Research › Search › Judgment

Allahabad High Court · body

2016 DIGILAW 2763 (ALL)

UFLEX LIMITED v. STATE OF U. P.

2016-08-10

K.J.THAKER, SUDHIR AGARWAL

body2016
JUDGMENT By the Court.—Heard Sri Bharat Ji Agrawal, learned Senior Counsel assisted by Sri Piyush Agrawal and Rahul Agrawal; Sri S.D.Singh, Senior Advocate assisted by Nishant Mishra and Diptiman Singh for the petitioners and Sri C.B. Tripathi, learned Standing Counsel for respondents. 2. Petitioners have filed these writ petitions under Article 226 of Constitution of India challenging vires of Section 42(4) and 42(5) of U.P. Value Added Tax Act, 2008 (hereinafter referred to as the ‘Act, 2008’) as substituted vide U.P. VAT (Amendment) Ordinance, 2008 which came to be substituted by U.P. VAT (Amendment) Act, 2008 i.e. U.P. Act No. 11 of 2008 (hereinafter referred to as the ‘Amendment Act, 2008’). Some of the petitioners have also challenged validity of Rule 70(5) of U.P. Value Added Tax Rules, 2008 (hereinafter referred to as the ‘Rules, 2008’) as stands substituted by U.P. VAT (First Amendment) Rules, 2009. 3. In writ petition No. 1448 of 2009, writ of certiorari for quashing order dated 5.6.2009 passed by Joint Commissioner, Corporate Circle, Commercial Tax, Noida has also been prayed whereby respondent 3 has found that in view of amended provision, petitioner was supposed to deposit admitted tax of January 2008 to March 2008 by 20th October 2008 but it has been deposited late i.e. on 18.12.2008, 24.12.2008 and 31.12.2008. Hence petitioner is liable to pay interest on the aforesaid delayed payment. Respondent No. 3 has held petitioner liable to pay penalty under Section 54(1)(1) at the rate of 20 per cent of tax paid that is Rs. 10,62,929/- in respect to Provincial Tax and Rs. 19,06,785/- in respect to Central Tax. 4. Petition No. 1449 of 2009 (hereinafter referred to as the ‘Second Petition’) also deals with a similar order dated 6.6.2009 of penalty under Section 54(1)(1) for alleged delayed payment of due tax for the month of April 2008 which according to respondent 3 was liable to be deposited up to 20.11.2008 but was actually deposited in December 2008, therefore, in respect to Provincial Tax it has demanded penalty of Rs. 25,35,230/- and in respect of Central Tax amount of penalty imposed is Rs. 33,97,959/-. 5. 25,35,230/- and in respect of Central Tax amount of penalty imposed is Rs. 33,97,959/-. 5. Petition No. 1450 of 2009 (hereinafter referred to as the ‘Third Petition’) relates to similar order dated 6.6.2009 for alleged delayed payment of due tax for the month of May 2008 which was payable by petitioner up to 20.12.2008 but deposited on 31.12.2008 and in January and February 2009 Penalty for Provincial Tax under Section 54(1)(1) has been imposed at Rs. 23,52,870/- and in respect to Central Tax it is Rs. 43,03,582/-. 6. In Writ Petition No. 870 of 2009 notice dated 25.2.2009 issued by Joint Commissioner has been challenged since it has informed petitioner M/s. ACC Ltd. that it has withheld net tax payable for the period January 2008 to June 2008 whereupon it will have to pay interest under Section 33(2) of Act, 2008. 7. In Writ Petition No. 1680 of 2008 Joint Commissioner has issued notice dated 21.7.2008 which has also been challenged whereupon petitioner M/s. H-One India Pvt. Ltd. has been directed to deposit tax of January 2008 to June 2008 by 25.7.2008. 8. Similar notices requiring payment of tax which was not paid under exemption benefit have been challenged in the remaining three writ petitions for different periods upto June 2008. 9. With the agreement of learned counsel for the parties, for the purpose of pleadings, we have taken writ petition No. 1448 of 2009 as the leading case. The facts in brief giving rise to the dispute in question are stated as under: 10. Petitioner M/S Uflex Limited is a Company incorporated under Companies Act, 1956 (hereinafter referred to as the ‘Act, 1956’). It established a new unit pursuant to the representation made by State Government in the notification dated 31.3.1995, allowing certain tax exemptions. Petitioner’s unit was established for manufacture of printed and unprinted multi layer laminated metal and non metal plastic films etc. It has its unit established at Plot No. A-1, Sector-60 and D-1 to 15, 16 Sector 59, New Okhla Industrial Development Authority (hereinafter referred to as the ‘NOIDA’). Since petitioner satisfied all the requirements of tax exemption, it was granted eligibility certificate under Section 4-A of U.P. Trade Tax Act, 1948 (hereinafter referred to as the ‘Act, 1948’) for a period of 15 years or to the extent of Rs. 959,51,76,417/- which ever is earlier. The exemption was granted w.e.f. 16.2.1995. 11. Since petitioner satisfied all the requirements of tax exemption, it was granted eligibility certificate under Section 4-A of U.P. Trade Tax Act, 1948 (hereinafter referred to as the ‘Act, 1948’) for a period of 15 years or to the extent of Rs. 959,51,76,417/- which ever is earlier. The exemption was granted w.e.f. 16.2.1995. 11. In normal circumstances, petitioner was entitled to avail aforesaid exemption up to 15.2.2010 or till the amount of exemption of tax reaches to the extent of Rs. 959,51,76,417/-, which ever is earlier. 12. The facts in all other writ petitions are similar, inasmuch as, all the petitioners have been granted eligibility certificate entitled for exemption and for the period of dispute i.e. from January 2008 to June 2008 it is admitted by respondents that exemption benefit was available to all the petitioners. 13. It so happened that Act, 1948 was repealed and a new Act i.e. Act, 2008 came to be enacted by Provincial Legislation w.e.f. 1.1.2008. Initially U.P. Value Added Tax Ordinance, 2007 was promulgated on December 20th 2007 and it was made effective from 1.1.2008. Section 42 of Ordinance provided that any industrial unit which was availing tax exemption or reduction in rate of tax under Section 4-A of Act, 1948 on 1.1.2008 and to whom facility of exemption was granted, shall continue to avail tax deferment in accordance with Section 42 of Ordinance. Section 42 of Ordinance is reproduced as under: “(1) Notwithstanding anything contained in this Ordinance any industrial unit availing tax exemption or reduction in the rate of tax on the date of commencement of this Ordinance or an industrial unit which is granted the facility of exemption or reduction in the rate of tax under the erstwhile Act shall be treated as a unit availing tax deferment. A unit availing tax deferment under the erstwhile Act on the commencement of this Ordinance or a unit, which is granted benefit of tax deferment under the erstwhile Act, shall continue to avail the said facility subject to such conditions as may be specified. (2) The unit availing the tax deferment as specified in sub-section (1) or a unit availing deferment facility under the erstwhile Act shall be eligible to issue tax invoices and to claim input tax credit subject to provisions of section 13 of this Ordinance. (2) The unit availing the tax deferment as specified in sub-section (1) or a unit availing deferment facility under the erstwhile Act shall be eligible to issue tax invoices and to claim input tax credit subject to provisions of section 13 of this Ordinance. (3) The period of eligibility, the method of debiting eligibility amount, the repayment and any other benefits for all units availing tax deferment shall be in such manner as may be prescribed.” (Emphasis added) 14. In exercise of powers under Section 79 read with Section 74, State Government framed rules i.e. Rules, 2008 and rule 70 thereof provided that a dealer holding eligibility certificate granted before commencement of Ordinance (later Act, 2008) shall be entitled for tax deferment for the extent and period mentioned in eligibility certificate, for balance amount and for the remaining period, as the case may be. 15. Subsequently, State Legislature in its wisdom decided to allow tax exemption to eligible unit by way of refund of tax in the next month after the same is deposited in preceding month alongwith return. As a consequence thereof U.P. Value Added Tax (Amendment) Ordinance, 2008 (U.P. Ordinance No. 3 of 2008) (hereinafter referred to as the ‘Amendment Ordinance, 2008’) was enacted vide notification dated 16.7.2008 by which Section 42 was substituted w.e.f. 1.1.2008. Relevant Section 42 (4), (5), (6) and (7) are reproduced as under: “42—Treatment of industrial units availing exemption or reduction in the rate of tax under erstwhile Act— .............. Relevant Section 42 (4), (5), (6) and (7) are reproduced as under: “42—Treatment of industrial units availing exemption or reduction in the rate of tax under erstwhile Act— .............. (4) The industrial unit availing benefit of exemption from, or reduction in the rate of, tax on the turnover of sales before the date of commencement of this Act or an industrial unit which is granted the facility of exemption from, or reduction in the rate of, tax on or after such commencement, on the turnover of sales under the erstwhile Act or the Central Sales Tax Act, 1956, shall be entitled for exemption by way of refund of net tax paid alongwith the return of tax period in prescribed manner and on fulfilling the conditions that,- (a) the unit shall hold valid registration certificate issued under this Act or under the Central Sales Tax Act, 1956 (b) the unit shall have a valid Certificate of Entitlement issued by the Commissioner, (c) the amount of refund shall not be more than an amount equal to net tax paid for relevant tax period, (d) the net tax payable has been deposited alongwith return of tax period in prescribed manner, (e) the refund shall be subject to the provisions of Section 40 except that the amount shall not be adjusted against the admitted tax liability, (f) the facility of refund shall cease on the day when the amount or the period mentioned in the Certificate of Entitlement, whichever is earlier, (g) the tax payable on the turnover of sales of goods mentioned in the Certificate of Entitlement and which is manufactured in the industrial unit shall be deducted from the total amount mentioned or described in the Certificate of Entitlement, (h) the industrial unit has not misused the facility of exemption from or reduction in the rate of tax in any manner. Explanation : The expression net amount of tax payable means— (i) the differential amount of tax payable under this Act on the sale of taxable goods other than non-vat goods, manufactured in the unit and input tax credit available to the extent or proportionate to taxable goods other than non-vat goods sold; in case of an industrial unit availing facility of exemption from tax under the erstwhile Act and the Central Sales Tax Act, 1956. (ii) the partial amount of net tax computed under clause (i) above, in proportion to the rate of tax available for exemption to the rate of tax payable under the erstwhile Act, in case of an industrial unit availing benefit of reduction in the rate of tax (5) (a) The amount found refundable shall be refunded within a period of 30 days from the last date of the month in which dealer files the return of relevant tax period alongwith the proof of deposit of net tax payable. (b) The amount of refund shall be made in such manner as may be prescribed. (c) The industrial unit failing to deposit the net tax admittedly payable within prescribed time and in prescribed manner or deposits it after due date, the amount of interest leviable and penalty imposed if any, shall be adjusted and only the balance amount shall be refunded. (6) (a) The total amount of the refund shall be limited to the extent of the differential amount of the total eligible amount available for exemption or reduction in the rate of tax and the amount availed in exemption or reduction in the rate of tax before the commencement of this Act. (b) The total period of the refund shall not exceed difference of the total period available for exemption or reduction in the rate of tax and the period exhausted before the commencement of this Act. (7) If any amount is found refundable and is not refunded within the prescribed time, the industrial unit shall be entitled to simple interest at the rate of twelve percent per annum from the last date prescribed for refund. The amount of interest shall be refunded in such manner as may be prescribed.” (Emphasis added) 16. The aforesaid amendment of Section 42 by substitution was given effect from 1.1.2008. Amended Section 42(1) provided that no industrial unit availing benefit of exemption or of reduction in the rate of tax or granted benefit of tax from exemption or reduction in the rate of tax under Act, 1948 and Central Sales Tax Act, 1956 shall be permitted to avail benefit of exemption or reduction in the rate of tax on the turn over of sale and purchase or both, as the case may be, on or after the commencement of Act, 2008. Sub-section (3) however, provided such units availing benefit of exemption etc. Sub-section (3) however, provided such units availing benefit of exemption etc. to apply Government for issue of a certificate for entitlement in prescribed form and in prescribed manner. 17. Petitioners filed applications for grant of certificate of entitlement as contemplated under Section 42(3) which was granted by Commissioner, Commercial Taxes, U.P. (hereinafter referred to as the ‘CCT’). The certificate of entitlement was granted to all the petitioners on different dates but for the purpose of record, it may be stated that petitioner M/s. Uflex Ltd. CCT was granted certificate of entitlement dated 7.11.2008 wherein period of entitlement for exemption mentioned is 1.1.2008 to 15.2.2010. Certificate further mention amount of entitlement of refund as Rs. 721,08,88,090.94. 18. For the purpose of availing entitlement for exemption under Act, 2008 as amended by Amendment Ordinance, 2008, a unit would have to deposit net tax payable alongwith return of tax period in prescribed manner. Sub-section (4) of Section 42 provided that thereafter unit would be entitled for exemption by way of refund of net tax paid alongwith return of tax period. 19. The manner of submission of tax return is contained in Section 24 of Act, 2008 and relevant part of Section 24 reads as under: “24. Sub-section (4) of Section 42 provided that thereafter unit would be entitled for exemption by way of refund of net tax paid alongwith return of tax period. 19. The manner of submission of tax return is contained in Section 24 of Act, 2008 and relevant part of Section 24 reads as under: “24. Submission of tax returns—(1)Every taxable dealer including a dealer from whom any amount of tax has been deducted at source under Section 34, shall, for such tax period and within such time, as may be prescribed, submit tax return of his self assessed turnover and tax, in such form and verified in such manner as may be prescribed, but the assessing authority may in its discretion and for reasons to be recorded, extend the date for submission of the return by any dealer or class of dealers: Provided that every taxable dealer, including a dealer who claims input tax credit, shall also submit alongwith tax return a list of- (i) purchases of goods made from registered dealer in respect of which the dealer has received tax invoices; (ii) sales of goods made to registered dealers in respect of which the dealer has issued tax invoices; and (iii) sale made to dealers to whom sale invoices have been issued in the names of such dealers, containing such particulars as may be prescribed: (2) Before submitting the tax return under sub-section (1), the dealer shall, in the manner prescribed, deposit the net amount of tax payable shown in such tax return alongwith amount, if any, realized in excess of amount of tax due under this Act from purchasers of goods during the tax period. (3) Every person or dealer to whom provisions of Section 34 apply, shall, in respect of dealers from whom any amount of tax has been deducted, submit such statement within such time as may be prescribed. (4) Where as a consequence of the date for the submission of return being extended under sub-section (1) on the application of the dealer, the deposit of tax under sub-section (2) is deferred, there shall be payable simple interest at the rate of one and quarter percent per men sum on such deposit for the period commencing on the last date prescribed for submission of the tax return and ending with the date of deposit of such amount. (5) If any dealer discovers any omission or other error in any tax return submitted by him, he may, at any time before the expiry of the time prescribed for submitting the next tax return, submit a revised tax return. If the revised tax return shows a greater amount of tax to be due than was shown in the original return, the dealer shall also deposit separately the difference of tax due and the interest payable under sub-section (4) as if the time for submitting the original tax return had been extended on the application of the dealer to the date of submission of the revised tax return. If, the revised tax return shows lesser amount of tax to be due than was shown in the original tax return the dealer may adjust the excess amount towards the tax due for the subsequent tax periods. .................” 20. Under Rule 45 return has to be filed for each calendar month of assessment year and every month shall be treated as tax period. The relevant part of Rule 45 reads as under : Rule 45. Submission of returns—(1) In cases of dealers mentioned in the following clauses, tax periods referred to in Section 24, shall be as given in each such clause : (a) in case of a dealer who becomes liable for payment of tax for the first time in any assessment year, tax periods shall be as under: (i) first tax period for such assessment year shall commence on the date on which the dealer has become liable for payment of tax and shall end with the last day of the calendar month in which the dealer has become liable for payment of tax; (ii) after expiry of first tax period, each calendar month, of the assessment year in which the dealer has become liable for payment of tax, shall be a tax period; ...................... (2) Except as provided in sub rule (10) of this rule, every dealer liable to pay tax, shall, before expiry of a period of twenty days, commencing on the day following the day on which a tax period has expired, submit to his assessing authority tax return for each tax period in Form XXIV alongwith detailed information, according to code numbers notified by the State Government from time to time, in respect of each category of goods in which he carries on business: Provided that a dealer, whose aggregate of turnover, referred to in sub-rule (1), for any assessment year, is likely to exceed twenty-five lakh rupees or whose such aggregate for the assessment year or part of the assessment year, as the case may be, immediately preceding such assessment year, has exceeded twenty-five lakh rupees, shall, before expiry of a period of twenty days after the last day of each calendar month of a quarter referred to in clause (b) of subrule (1), deposit amount of net tax payable by him and Treasury Challan of such deposit shall be submitted to the assessing authority and shall submit to his assessing authority tax return within twenty days after expiry of the quarter alongwith proof of deposit of net amount of tax payable by him. (4) Before submitting the return under sub-rule (2) for a tax period, the dealer shall in the manner laid down in these rules, deposit the net amount of tax payable by him under the Act as disclosed in the return and shall submit to the assessing authority, alongwith the return a copy of the treasury challan in Form I: Provided that where a Government department wants to deposit the tax by book transfer, such department shall, before submitting such return, prepare a bill, in triplicate, for the net amount of tax payable, endorse it to the assessing authority in accordance with the financial rules on the subject and two copies thereof with such return. One of the copies shall be retained by the assessing authority and the other copy shall be sent to the Accountant General, Uttar Pradesh for crediting the amount to the account of the Commercial Tax Department. One of the copies shall be retained by the assessing authority and the other copy shall be sent to the Accountant General, Uttar Pradesh for crediting the amount to the account of the Commercial Tax Department. Provided further that the net tax payable upto 20th March for the tax period ending on 31st March of an assessment year, shall be deposited and Treasury Challan of such deposit shall be submitted to the assessing authority upto 25th March of that year. (5) The amount deducted under sub-section (1) or sub-section (7) of Section 34, shall be deposited into the Government Treasury by the person making such deduction before the expiry of period of twenty days commencing on the day following the last day of the month in which deduction is made. (6) Every person, responsible for making tax deduction under any provision of Section 34, shall, for each quarter ending with thirtieth June, thirtieth September, thirty-first December and thirty-first of March of each assessment year, submit the statement in Form XXV containing following particulars: ................... (8) Dealers having more than one place of business shall include the turnover of all branches of his business in Uttar Pradesh in the return submitted for the principal place of business and shall send intimation thereof to each Assessing Authority concerned. (9) Upon expiry of the assessment year, every person liable to deduct amount of tax at source under provisions of Section 34, shall submit to the Assessing Authority having jurisdiction over the principal place of business of such person, a statement in Form XXVII on or before October 31, for the preceding assessment year, Provided that the assessing authority may, on request of the person concerned and for adequate reasons to be recorded in writing, extend the time for filing such statement for a period not exceeding ninety days. ............... 21. Thus, even after grant of certificate of entitlement, an industry availing benefit of tax exemption would have got benefit only when first it has to deposit net tax alongwith return and thereafter such deposited tax shall be refunded. 22. Amendment Ordinance, 2008 came to be substituted by U.P. Act No. 19 of 2008 published on 29.8.2008 and came into force w.e.f. 1.1.2008. 23. 22. Amendment Ordinance, 2008 came to be substituted by U.P. Act No. 19 of 2008 published on 29.8.2008 and came into force w.e.f. 1.1.2008. 23. So far as Section 42 is concerned, it is in this backdrop, dispute which has arisen relates to the period of January 2008 to June 2008 for which time to file return and deposit of tax had already expired and it was not practically feasible to comply with the requirements of Section 42 as amended. 24. Thereafter, Rule 70 was also amended by Amendment Rules, 2009 vide notification dated 30.1.2009 which came into force from the date of publication in gazette. Rule 70 as it existed earlier and stood after amendment by notification dated 30.1.2009 is reproduced as under: Column-I Existing rule Column-II Rule as hereby substituted (1) Subject to other provisions of this rule, dealers holding eligibility certificate, granted before, on or after the date of commencement of the Act, shall be eligible for tax deferment , referred to in Section 42 to the extent and for the period, whichever expires earlier, as under: (a)(i) In case of an industrial unit referred to in first paragraph of sub-section (1), to the extent of the difference of the amount of exemption from tax mentioned in the eligibility certificate and the aggregate of amounts of exemption from payment of tax that has been availed, either under the Uttar Pradesh Trade Tax Act, 1948 or under the Central Sales Tax Act, 1956, before the date of the commencement of the Act; and (ii) In case of an industrial unit referred to in second paragraph of sub-section (1) of Section 42 of the Act, to the extent of balance amount as on the date of commencement of the Act liable for deferment. (b) For the remaining period of exemption from tax as on the date of the commencement of this Act, out of the maximum period mentioned in the eligibility certificate. (2) Facility of deferment shall be available in respect of net amount of tax payable under the Act. (b) For the remaining period of exemption from tax as on the date of the commencement of this Act, out of the maximum period mentioned in the eligibility certificate. (2) Facility of deferment shall be available in respect of net amount of tax payable under the Act. Explanation : Net amount of tax payable means— (a) In case of an industrial unit availing facility of exemption under the Uttar Pradesh Trade Tax Act, 1948 and Central Sales Tax Act, 1956 shall be the differential amount of tax payable under the Act on the sale of taxable goods other than non-vat goods, manufactured in the unit and input tax credit available to the extent or proportionate to taxable goods other than non-vat goods sold. (b) In case of an industrial unit availing reduction in the rate of tax, the net tax payable will be the partial amount of net tax computed as described in sub-clause (a) of this explanation in proportion to the rate of tax available for exemption to the rate of tax payable under the Uttar Pradesh Trade Tax Act, 1948 as if the Uttar Pradesh Trade Tax Act, 1948 had not been repealed. (3) Facility of tax deferment shall be available under the Uttar Pradesh Value Added Tax Act, 2008 and the Central Sales Tax Act, 1956. (4) Aggregate of amounts of tax, payment of which is deferred for each assessment year under the Uttar Pradesh Value Added Tax Act, 2008 and the Central Sales Tax Act, 1956, shall be debited against the differential amount referred to in sub-clause (i) or sub-clause (ii) of clause(a) of sub-rule (1), as may be applicable. (5) Payment of tax, for which facility of deferment is available, for any assessment year, shall be deferred for a period of five years and such period of five years shall commence on the date immediately following the last date prescribed for submission of tax return of the last tax period of such assessment year. (6) The dealer availing the facility of deferment of net tax payable under the Act shall file statement of computation of net tax payable, total amount of eligibility, amount availed up to last month, amount availed in the month and balance at the end of the month, alongwith the return of the tax period. (6) The dealer availing the facility of deferment of net tax payable under the Act shall file statement of computation of net tax payable, total amount of eligibility, amount availed up to last month, amount availed in the month and balance at the end of the month, alongwith the return of the tax period. (1) Industrial unit availing or granted the facility of exemption or reduction in the rate of tax under erstwhile Act, may apply to the Commissioner for issue of certificate of entitlement duly filled and signed by the person authorized under sub-rule (6) of rule 32, in form XLV up to 31st August 2008 or within thirty days from the date of publication of this rule whichever is later. (2) A copy of the application alongwith enclosures, if any, shall be served to the assessing authority and certified copy of such receipt shall be annexed to the application. (3) The assessing authority shall, after examining relevant record and after giving the dealer a reasonable opportunity of being heard if necessary, send to the Commissioner a report in form XLVI within a period of thirty days from the date of receipt of the application. (4) If the Commissioner is satisfied that information furnished is correct and complete and report of the assessing authority confirms the particulars of the application, he shall issue the certificate of entitlement in form XLVII within sixty days of the receipt of the application. (5) If the net tax payable for tax periods commencing on January2008 and ending with 30th June 2008,has not been deposited alongwith return of the tax period the same shall be deposited in following time schedule : S.N. Tax period ending on Date up to which net tax has to be deposited 1. 31.3.2008 20.8.2008 2. 29.2.2008 20.9.2008 3. 31.3.2008 20.10.2008 4. 30.4.2008 20.11.2008 5. 31.5.2008 20.12.2008 6. 30.6.2008 31.7.2008 (6) The net tax payable for the tax period after the tax period ending on 30th June 2008 shall be deposited alongwith return of the relevant tax period. 31.3.2008 20.8.2008 2. 29.2.2008 20.9.2008 3. 31.3.2008 20.10.2008 4. 30.4.2008 20.11.2008 5. 31.5.2008 20.12.2008 6. 30.6.2008 31.7.2008 (6) The net tax payable for the tax period after the tax period ending on 30th June 2008 shall be deposited alongwith return of the relevant tax period. (7) If an industrial unit fails to deposit the net tax payable for the period and within the time prescribed under sub-rule (5) of this rule, the unit shall be liable to pay the interest provided under sub-section (2) of Section 33 of the Act and penalty, if any, in accordance with the provisions of Section 54 of the Act (8) The amount of refund or interest if any, under Section 42 of the Act shall be made in accordance with the provisions of the rules 50 and 51. (9) Aggregate of amounts of tax payable under the Act and the Central Sales Tax Act, 1956, shall be debited from the amount mentioned in the certificate of entitlement. (10) Payment of tax, for which facility of deferment is available, for any assessment year, shall be deferred for a period of five years and such period of five years shall commence on the date immediately following the last date prescribed for submission of tax return of the last tax period of such assessment year. (11) The dealer availing the facility of deferment or refund of net tax payable under the Act shall file statement of computation of net tax payable, total amount of eligibility, amount availed up to last month, amount availed in the month and balance at the end of the month, alongwith the return of the tax period in form XLVIII (Emphasis added) 25. This substituted Rule 70(5) though came into force on 30.1.2009 but requires industrial units availing exemption/concession to deposit tax payable during the period of January 2008 to May 2008 by 20.8.2008 to 20.12.2008, but for the period of June 2008 by 31st July 2008. Sub Rule 7 further provides, if an industrial unit failed to pay tax as prescribed under sub Rule (5), unit shall be liable to pay interest under Section 33(2) and penalty under Section 54. 26. Sub Rule 7 further provides, if an industrial unit failed to pay tax as prescribed under sub Rule (5), unit shall be liable to pay interest under Section 33(2) and penalty under Section 54. 26. The short and crucial issue raised in these writ petitions is that compliance of deposit of net tax to which petitioners were entitled for exemption with regard to period of January 2008 to June 2008 was practically impossible for the reason that Section 42 for the first time making such different procedure came to be enacted on 16.7.2008 and relevant rule came to be enacted on 30.1.2009 by which date time for deposit of tax alongwith return had already elapsed. The submission is that petitioners and other similarly placed industries could have never imagined or dreamt that in future legislature will change scheme for entitlement of tax benefit for remaining period/amount in a totally different manner i.e. first amount of tax alongwith return would be deposited and thereafter refund would be claimed. Before enactment of Ordinance of 16.7.2008, petitioners had strictly and honestly followed requirement of statute as it was. Even the requirement of amended provision is not objectionable to petitioners but impossibility in the manner of compliance required by legislature renders the said provisions illogical, irrational and arbitrary. It is also contended that in case the provisions are not irrational or arbitrary yet for observance and compliance a reasonable opportunity has to be given to concerned industries like petitioners and therefore, the aforesaid provisions need to be read down in a manner so that intention of legislature become practicable and is capable of compliance. A provision has to be read as to make entire things workable and functional, compliance for the period, already expired before actual amendment is just improbable and impossible. 27. The learned Standing Counsel when confronted with the situation could not dispute that with respect to period of January 2008 to June 2008 apparently an industry could not have complied with provisions since returns had already been filed and time to file return and deposit tax as per amended statute has already expired. 27. The learned Standing Counsel when confronted with the situation could not dispute that with respect to period of January 2008 to June 2008 apparently an industry could not have complied with provisions since returns had already been filed and time to file return and deposit tax as per amended statute has already expired. He also could not dispute that even time frame mentioned in sub Rule (5) of Rule 70 having already expired, no one could have complied the same and necessarily all the industries availing tax exemption would attract a liability of interest and penalty under Rule 70(6) and (7) though have not committed anything wrong or illegal. He however, submitted that provision by itself is not irrational and arbitrary but can always be read in a manner so as to render it functional, practicable and compliable. 28. We have heard learned counsel for the parties, perused the authorities and relevant statutes. 29. The amended scheme of deposit of net amount of tax to which petitioners industries were entitled for exemption alongwith return per-se is neither illegal nor arbitrary nor violates any constitutional provision nor the legislature lacks competence in changing its policy and amending statute. Therefore, Section 42(4) and (5) as enacted by amendment Act, 2008 cannot be said to be ultra vires. We find no force in the submission that Section 42(4) and (5) as amended by Amendment Act, 2008 are bad for any reason whatsoever, and have no hesitation in us holding the same. However, the question is whether compliance of Section 42(4)(d) of Act, 2008 as amended by Amendment Act, 2008 read with Rule 70(5) as amended by U.P. VAT (First Amendment) Rules, 2009 requires petitioners or any person similarly situated, to do something which is practicably possible. A provision compliance whereof is improbable, irrational, in that view of the matter is Rule 70(5) of U.P. VAT (First Amendment) Rules, 2009 is invalid, irrational and unreasonable. 30. Section 42(4)(d) as amended by Amendment Act, 2008 seeks compliance in the “prescribed manner”. Under existing Act, 2008, and Rules 2008, there was no provision with regard to deposit of tax, by industrial units having certificate of entitlement for exemption of tax alongwith return, therefore, no procedure or scheme was prescribed till Rule 70 was amended by U.P. VAT (First Amendment) Rules, 2009. Under existing Act, 2008, and Rules 2008, there was no provision with regard to deposit of tax, by industrial units having certificate of entitlement for exemption of tax alongwith return, therefore, no procedure or scheme was prescribed till Rule 70 was amended by U.P. VAT (First Amendment) Rules, 2009. The amended Rule 70 provides the manner in which net tax payable alongwith return shall be paid and thus for the first time requirement of Section 42(4)(d) as amended by Amendment Act, 2008 satisfied ‘prescribed manner’ only on 30.1.2009 and not before that. 31. Now, rule framing authority in its wisdom requires deposit of tax and filing of return for January 2008 by September 2008, March 2008 by October 2008, April 2008 by November 2008, May 2008 by December 2008 and for the month of June 2008 since amendment by Ordinance was made by notification dated 16.7.2008, therefore, time was prescribed upto 31.7.2008. Unfortunately, rule framing authority completely missed and erred in failing to appreciate that the period by which compliance under amended Rule 70(5) was required, has long expired before actual framing of Rule 70(5) vide U.P. Value Added Tax (First Amendment) Rules, 2009 which came to be published by notification dated 30.1.2009. 32. Even, learned Standing Counsel for respondents could not explain any logic or rational for mentioning such period for compliance under amended Rule 70(5) which has already expired. There is a well accepted principle in law that law does not require anyone to perform something which is impossible or improbable or cannot be performed by any person of ordinary prudence in the given facts and circumstances and situation. The Principal Legislature require compliance of deposit of tax by amended Section 42 of Act, 2008 vide amendment Act, 2008 in the manner prescribed. Delegated legislation acted and complied the requirement of “prescribed manner” by framing Rules laying down as to how and when tax shall be deposited and return shall be filed as required by the amended Section 42(4)(d). Rule framing authorities, however, sit tight and idle for more than 5-6 months and only on 30.1.2009 framed Rules providing time schedule. But this prescribed period has already expired long back. 33. Can such a provision be held rational and valid? Our obvious emphatic answer is ‘No’. Rule framing authorities, however, sit tight and idle for more than 5-6 months and only on 30.1.2009 framed Rules providing time schedule. But this prescribed period has already expired long back. 33. Can such a provision be held rational and valid? Our obvious emphatic answer is ‘No’. Since neither such provision is capable of read down in such a manner so as to render it rational such a provision which require compliance just impossible, valid law. There is a well known maxim, “Lex Non Cogit ad impossibilia” The law does not compel a man to do that which he cannot possibly perform. The other similarly recognized legal maxims are “Impotentia Excusat Legim” and “neon tenatur ad impossibilia.” Where the law creates a duty, and the party is disable to perform it without any default in him and has no remedy over there, the law will excuse him. 34. The aforesaid doctrines have been accepted, approved and applied by Courts, in India also, in Cochin State Power and Light Corporation Ltd. v. State of Kerala, AIR 1965 SC 1688 , Court followed the aforesaid maxims and held: “The performance of this impossible duty must be excused in accordance with the maxim, lex non cogit ad impossibilia (the law does not compel the doing of impossibilities), and sub-section (4) of Section 6 must be construed as not being applicable to a case where compliance with it is impossible”. (para 8) 35. A Constitution Bench of seven Hon’ble Judges in Re: Presential Pool, 1974 (2) SCC 33 : ( AIR 1974 SC 1682 ) held as under: “The maxim of law impotentia excusat legam is intimately connected with another maxim of law lex non cogit and impossibilia. Impotenia excusat legam is that when there is a necessary or invincible disability to perform the mandatory part of the law that impotentia excuses. The law does not compel one to do that which one cannot possibly perform. “Where that law creates a duty or charge, and the party is disabled to perform it, without any default in him, and has no remedy over it, there the law will in general excuse him.” Therefore, when it appears that the performance of the formalities prescribed by a statute has been rendered impossible by circumstances over which the persons interested had no control, like the act of God, the circumstances will be taken as a valid excuse. Where the act of God prevents the compliance of the words of a statute, the statutory provision is not denuded of its mandatory character because of supervening impossibility caused by the act of God. (See Broom’s Legal Maxim 10th Edition at PP. 162-163 and Craies on Statute Law 6th Ed. At p. 268)” (para 15) 36. In State of Rajasthan v. Shamsher Singh, AIR 1985 SC 1082 , Court, while considering a case under Notional Security Act, applied the aforesaid doctrine and held as under: “Mr. Jethmalani placed before us a passage from broom’s Legal Maxims (p. 162), 10th Edn. Where the doctrine of impossibility of performance (lex non cogitad impossibilia) has been discussed. It has been indicated therein that however mandatory the provision may be where it is impossible of compliance that would be a sufficient excuse for non-compliance, particularly when it is a question of the time factor, keeping the attendant circumstances of this case in view, we find it difficult to hold that the time taken by the State Government can amount to withholding of the representation which resulted in non-compliance of S. 10 of the Act so as to vitiate the detention.” (para 10) 37. Rajesh D. Darbar v. Narsing Rao Krishnaji Kulkarni and others, (2003) 7 SCC 219 , it was held: “The other maxim is, lex non cogit an impossibilia i.e. law does not compel a man to do that what he cannot possibly perform. The applicability of the abovesaid maxim has been approved by this Court in Raj Kumar Dey v. Tarapada Dey : AIR 1987 SC 2195 Gursharan Singh v. New Delhi Municipal Committee : AIR 1996 SC 1175 and Mohd. Gazi v. State of M.P. : AIR 2000 SC 1806 (para 6) 38. This was followed again in Ram Chandra Singh v. Sabitri Devi and others, 2003 (8) SCC 319 (para 41). In the case of Industrial Financial Corporation of India Ltd. v. Cannanore Spinning & Waving Mills Ltd., AIR 2002 SC 1841 , Court held: “The Latin Maxim referred to in the English judgment “lex non cogit ad impossibilia” also expressed as “impotentia excusat legem” in common English acceptation means, the law does not compel a man to do that which he cannot possibly perform. There ought a always thus to be an invincible disability to perform the obligation and the same is akin to the Roman Maxim. There ought a always thus to be an invincible disability to perform the obligation and the same is akin to the Roman Maxim. “nemo tenetur ad impossibilia”. (para 30) 39. A Constitutional Bench of Five Hon’ble Judges also considered the aforesaid maxim in Special Reference No. 1 of 2002 reported in AIR 2003 SC 1987 and held: “The maxim of law impotentia excusat legem is intimately connected with another maxim of law lex non cogit ad impossibilia. Impotentia excusat legem is that when there is a necessary or invincible disability to perform the mandatory party of the law that impotentia excuses. The law does not compel one to do that which one cannot possibly perform. “Where the law creates a duty or charge, and the party is disabled to perform it, without any default in him, and has no remedy over it, there the law will in general excuse him”. Therefore, when it appears that the performance of the formalities prescribed by a statute has been rendered impossible by circumstances over which the persons interested had no control, like the act of God, the circumstances will be taken as a valid excuse. Where the act of God prevents the compliance of the words of a statute, the statutory provision is not denuded of its mandatory character because of supervening impossibility caused by the act of God. (See Broom’s Legal Maxims 10th Edition at pp. 1962-63 and Craies on Statute Law 6th Ed. p. 268.) These aspects were highlighted by this Court in Special Reference 1 of 1974 ( 1975 (1) SCR 504 ). Situations may be created by interested persons to see that elections do not take place and the caretaker Government continue in office. This certainly would be against the scheme of the Constitution and the basic structure to that extent shall be corroded.” (para 154) 40. In Board of Control of Cricket in India v. Netaji Cricket Club, AIR 2005 SC 592 , Court has again followed and approved the aforesaid maxim by referring to its earlier judgment in Rajesh D. Darbar, and said: “The other maxim is, lex non cogit ad impossibilia, i.e. the law does not compel a man to do that what he cannot possibly perform........” (para 107) 41. In another judgment of Apex Court in HUDA and another v. Dr. In another judgment of Apex Court in HUDA and another v. Dr. Babeswar Kanhar, 2005 (1) SCC 191 : AIR 2005 SC 1491 , referring to certain English decisions, Court observed: “Apart from the said section and various provisions in various other Acts, there is the general principle that party prevented from doing an act by some circumstances beyond his control, can do so at the first subsequent opportunity (see Sambasiva Chari v. Ramasami Reddi). The underlying object of the principle is to enable a person to do what he could have done on a holiday, on the next working day. Where, therefore, a period is prescribed for the performance of an act in a Court or office, and that period expires on a holiday, then the act should be considered to have been done within that period if it is done on the next day on which the Court or office is open. The reason is that law does not compel the performance of an impossibility (see Hossein Ally v. Donezelle 2.) Every consideration of Justice and expediency would require that the accepted principle which underlies Section 10 of the General Clauses Act should be applied in cases where it does not otherwise in terms apply. The principles underlying are lex non cogit ad impossibilia (the law does not compel a man to do the impossible) and actus curiae neminem gravabit (the act of Court shall prejudice no man)” (para 5) 42. In Maharashtra State Board of Secondary Education v. Paritiosh Bhupesh Kumar Seth, AIR 1984 SC 1543 , Court, in para 29 of judgment, observed as under : “It will be wholly wrong for the Court to make a pedantic and purely idealistic approach to the problems of this nature, isolated from the actual realities and gaoss root problems involved in the workign of the system and unmindful of the consequences which would emanate if a purely idealistic view as opposed to a pragmatic one were to be propounded. It is equally important that the Court should also, as far as possible, avoid any decision or interpretation of a statutory provision, rule or by law which would bring about the result of rendering the system uunworkable in practice”. 43. We may add that the aforesaid principle has been followed by Division Bench of this Court in Inter College, Kasmali, 2006 (2) ALJ 601. 44. 43. We may add that the aforesaid principle has been followed by Division Bench of this Court in Inter College, Kasmali, 2006 (2) ALJ 601. 44. When issues of a statute is challenged, Court presumes constitutionality unless shown otherwise but presumption cannot go to uphold a provision whereof compliance is impossible by any person and still that statute hold one guilty and further liable of penalty and other dues for non compliance. 45. In Maharashtra State Board of Secondary and Higher Education (supra) Court in para 21, 22 and 28 said: “21. If of instance, they were found to be partial and unequal in their operation as between different classes; if they were manifestly unjust; if they disclosed bad faith; if they involved such oppressive or gratuitous interference with the rights of those subject to them as could find no justification in the minds of reasonable men, the Court might well say parliament never intended to given authority to make such rules; they are unreasonable and ultra vires. 22. A law has to be adjudged for its constitutionality by the generality of cases it covers not by the freaks and exceptions it martyre. 28. The test of reasonableness is not applied in vaccum but in the context of life’s realities.” (Emphasis added) 46. The above doctrine and also exposition of law that a statute cannot require performance of something which is impossible and places a burden upon a person for no fault of him has also been considered in M/s. D.C.M. Ltd. and others v. State of U.P. and others, Writ C No. 9513 of 1989. 47. In view of above exposition of law, when we look into the amended Rule 70(5) of Rule, 2008 as substituted by U.P. VAT (First Amendment) Rules, 2009, we find that rule framing authority, while framing a rule and enforcing the same on 30.1.2009, has required concerned units to deposit tax and submit return between July 2008 to December 2008 which is ex facie irrational, unreasonable and improbable. When information by way of framing Rules is being given on 30.1.2009, no one can be expected to comply in retrospect i.e. during July 2008 to December 2008. In our view, Sub-rule (5) of Rule 70 as substituted by U.P. VAT (First Amendment) Rules, 2009 in Rules, 2008 is apparently irrational, arbitrary, illegal and unreasonable, hence violative of Article 14 of the Constitution. In our view, Sub-rule (5) of Rule 70 as substituted by U.P. VAT (First Amendment) Rules, 2009 in Rules, 2008 is apparently irrational, arbitrary, illegal and unreasonable, hence violative of Article 14 of the Constitution. We have no hesitation in striking down the same, being wholly illegal, absurd, unfair and unreasonable, thus, violative of Article 14 of the Constitution. 48. Consequently, sub-rules (7) to (11) of Rule 70 in respect of net tax of January 2008 to June 2008 would render inoperative for the reason that they would come into operation only when a valid sub-Rule (5) is in existence but when we strike down sub-rule (5), consequences provided under sub-rule (7) and ..... of Rule 70 also cannot be complied. Therefore, the same would become inoperative till a valid provision providing a rational procedure for compliance under Section 42(4)(d) is made by competent rule framing authority. 49. In view of above discussion, impugned notices and orders in all these writ petitions, issued by taxing authorities, are also hereby quashed. 50. Since dispute relates to deposit of tax from January 2008 to June 2008 and sufficient period had already elapsed since then, in order to mitigate and avoid any further scope of litigation and in the interest of both the parties, we provide and permit petitioners to deposit requisite amount of tax alongwith return within two months from today,if not already deposited, and if the said direction is complied with, respondent tax authorities shall treat said deposit and submission of return as due compliance of requirement of Section 42(4)(d) of Act, 2008 as amended by Amendment Act, 2008 and proceed accordingly for the purpose of refund of tax as provided under amended Section 42(5). If deposit has already been made, the same shall be treated as a deposit of tax in time then respondents shall proceed accordingly. 51. In case the direction as above, are not complied, with after two months from today, petitioners shall be deemed guilty of non compliance of deposit of tax and filing of return under Section 42(4) and then on all the relevant provisions including Rule 42(7) to (11) shall become operative with due consequences. 52. All writ petitions are partly allowed in the manner aforesaid. However, there shall be no order as to cost.