VAT set-off conditions upheld where actual tax payment into the treasury is required for the concession and refund mechanism.

Section 48(5) of the Maharashtra Value Added Tax Act was upheld as a valid condition on VAT set-off, because the legislature may restrict that concession to tax actually paid into the treasury. The court held that "actually paid" means actual physical deposit, not a deemed or notional payment, and found a rational nexus with revenue protection and prevention of abuse. It rejected the Article 14 challenge based on hardship to bona fide purchasers and declined to read down the clear statutory language. The related refund provision in Section 51(7) was also upheld as a valid regulation of the refund mechanism.

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Issues: Whether Section 48(5) of the Maharashtra Value Added Tax Act, 2002 was unconstitutional for denying set-off unless the tax on the same goods had actually been paid into the Government treasury, and whether the words "actually paid" could be read down to mean "ought to have been paid".

Analysis: Set-off under the VAT scheme is a statutory concession intended to prevent cascading of tax. The statutory scheme of Section 48, read as a whole, permits set-off subject to conditions, and sub-section (5) declares that the amount of set-off or refund cannot exceed the tax actually paid into the treasury. The expression "actually paid" was held to mean actual physical deposit and not a notional or deemed payment. The provision was found to have a rational nexus with the legislative object of securing revenue and preventing abuse, and the legislature was entitled to impose such a condition while granting the concession. In fiscal legislation, the Court accorded due deference to legislative choice and rejected the plea that hardship to bona fide purchasers rendered the provision discriminatory. Since the provision was held constitutional, there was no scope to read it down. The related refund provision in Section 51(7) was also upheld as a valid regulation of the refund mechanism.

Conclusion: Section 48(5) was upheld as constitutional, the prayer to read down "actually paid" was rejected, and the challenge under Article 14 failed.

Ratio Decidendi: Where a taxing statute grants set-off as a concession, the legislature may validly condition that benefit on actual payment of tax into the treasury, and a court will not rewrite clear words of a fiscal provision by reading in a notional payment standard.

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