“The purchases” mentioned in the Condition 3 of VAT Notification dated 9th July refers to all the purchases; no exceptions: Bombay High Court
Title: Oasis Realty v. The Commissioner of Sales Tax and The State of Maharashtra
Decided on: 26th July, 2023
+ CRL.A. 530 OF 2016
CORAM: FIRDOSH P. POONIWALLA
Facts of the Case:
The appellant, Oasis Realty, is engaged in the real estate business of construction, purchase and sale of buildings. It is registered under the Maharashtra Value Added Tax Act, 2002 (“the MVAT Act”) and Central Sales Tax Act, 1956.
For the purpose of payment of VAT towards the aforesaid construction activity, the Appellant opted for the Scheme of Composition under Section 42(3A) of the MVAT Act.
Issues
Whether conditions in the VAT notification restricts set-off only in respect of purchases of those goods involved in the execution of a works contract the property in respect of which (goods) are transferred in the execution of such works contract?
Contentions
The appellants claimed that only those purchases (of inputs) in which the property has been transferred be considered for the sake of setting-off. It was submitted that the expression “the purchases” in Condition No.3 had to be read harmoniously with the enabling powers in Section 42(3A) of the MVAT Act whereunder the Scheme of Composition was introduced as well as the purpose of the Scheme of Composition, which is to levy tax at a reduced rate.
The Respondents contented that as per the case of Maharashtra Chamber of Housing Industry and Others that there is no compulsion or obligation upon a dealer to opt for such a scheme. As per the Composition Scheme composition amount is one percent of the agreement amount specified in the agreement or the value specified for the purpose of stamp duty in respect of the said agreement under Bombay Stamp Act, 1958, whichever is higher. Thus, the Scheme provides for tax at a flat rate of one percent on the aforesaid amount. However, Condition No.3 provides that a dealer who opts to pay composition under the said Scheme shall not be eligible to claim set-off of taxes paid in respect of the purchases.
Decision
There is no merit in the argument of the Appellant that, just because Condition No.3 refers to “the purchases”, it applies only in respect of certain kind of purchases and does not apply in respect of certain other purchases. If Condition No.3 wanted to make an exception in respect of certain kind of purchases, then it would have expressly stated so. In the absence of any such exception made by Condition No.3 applies to all purchases.
The appeal was thereby dismissed.
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Written by- Aparna Gupta, University Law College & Dept. of Studies in Law