Full sales tax exemption under incentive scheme applies where entitlement is based on investment, not production-capacity expansion.

Section 93(1) of the Maharashtra Value Added Tax Act, 2002 applies only where the eligibility certificate and certificate of entitlement are granted for increase in production capacity or acquisition of new fixed capital assets. On the facts stated, the assessee's entitlement arose under the 1993 package scheme of incentives on the basis of investment, not expanded production capacity, and there was no provision in that scheme or under the Central Sales Tax Act, 1956 to reduce the exemption. The notification under section 8(5) of the Central Sales Tax Act had also not been amended, modified or withdrawn, so full exemption on sales turnover was available and pro rata reduction was not justified.

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Issues: Whether the respondent-assessee was entitled to full exemption on sales turnover or only proportionate exemption under the incentive scheme and the MVAT Act.

Analysis: Section 93(1) of the Maharashtra Value Added Tax Act, 2002 applies only where the eligibility certificate and certificate of entitlement are granted on account of increase in production capacity or acquisition of new fixed capital assets. The respondent's entitlement was granted on the basis of investment under the 1993 package scheme of incentives, and not on the basis of increased production capacity. There was also no provision in the package scheme or under the Central Sales Tax Act, 1956 for reduction of the exemption, and the relevant notification under section 8(5) of the Central Sales Tax Act, 1956 had not been amended, modified, or withdrawn.

Conclusion: The respondent was entitled to 100% exemption and the pro-rata exemption was ly applied. The appeal was without merit.

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