Law:

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Section 280ZE of the Income-tax act, 1961, read with para 5(3) of the tax credit certificate (excise duty on excess clearance) scheme, 1965 - Tax credit certificate - Bar of limitation for claiming benefit - Whether para 5(3) of the tax credit certificate (excise duty on excess clearance) scheme, prescribing time limit for claiming benefit under chapter xxii-B is ultra vires - Held, yes Facts The petitioner, a manufacturer of paper, submitted its applications for the grant of tax credit certificates under section 280ZD for the financial years 1966-67 and 1967-68 on time. However, due to protracted correspondence between the petitioner and the Excise Superintendent over certain formalities in connection with verification of petitioner's claim, the applications reached the Director of Inspection and Audit after the expiry of the time limit prescribed in para 5(3) of the Tax Credit Certificate (Excise Duty on Excess Clearance) Scheme. He, therefore, refused to grant the tax credit certificate. On writ, the petitioner challenged that para 5(3) of the aforementioned Scheme, which provides for condonation of delay caused in presenting an application not exceeding 60 days and consequential prohibition from entertaining an application thereafter, as ultra vires. Held Section 280ZE, which enables the Central Government to frame a scheme of incentives for increased productivity in specified goods, nowhere empowers the Central Government to prescribe a period of limitation for claiming the benefit of Chapter XXII-B. Considering the scope and object with which such incentives are provided to assessee's, the right to claim grant of tax credit certificate on fulfillment of the prescribed conditions is a substantive right and not a procedural one. Para 5(3) of the Scheme prescribing a time limit for making a claim for tax credit certificate extinguishes the right conferred under Chapter XXII-B which is not within the pale of procedure. In the guise of framing a scheme, a substantive right conferred under the Act cannot be curtailed or nullified by prescribing a time limit. When Parliament has not prescribed any period of limitation for claiming benefit under Chapter XXII-B,…

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