of the VAT Act, 2003, and that, such question has to be considered by the Appellate Authority in an appeal to be filed by the petitioner, and thereafter, if he is still aggrieved, he may approach the Tribunal. The challenge to any 8 assessment order cannot be ordinarily made by way of filing a writ petition, without availing the alternative remedies of filing an appeal and review petition under the Act.
14. So far as the question of validity of the provisions of sub- section (3A) of Section 18, which was inserted by Section 7(iii) of the Finance Act, 2011 with effect from 9.3.2011 is concerned, we do not find that the challenge has been made on the ground that the State Legislature was not competent to enact the provision. The challenge is on the ground that it is against the basic concept of the law, governing input tax credit, under the Rajasthan VAT Act, 2003, and being consfiscatory of the input tax credit, is violative of Articles 14, 19(1)(g) and 300A of the Constitution of India.
15. The petitioner has relied upon Collector of Central Excise, Pune VS. Dai Ichi Karkaria Ltd., 1999 (112) E.L.T. 353 (S.C.), in support of his submission that the input credit tax is an indefeasible right, which cannot be denied or reversed on the ground that the selling price of the goods is less than the purchase price, on which the tax has been paid.
16. The petitioner is a trader, engaged in the business of purchase and sale of cement. For the assessment year 2014-15, it was found that his contention, that he does not sell the goods at price lesser than the purchase price, is not correct, inasmuch as from his trading account, it was found from the value of the opening stock, and from the value of closing stock that his average 9 price of purchase of cement is Rs.227.89 per bag, whereas he sold the cement at an average price of Rs.226.354 per bag. He had shown his ITC on 1.4.2012 of Rs.25046.64, which shows that prior to 1.4.2012, he had adjusted his ITC by issuing bills of sale at a higher price, which had affect on the subsequent years. Though he had purchased goods from the registered dealers, and had claimed ITC, his aggregate sale price, being less than the purchase price, he is entitled to the input tax credit in accordance with Section 18 (3A) of the VAT Act, 2003. The Assessing Officer thus, in view of the prohibition under Section 18(3A), allowed input tax credit only to the extent, to which it was claimed by him, and thereafter, assessed him, after adding interest under Section 61 for Rs.29,25,450/-, with the further order of penalty of the like amount.
17. In the reply given to the show cause notice, in pursuance to the survey conducted at the business premises of the assessee on 14.5.2014, it was stated by him that he had not sold the goods at a price, below the purchase price. He stated that the amount of carried forward input tax credit is very low. In the trading account, in Form VAT 10A, he has given the net amount of purchase, after making the adjustments of discounts, purchase returns, and other direct expenses. The amount so shown in purchase, is by way of net purchase, just to calculate the landing cost of the material, after adjusting all types of expenses and incentives. There is no provision in the VAT Act, 2003 about the charging of tax on trading 10 loss. The reversal of Input Tax Credit is indirectly the levy of VAT on trading loss, because of discounts and schemes received by the assessee from the company, and is not the amount, which was reduced by him in sale bills from the sale price. In fact, it was not received from the cement company, in compliance to the various schemes. The Supreme Court has not accepted the stand of the Department in the Special Leave Petitions, that the sales tax can be levied on discount in a judgment delivered for the period, prior to 9.3.2011. As an alternative, it was stated in the reply that as per the trading results, if there is any loss in the trading account, it is because of the cut throat competition in the market. The assessee has managed the profits from the schemes and discounts received from the company, in the form of various discount schemes. The trading loss is a normal business phenomena, and it is very usual in the type of trade carried on by the assessee. In case, the input tax on the trading account is reversed, the assessee will get double loss, namely, that the assessee has passed the benefits of schemes and discounts on to the customers to get the sales, to achieve the target of the company, and further, he is not getting the benefit of entire input tax paid on purchase.
18. We find that the entire arguments, put forward by learned counsel appearing for the petitioner that he has not made sales at a price lower than the purchase price, has been advanced without looking into the reply filed by the petitioner on 17.6.2014 to the show cause notice dated 6.6.2014 given by the Commercial Taxes 11 Officer (Anti Evasion), Bikaner, in which it was pleaded and argued that the goods were sold at a lesser price than the purchase price, in anticipation of getting quantity discount, or sales incentive, on achieving a particular sale figure or reaching the target, which cannot be treated as subsidized price. In the reply filed by the petitioner, it is stated that the assessee has not sold the goods at a price below the purchase price. The net amount of trading account has been arrived at, after making adjustments of discount, purchase returns and other direct expenses.
19. In any case, since the argument has been raised regarding the validity of Section 18(3A) on the anvil of Articles 14, 19(1)(g) and 300A of the Constitution of India, we propose to consider the question and observe as follows:-
20. The Value Added Tax is modern and progressive tax system now adopted in over 130 countries around the world. In India, this was initially tried out on Central Excise and after its success, extended to Service tax levy. Since at both levels Value Added Tax (VAT) has been successfully integrated in the tax system, the same has now been extended to state sales tax levies. Tax on sale within the State is a State subject. Over the period, many distortions had come in the regime of sales tax due to heterogeneity prevailed in the structure of sales tax. In the Sales Tax regime, there were problems of double taxation of commodities and multiplicity of taxes resulting in a cascading tax burden. Many steps were taken to remove the distortion and rationalise the tax structure since 1999. 12 It was decided to introduce uniform State Level VAT.
21. Introduction of VAT was difficult in India as sales tax is a State subject and sales tax on sales within the State can be levied under Entry 54 of List II by respective State Governments. Initially the States Governments were reluctant to introduce VAT in their respective States. After persuasion by Central Government, all States ultimately agreed to introduce the State Level Sales Tax - VAT at the Conference of Chief Ministers of all States at Delhi in November, 1999. A High Power Committee (termed as "Empowered Committee") consisting of senior representatives of all 29 States was constituted under Chairmanship of Dr. Asim Dasgupta. Introduction of VAT was delayed on several occasions. Finally, it was announced that all States agreed to introduce VAT with effect from 1.4.2005. A "White Paper" was released by the Empowered Committee on 17.1.2005 and the said White Paper is a Policy Document indicating the basic policies of the State Sales Tax VAT. The White Paper circulated by the Empowered Committee of State Finance Ministers furnished the following rationale for the introduction of VAT:
In the existing sales tax structure, there are problems of double taxation of commodities and multiplicity of taxes, resulting in a cascading tax burden. For instance, in the exiting structure, before a commodity is produced, inputs are first taxed, and then after the commodity is produced with input-tax load, output is taxed again. This causes an 13 unfair double taxation with cascading effects. In the VAT, a set-off is given for input tax as well as tax paid on previous purchases. In the prevailing sales tax structure, there is in several States also a multiplicity of taxes, such as turnover tax, surcharge on sales tax, additional surcharge, etc. With introduction of VAT, these other taxes will be abolished. In addition, Central sales tax is also going to be phased out. As a result, overall tax burden will be rationalized, and prices in general will also fall. Moreover, VAT will replace the existing system of inspection by a system of built-in self-
assessment by the dealers and auditing. The tax structure will become simple and more transparent. That will improve tax compliance and also augment revenue growth.
Thus, to repeat, with the introduction of VAT, benefits will be as follows:
a set-off will be given for input tax as well as tax paid on previous purchases other taxes, such as turnover tax, surcharge, additional surcharge, etc., will be abolished.
overall tax burden will be rationalized.
prices will be self-assessment by dealers transparency will increase there will be higher revenue growth
22. There is distinction between the scheme of tax on sale of goods both under the VAT regime and under the Sales Tax Act existing prior to that. Under the Sales Tax Act except a few items, 14 all other goods were taxable at the point of first sale in the State. Therefore tax was levied and collected only from the first seller. Contrary to this, the scheme under the VAT regime is that the tax collected by the first seller is given as Input Tax Credit to the second seller, and the tax paid by the second seller is given as Input Tax Credit to the third seller and ultimately the entire tax is borne by the consumer. In other words, the tax paid on the value addition by a series of dealers is ultimately passed on to the consumer and dealers get reimbursement of the tax paid by them.
23. All the States have implemented VAT and made provisions for Input Tax Credit as per their needs. Under the erstwhile Sales Tax regime, there was multiplicity of taxes like turnover tax, surcharge on sales tax, additional surcharge, etc., but with introduction of VAT, these other taxes have been abolished. As a result, over all tax burden will be rationalised and prices in general will also fall.
24. It is not correct to contend that ITC is not a concession granted under the scheme of Rajasthan VAT Act, 2003. In Godrej and Boyce Mfg. Co. Pvt. Ltd. v. Commissioner of Sales Tax and others, (1992) 3 SCC 624, the Supreme Court dealt with Rule 41 of Bombay Sales Tax Rules which provides for setting off the purchase tax paid by the appellant on the raw material purchased by him within the State of Bombay.
No set-off is given in respect of the tax paid by the appellant on the purchases of the raw material made by him outside the State of Maharashtra evidently for the reason that such tax is paid to 15 such other States. While considering the provisions for grant of setting off under Rule 41 of Bombay Sales Tax Rules and observing that such set-off is a concession or indulgence and that it is open to the Legislature while granting concession to restrict or curtail the extent of entitlement as condition for availing the concession, the Hon'ble Supreme Court held as under:-
6. ..... A manufacturing dealer like the appellant pays purchase tax when he purchases raw material and he is again obliged to pay the sales tax when he sells the goods manufactured by him out of the said raw material. Tax on both the transactions has the inevitable effect of increasing the price to the consumers besides adversely affecting the trade. It is for this reason that the aforesaid Rules enable the manufacturing dealer to claim set-off of the tax paid by him on the purchase of raw materials from out of the tax payable by him on the sale of goods manufactured from out of the said raw material.
...............
9. ......... In law (apart from Rules 41 and 41-A) the appellant has no legal right to claim set-off of the purchase tax paid by him on his purchases within the State from out of the sales tax payable by him on the sale of the goods manufactured by him. It is only by virtue of the said Rules which, as stated above, are conceived mainly in the interest of public that he is entitled to such set-off. It is really a concession and an indulgence. More particularly, where the manufactured goods are not sold within the State of Maharashtra but are despatched to out-State branches and agents and sold there, no sales tax can be or is levied by the State of Maharashtra. The State of Maharashtra gets nothing in respect of such sales 16 effected outside the State. In respect of such sales, the rule-making authority could well have denied the benefit of set-off. But it chose to be generous and has extended the said benefit to such out-State sales as well, subject, however to deduction of one per cent of the sale price of such goods sent out of the State and sold there. We fail to understand how a valid grievance can be made in respect of such deduction when the very extension of the benefit of set-off is itself a boon or a concession. It was open to the rule-making authority to provide for a small abridgement or curtailment while extending a concession. .......
(underlining added)
25. A useful reference may be made to the recent decision of the Division Bench of Bombay High Court in M/s. Mahalaxmi Cotton Ginning Pressing and Oil Industries vs. the State of Maharashtra and Ors. The challenge before the High Court of Bombay was to the constitutional validity of Section 48(5) of the Maharastra Value Added Tax Act, 2002. Section 48 deals with set- off, refund, etc. Though the terminology used in Section 48 is slightly different from the terminology used in Section 18 of the Rajasthan VAT Act, 2003, in effect what is contemplated under Section 48 of the MVAT Act is in effect a credit or a refund of duty paid by a dealer subject to fulfillment of the conditions set out in Section 48. The Bombay High Court analyzed the set-off provision and held that the purpose of set-off is to obviate a cascading effect of the tax burden on the ultimate consumer and this element of legislative policy is to be balanced with the need for 17 securing tax compliance and ensuring against a loss of legitimate revenue owing to Government. After analysing the erstwhile provisions contained in the Bombay Sales Tax Act and the Maharastra Value Added Tax Act, the Division Bench of the Bombay High Court held that a set-off constitutes a concession granted by the legislature and in the absence of set-off, the selling dealer would be liable to pay tax on the sale consideration and there is no independent right to a set-off apart from Section 48.
26. In Mohammed Haji Manachithodi Agencies vs. State of Kerala [2012 (3) KLT (SN) 17], the Division Bench of the Kerala High Court held that the set-off is in the nature of a concession and no dealer has a right to claim input tax credit independent of the provision of Section 11 of the Kerala VAT Act.
27. The availment of ITC is creature of Statute. The concession of ITC is granted by the State Government so that the beneficiaries of the concession are not required to pay the tax or duty which they are otherwise liable to pay under Rajasthan VAT Act. In extending the concession, it is open to the Legislature to impose conditions. Section 18 is one such condition imposed making it mandatory for the registered dealer to claim ITC within 90 days under sub-section (2), from the date of issuance of invoice, and no ITC will be allowed on certain purchases under sub-section (3). The entitlement to claim Input Tax Credit is created by Rajasthan VAT Act and the terms on which Input Tax Credit can be claimed must be strictly observed.
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28. The expression "in the manner as may be prescribed" is used in Section 18. The usage of the expression "in the manner as may be prescribed" occurring, is referable only to the manner prescribed in Section 18. The modalities and the time frame in Section 18, as regards availment or enjoyment of Input Tax Credit, is a pre-condition and not merely procedural.
29. A person claiming benefit of exemption must show that he satisfies the eligibility criteria and for that purpose the provision must be strictly construed. If exemption is available on complying with certain conditions, the conditions have to be mandatorily complied with. In Commissioner of Central Excise v. Hari Chand Gopal, (2011) 1 SCC 236, the Hon'ble Supreme Court held as under:-
29. The law is well settled that a person who claims exemption or concession has to establish that he is entitled to that exemption or concession. A provision providing for an exemption, concession or exception, as the case may be, has to be construed strictly with certain exceptions depending upon the settings on which the provision has been placed in the statute and the object and purpose to be achieved. If exemption is available on complying with certain conditions, the conditions have to be complied with. The mandatory requirements of those conditions must be obeyed or fulfilled exactly, though at times, some latitude can be shown, if there is a failure to comply with some requirements which are directory in nature, the non-compliance of which would not affect the essence or substance of the notification granting exemption.19
The same principle was reiterated in Commissioner of Customs (Preventive), Amritsar v. Malwa Industries Ltd., (2009) 12 SCC
735.
30. In India Agencies (Regd.), Bangalore v. Additional Commissioner of Commercial Taxes, Bangalore, (2005) 2 SCC 129, the Supreme Court emphasised that in case of Inter-State sales, the provision for furnishing original Form-C to claim concessional rate of tax under Section 8(1) of Central Sales Tax Act, 1956 is mandatory and that dealer has to strictly follow the procedure. It was held that to claim concessional rate of tax, provisions have to be strictly construed and that unless there is strict compliance with the provisions of the Statute, the registered dealer is not entitled to the concessional rate of tax.
31. There is no force in the contention that Section 18(3A) would operate as an embargo to the registered dealer in claiming ITC causing prejudice to the registered dealer. The condition stipulated in Section 18 effectuates the scheme of the Act and more in the nature of beneficial to the registered dealer.
32. The benefit of credit under the Act is in the nature of a concession given which could be availed only in the manner and in the circumstances mentioned in Section 18.
33. When there is a challenge to the constitutional validity of the provisions of a Statute, the Court exercising power of judicial review must be conscious of the limitation of judicial intervention, 20 particularly, in matters relating to the legitimacy of the economic or fiscal legislation. While enacting fiscal legislation, the Legislature is entitled to a great deal of latitude. The Court would interfere only where a clear infraction of a constitutional provision is established. The burden is on the person, who attacks the constitutional validity of a statute, to establish clear transgression of constitutional principle.
34. When vires of a Statute is challenged, Courts must make every effort to uphold the constitutional validity of a statute. In Government of Andhra Pradesh v. P. Lakshmi Devi, (2008) 4 SCC 720, the Hon'ble Supreme Court has observed as under:
The Court must, therefore, make every effort to uphold the constitutional validity of a statute, even if that requires giving the statutory provision a strained meaning, or narrower or wider meaning, than what appears on the face of it. It is only when all efforts to do so fail should the court declare a statute to be unconstitutional.
35. Legislative entries in the Seventh Schedule to the Constitution have to be read in a broad and comprehensive sense to include all subsidiary and ancillary matters. An entry, which authorises the imposition of a tax, such as Entry 54 of List II, also authorises an enactment, which prevents the tax evasion or taking excess credit. Regulating the claim of Input Tax Credit is within the powers of legislative competence. The Legislature consciously enacted Section 18(3) and (3A) of the Rajasthan VAT Act, 2003, 21 with an object of incorporating the time frame and conditionalities for availing the ITC. Prescribing such conditions for availing ITC is well within the legislative competence of the State.
36. The Hon'ble Constitution Bench of the Supreme Court in R.K. Garg vs. Union of India (1981) 4 SCC 675], held that there is always a presumption in favour of the constitutionality of a statute and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles. Laws relating to economic activities should be viewed with greater attitude than laws touching civil rights such as freedom of speech, religion etc. The legislature should be allowed some play in the joints and there is no straitjacket formula particularly in case of legislation dealing with economic matters and having regard to the nature of the problem required to be dealt with, greater play in the joins has to be allowed to the legislature. The Court should feel more inclined to give judicial deference to legislative judgment in the field of economic regulation than in other areas, where fundamental human rights are involved. That the Court should remember legislation is directed to practical problems, that the economic mechanism is highly sensitive and complex, there may be crudities and in equities in complicated experimental, economic legislation, but on that account alone it cannot be struck down as invalid. The same principle that in the matter of taxation, the Court permits great latitude to the legislature was reiterated in Mafatlal Industries Limited v. Union of India, (1997) 5 SCC 22 536 .
37. We do not agree with the contention advanced by learned counsel appearing for the petitioner that the word 'subsidize' would mean the price to be subsidized by the government, under any scheme. The word 'subsidize', in sub-section (3A) of Section 18, has not been used in a sense, in which the goods are sold on any concession, exemption, or subsidy, given by the State Government under any scheme. The word 'subsidize' has been defined in 'The New Shorter Oxford English Dictionary', as follows:-
"subsidize.- 1. Pay money to secure the services of (mercenary or foreign troops); provide (a country or leader) with a subsidy to secure military assistance or neutrality. 2. Support (an organization, activity, person, etc.) by grants of money. Also, reduce the cost of (a commodity or service) by subsidy."
38. In 'Concise Oxford English Dictionary', the word 'subsidize' has been defined as follows:-
"subsidize or subsidise. v. support (an organization or activity) financially.> pay part of the cost of producing (something) to reduce its price."
39. In any case, we are not expressing any final opinion, as to whether the goods were sold by the petitioner on subsidy, at a cost lower than the cost of purchase. The question, in this regard, is not a question, which is required to be decided, in considering the constitutional validity of the amendment, which we have upheld. The fact whether the goods were subsidized by lowering the price, or on any incentive given by the Cement Company to the 23 petitioner, is the question of fact to be considered in appeal against the order of assessment, provided such question was argued in the proceedings for assessment, and a ground has been taken in appeal.
40. For the aforesaid reasons, we uphold the constitutional validity of sub-section (3A) of Section 18 of the Rajasthan VAT Act, 2003.
The writ petition is dismissed. We relegate the petitioner to file an appeal against the assessment order, in accordance with the provisions of the Rajasthan VAT Act, 2003.
(VIJAY BISHNOI),J. (SUNIL AMBWANI),ACTING C.J. Skant/-, Proof Reader