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of <h1>High Court of Bombay stays bank account attachment under Maharashtra VAT Act pending GST/VAT taxability dispute</h1> <h3>New Phaltan Sugar Works Distillery Division Ltd. Versus State of Maharashtra and Ors.</h3> New Phaltan Sugar Works Distillery Division Ltd. Versus State of Maharashtra and Ors. - 2020 (43) G.S.T.L. 38 (Bom.) Issues:Challenge to notice provisionally attaching bank account under Maharashtra Value Added Tax Act, 2002 regarding taxability of Extra Neutral Alcohol and Rectified Spirit under GST or VAT.Analysis:The High Court of Bombay heard a writ petition challenging a notice issued under the Maharashtra Value Added Tax Act, 2002, provisionally attaching a bank account. The petitioner, a company engaged in manufacturing Extra Neutral Alcohol and Rectified Spirit, raised a dispute on whether GST or VAT should be levied on these products. The core issue revolved around the taxability of Extra Neutral Alcohol (ENA) and Rectified Spirit (RS), specifically whether they should fall under GST or VAT. The petitioner argued that ENA and RS, containing 95% alcohol by volume, are not fit for human consumption. The confusion arose following the introduction of the GST regime, prompting the matter to be taken up by the GST Council for a final decision.The State of Maharashtra classified ENA/RS as a VAT leviable item, effective from August 24, 2017, pending the decision of the GST Council. The petitioner referred to an opinion by the Attorney General of India, stating that GST cannot be levied on ENA used for manufacturing alcoholic liquor for human consumption. The Attorney General opined that ENA, not fit for human consumption, is used in the manufacturing process and thus not directly consumed. The court also referenced previous judgments emphasizing the limitations on states to levy taxes on alcoholic liquor for human consumption.The court, after hearing both parties, directed that the impugned notice provisionally attaching the petitioner's bank account be stayed upon the petitioner furnishing a bank guarantee of 50% of the differential amount between GST paid and VAT quantified within three weeks. The matter was scheduled for further consideration on December 3, 2020.
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