Composition scheme set-off bar applies to all purchases under plain language, without implied exception for non-transferred goods.

Under the Maharashtra Value Added Tax composition scheme for works contracts, Condition No. 3 was held to bar set-off of tax paid on all purchases made for the construction activity. The clause was read according to its plain language, which disallowed set-off without creating any exception for purchases used for administration or for goods not ultimately transferred in the works contract. The court reasoned that implying such a carve-out would add words not found in the notification and would dilute the object of a simplified composition mechanism. The assessee was therefore not entitled to claim set-off on any such purchases.

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Issues: Whether Condition No. 3 of the composition scheme notification barred set-off of tax paid on all purchases made for construction activity, or only on those purchases whose property was transferred in the works contract.

Analysis: The composition scheme under Section 42(3A) of the Maharashtra Value Added Tax Act, 2002 was an optional scheme prescribing tax at a flat rate in lieu of tax payable on transfer of goods in the execution of works contracts. Condition No. 3 stated that a dealer opting for the scheme shall not be eligible to claim set-off of taxes paid in respect of the purchases. The language of the condition contained no exception for purchases used only for administrative purposes or for construction equipment not transferred to the buyer. Reading in such an exception would require words not found in the notification and would also undermine the object of a simplified composition mechanism by forcing inquiry into the nature of each purchase and the extent of transfer of goods.

Conclusion: Condition No. 3 applies to all purchases and the assessee was not entitled to claim set-off.

Ratio Decidendi: Where a dealer voluntarily opts for a composition scheme that expressly disallows set-off on purchases, the prohibition must be given full effect according to its plain language and cannot be restricted by implication to only those purchases whose goods are transferred in the works contract.

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