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High Court of Judicature at Bombay
D.Y. CHANDRACHUD & R.D. DHANUKA, JJ.
M/s.Mahalaxmi Cotton Ginning Pressing and Oil Industries
Versus
The State of Maharashtra & Others
WRIT PETITION NO.33 OF 2012
Decided on : 11-05-2012
Sub-clause 2 clearly permits the residential accommodation as a support facility to the extent of 20% in Aurangabad and Nashik area which includes the area where the subject land is located. Clause-2 undoubtedly provides that accommodation facility such as service apartment will be allowed in Nagpur, Aurangabad and Nashik, however, this clause does not say that such facility will be allowed only in Nashik, Aurangabad and Nagpur.
There is nothing to derogate from sub-clause 2 of Clause 1 of the form which expressly, permits residential construction as a support facility to the extent of 20% in Nashik, Aurangabad and Nagpur areas.
It is not possible to read this seemingly contradictory clause in the policy as mutually destructive of other clause. Contention that the policy does not permit residential construction in Aurangabad, Nagpur and Nashik areas such as Mumbai Metropolitan region hence, not acceptable.
MAHARASHTRA VALUE ADDED TAX ACT, 2002 - Section 48(5) - Constitution of India, Articles 226 and 227 - Set-off. Since right to obtain set-off is right conferred by statute and Legislature hence constitutional validity of provision of Section 48(5) of Act is upheld.
Legislature has performed balancing exercise between need on one hand of ensuring interest of ultimate consumer by obviating cascading tax burden and on other hand securing governance under rule of law principles which promote transparency and certainty while at same time protecting legitimate revenues of State. Value Added Tax regime has replaced single point levy with multiple point levies in which every dealer is vital link in levy and collection of tax, As number of dealers has increased manifest fold, conventional systems of tax administration have to be replaced by web based electronic systems.
System which administrator must devise must continuously evolve both with view to simplify procedures and to make process including that relating to beneficial provision such as set off and refund objectives transparent. Judgments of Supreme Court recognise latitude which law confers upon Legislature and executive to experiment with new systems in cases involving fiscal and economic policy. Systems have to evolve as experiences result in shared learning and as technology keeps abreast of changing needs.
In view of this, constitutional validity of provision of Section 48(5) is upheld, Similarly Section 51(7) which requires application for refund and specifies period within which an application can be made, cannot be assailed as being invalid. Regulating process of refunds is as much within tax enactment and legislature is within its power in requiring refund to he applied for within reasonable period. Right to obtain set off is right conferred by statute and Legislature.
While recognizing entitlement to set off in certain circumstances, conditions are prescribed subject to which set oilcan be obtained.
If Legislature as in present case, prescribes that set off should be granted only to extent to which tax has been deposited in treasury on purchase of goods, it is within reasonable exercise of its legislative power in so mandating.
This does not offend Article 14. Plea of hardship cannot result in invalidation of statutory provision in fiscal enactment which is otherwise lawful. State Revenue has placed before this Court assurance and steps that would be taken to pursue recoveries against selling dealers who have either not filed returns or having filed returns have not deposited tax collected from purchasing dealer in whole or in part.
Hence there is no merit in challenge to provisions of Section 48(5) of MVAT Act, 2002. Order of assessment is subject to remedy of appeal in course of which it would be open to petitioner to pursue remedy available in law. Petition is liable to be dismissed.
Dr. D.Y. Chandrachud, J.
Rule, made returnable forthwith. With the consent of learned Counsel and at their request the Petition is taken up for hearing and final disposal.
2. The constitutional validity of Section 48(5) of the Maharashtra Value Added Tax Act, 2002 (MVAT Act, 2002) is in challenge. In the alternative, if its validity is upheld, the Petitioner seeks that the words “actually paid” be read down to mean “ought to have been paid”. The Petitioner challenges an order of assessment and seeks a mandamus to the State to recover from the vendor tax paid on goods of which a set off is claimed. Consequential orders of set off and refund are sought.
Facts
3. The Petitioner which is a partnership firm and a dealer registered under the MVAT Act, 2002, carries on business as a reseller in cotton bales. For 2009-10, the Petitioner filed its returns and, based on the purchases effected by it, claimed Input Tax Credit (ITC) by way of a set off under Section 48. According to the Petitioner, the claim was supported by tax invoices of its vendor. On 4 December 2010, the Petitioner claimed a refund of Rs.21.08 lakhs, resulting from the return filed. The Petitioner claims to have submitted data, transactionwise, in relation to its supplier, including the invoice number, date of supply, the registration number of the supplier and VAT paid on each purchase. By a letter dated 25 July 2011, the Deputy Commissioner of Sales Tax, Kolhapur informed the Petitioner of a list of dealers from whom the Petitioner had effected purchases where the data received was matched or, as the case may be, unmatched. The Petitioner was called upon to submit ledger copies and proof of the filing of returns by the dealer in those cases where the data was unmatched. Failing this, it was stated that ITC of the concerned dealers would be disallowed. After a personal hearing the Deputy Commissioner by his letter dated 16 September 2011 communicated the quantum of ITC which was allowable in accordance with a 'matched list' and that which was not allowable according to an 'unmatched list'. The Petitioner was also informed that the assessment would be taken up under Section 23. The Deputy Commissioner of Sales Tax passed an order of assessment on 20 October 2011. The Assessing Officer allowed a set off to the Petitioner to the extent of Rs.48.95 lakhs and reduced the claim of refund from Rs.21.08 lakhs to Rs.2.17 lakhs.
MVAT Act
4. The MVAT Act, 2002 was brought into force with effect from 1 April 2005. The Act replaced a single point levy under the erstwhile Bombay Sales Tax Act, 1959 with a multi point levy. The Act was legislated upon by the State Legislature in pursuance of a decision taken by the Empowered Committee of Finance Ministers of the States to bring in a value added tax system. The White Paper circulated by the Empowered Committee of State Finance Ministers on 17 January 2005 furnished the following rationale for the introduction of VAT:
“In the existing sales tax structure, there are problems of double taxation ofcommodities and multiplicity of taxes, resulting in a cascading tax burden. For instance, in the existing 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 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 rationalised, 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 w
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