TaxTMI 
TaxTMI 
2018 (7) TMI 1706
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....h and Rinkey Jassuja i/b M/s. Economic Law for the Petitioner in WP No.2008 of 2018. Mr. Jitendra Motwani a/w Mr. Harsh Shah and Rinkey Jussuja i/b M/s. Economic Law for the Petitioner in WP No.2009 of 2018. Mr. V.A. Sonpal, Special Counsel a/w Mr. B.V. Samant AGP for Respondent Nos.2 and 3­State. Mr. A.R. Bamane i/b Mr. A.R. Bamane and Co. for Respondent No.5. Smt. Nikita Badheka a/w Ms. Neha Chaudhary and Mr. Parth Badheka for the Petitioner in Writ Petition No.819 of 2018. Ms. Jyoti Chavan, AGP for the Respondents in Writ Petition No.819 of 2018. COMMON JUDGMENT: (Per S.C. Dharmadhikari, J) 1. Since the above petitions involve common questions of fact and law and identical arguments were canvased by both the sides, we proceed to dispose them of by this common judgment. 2. Rule in each of the petitions is issued. Respondents have waived service. With the consent of both the sides, the Writ Petitions are disposed of by this common judgment. 3. The challenge in these petitions is to a Trade Circular No.3T of 2018 dated 16th January 2018. 4. The prayer is that notification No.VAT­1517/C.R.136(A)/Taxation­1 dated 13th October 2017 should be g....
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.... 9. Prior to 01.07.2017, the sale of natural gas was governed by the residuary Entry of the MVAT Act, namely, Schedule­E and hence the applicable rate of tax on 30.06.2017 was 13.5%. Furthermore, the petitioner was eligible to claim set­off of the input MVAT paid by it subject to a reduction of 3% on account of the provisions of Rule 53(1) and Rule 53(1A) of the MVAT Rules. In other words, the net effective rate of MVAT on natural gas was only 3% prior to 01.07.2017 if the natural gas was consumed domestically as fuel or as an input for manufacture. 10. With effect from 01.07.2017, when any person purchased natural gas domestically, the seller would charge and collect full tax from him at the rate of 13.5%. However, since the person was no longer a dealer under the MVAT Act due to Section 16(6A), he could not claim set­off or refund of the input MVAT collected from him. Furthermore, he would be liable to pay GST on his outputs at the full rate since the GST Act only provided for adjustment of GST paid and not of VAT paid. Hence, such a person would be taxed at the full rate on his outputs without adjustment of the input tax paid by him. Whilst the effective rate of t....
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....17 expands the scope of terms 'goods' and 'registered dealers' to include goods covered by the MGST Act and persons registered under the MGST Act respectively. This effectively cured the anomaly in the Notification dated 24.08.2017. 15. The petitioner then contended that it submitted Proforma­B as required by the Entry No.60 to the respondents and had been issued a Proforma­A dated 15.09.2017 w.e.f. 15.09.2017. At the request of the respondent No.5, the petitioner applied for a revision of Proforma­A and was duly issued a new Proforma­A dated 1st November 2017 w.e.f. 24.08.2017 itself. Exhibit­F to the petitions are copies of the original Proforma­A and the revised Proforma­A. It is claimed that the respondent No.5 charged rate of Rs. 13.5% upon the petitioner from the period of 24­08­2017 to 13.10.2017, but after the issuance of the amended Proforma­A, this fifth respondent issued credit notes reducing the tax charges from 13.5% to 3%. Copies of the various invoices raised by respondent No.5 and credit notes issued are annexed as Exh­G to the petition. 16. However, the second respondent issued a subsequent Trade Cir....
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....titled to full input tax credit subject to production of 3% under Rule 53(1) and 53(1)­A of the value of purchase if it is used as fuel or raw material in manufacturing goods. Hence, net effective burden on dealers who use natural gas as fuel or raw material was 3%. However, if natural gas was not used as fuel or raw material, then, no retention of 3% was required. However, if the taxable person under the MGST Act does not continue to be registered under the MVAT Act, he is not entitled to input tax credit or refund of tax paid on purchases of goods covered by the MVAT Act, since under MGST Act any tax paid under MVAT Act is not available to be claimed as input credit. In order to extend the benefit to the taxable persons under the MGST Act and in order to ensure that impact of tax on dealers registered under the MVAT Act and MGST Act is same, the Government issued notification (Exhibit­E) to the Writ Petition No.2424/2018 w.e.f. 14.10.2017. Earlier similar notification was issued on 24.08.2017 for benefit of MVAT Act registered dealers only and sales to MGST dealers were excluded. 20. The petitioners', cannot challenge any effective date because none of the fundamen....
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....n the goods which are not covered under the MGST Act. That means the purchases of Natural Gas made by the taxable person shall not get INPUT TAX CREDIT under MGST Act 2002 on the tax paid for purchase of natural gas under MVAT Act and will consequently bear a burden of tax at 13.5 %. In order to remove the brunt of 13.5% and make it comparable with the dealers who are manufacturers of any of the goods as mentioned in para 7 of this reply, the rate of VAT on the purchases made by taxable persons under MGST Act 2017 of Natural Gas when used in manufacture of any other goods or as fuel for manufacture of any other goods was reduced from 13.5% to 3%. Therefore the Notification dated 13.10.2017 with effect from 14.10.2017 was issued." 21. In paragraph 17, it is urged that the petitioner is not challenging the notification, copy of which is at Exhibit­C to the petition, and the notification, copy of which is at Exhibit­E to the petition which amends the rate of tax on natural gas as prescribed in Schedule­B of the MVAT Act. Thus, the circulars merely explain the ambit and scope of the notification and seek to interpret the same. They are explanatory and, therefore, so long....
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....ntinuing business in the aforementioned six commodities may apply in the prescribed manner to have his cancellation of registration revoked. However, the manner has not been prescribed as yet. The word 'business' includes trade or commerce and the word "dealer" is understood as including a person who buys and sells goods. It is submitted that the petitioner's applications and the subsequent issuances of proforma by the respondents w.e.f. 24.08.2017 itself should be considered as registration under the MVAT Act. Thus, the petitioner should be considered as a registered dealer. 24. In any case, the second notification dated 13.10.2017 is merely curative and declaratory in nature and hence, the amendments made by it would be applicable from 24.08.2017 itself. It is argued that curative/clarificatory amendments would have retrospective effect. The Circulars adverse to the assessee can only operate prospectively. Hence, the Trade Circular No.3T of 2018 dated 16.01.2018 would operate prospectively and would not affect the earlier period, namely, 24.07.2017 to 13.10.2017. The Department cannot argue that the circulars issued by them are contrary to law. Similarly, the Depar....
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.... urge that the certificate is issued with effect from 24th August 2017. She has also invited our attention to Section 16(6A) of MVAT Act. She submits that on 18th July 2017 itself the petitioners had pointed out to the Deputy Commissioner of Sales Tax, Large Tax Payer Unit, Alibag Division, Belapur Navi Mumbai that the amendment should be made to the registration certificate for the goods dealt by the petitioner under MVAT Act and Central Sales Tax (CST) Act and to allow the petitioner to continue to hold the registration certificate under the existing Act. She submits that there has been no reply to this communication. The petitioner has been following this certificate, copy of which is at page 35 and the benefit thereof cannot be taken away. She therefore, submits that the first interpretation by the notification dated 24.08.2017 is the correct one and that should be maintained. 30. On the other hand, Mr.Sonpal, learned Special Counsel appearing for the respondents argued that the Writ Petitions deserve to be dismissed. He pointed out that there is no substance in any of these petitions. Mr.Sonpal, has invited our attention to the affidavit in reply, which is filed in these pe....
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....ers conferred under Section 9(1) of the MVAT Act had issued a notification dated 24.08.2017. A new entry 16 was added to the Schedule "B" of the MVAT Act, by the said notification, effective from 24.08.2017. The entry B­16 provides that the sale of natural gas to a registered dealer, subject to the condition mentioned in the said notification, is entitled for a lower rate of VAT at 3%. To avail the benefit of reduced rate, namely, 3%, the purchasing dealer was required to be certified (as per Proforma­A) by the concerned Joint Commissioner. 35. After issuance of the aforesaid notification dated 24th August 2017, certain queries were received from the trade as also from the Departmental Authorities and that query was whether the benefits given under the Notification dated 24th August 2017 are also available to the Tax payer registered under the Maharashtra Goods and Services Tax Act 2017. To clarify this aspect, a Trade Circular No.39T was issued on 08.09.2017 and it was clarified that the benefits of notification dated 24th August 2017 would also be available to the taxable persons registered under the MGST. 36. Subsequently, by Notification No..VAT­1517/CR­13....
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....view of the aforesaid circumstances, it is also necessary that the concerned Joint Commissioners, who had earlier issued certificate in "Proforma A" with effect from the 24th August 2017, issue an addenda and change the date of effect to the 14th October 2017. (d) From the date of issuance of this Trade Circular, the certificate in Proforma 'A' shall be issued effective from the date of filing of the application for the said certificate. (e) The dealers, who have sold natural gas during the period 24th August 2017 to 13th October 2017 to manufactures who were not holding registration certificate under the MVAT Act, applying lower rate of tax at 3% during the aforesaid period, are advised to arrange their affairs accordingly and take the necessary corrective steps at earliest. 8. In view of the above, the clarification issued vide Trade Circular No.39T of 2017 dated 8th September 2017 shall stand modified." 39. We have also perused the Maharashtra Act No.XLII of 2017. That Amendment Act amends inter alia the Maharashtra Value Added Tax Act, 2002. Chapter­IX of the amendment Act contains the amendments to the MVAT Act 2002. In Section 54,55 and 56 of the amend....
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....shy;Section 6A has been inserted in Section 16 and its reads as under:­ "(6A) The registration of a dealer, who has not effected sale, during the year 2016­17, of any goods, specified in column (2) in SCHEDULE A or, as the case may be SCHEDULE B, as it exists on the appointed date for the Maharashtra Goods and Services Tax Act, shall be deemed to be cancelled with effect from the said appointed date: Provided that, any such dealer, whose registration is deemed to be cancelled, may apply in the prescribed manner for the revocation of the cancellation of his registration, if he intends to carry on the business in these goods." 41. A perusal of sub­section (6A) would reveal as to how the original Section 16 which dealt with the registration would now provide for, by this sub­section, a deemed cancellation of registration of a dealer, who has not affected sales during the year 2016­2017, of any goods specified in column­(II) in Schedule­A or, as the case may be in Schedule­B as its exists on the appointed date for the MGST Act with effect from the appointed date. However, by the proviso any dealer whose registration is deemed to be cancelled may....
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.... reveal that by Section 9 of the MVAT Act, the State Government is empowered to amend the Schedule from time to time by notification in the official gazette. The amendment of the Schedule may be by adding or modifying or deleting any entry therein, providing for reducing and enhancing rate of tax or for specifying, rates of tax where Nil rates are specified. The mode in which this has to be done, namely, by issuing and publishing a notification in the official gazette is the same and identical to the manner and mode of making rules. 45. That is why by this notification of 24.08.2017, after Entry 15 in Schedule­B for the words appearing in earlier Entry 15 (natural gas), the words and figures 'natural gas, other than the natural gas specified in Entry 16' were substituted. After Entry 15, the portion set out in the notification and reproduced above has been added but this addition is conditional. Therefore, it is only if the conditions are satisified that the concessional rate of tax of 3% would be chargeable and leviable. The natural gas has to be sold to a registered dealer and that is also subject to the conditions reproduced herein above. Thereafter, Proforma­....
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.... Deputy Secretary to Government 48. A perusal of this notification reveals that the same is also issued in terms of the powers conferred by Section 9(1) of the MVAT Act. The Government of Maharashtra w.e.f. 14.10.2017 amended schedule­B appended to the Act and now in that schedule in Entry 16 for Clause (I) a substitution has been made, namely, a registered dealer who uses natural gas as a raw material or fuel in the manufacture of goods and then there is an addition. That addition is by inserting the portion in Clause­II of this notification. That is inserted/added below the existing explanation. That will now stand numbered as explanation (a). There, the goods referred to in the Entry shall mean goods as defined under the MVAT Act and goods defined under the MGST Act. 'Registered dealer' referred to in the Entry shall also include taxable person registered under the MGST Act and then, as reproduced above, there are subsequent amendments. 49. Hence, the only question that we have to consider is whether this concessional rate of duty could be availed of by the petitioner from 24.08.2017 to 13.10.2017. The intervening period where the taxable person under MGS....
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....nd that provides for deemed cancellation of his registration. If any benefit has to accrue to such dealers, then, it is not disputed that issuance of the substantive notification or an exercise similar to the same will have to be carried out. That was carried out by amending Schedule­B. Thus, Section 9 empowers the Government to carry out an amendment to the Schedule appended to the MVAT Act. In the earlier amendment by notification dated 24.08.2017 the registered dealers were not defined to include taxable persons registered under the MGST Act. Further, the word 'goods' referred to in the entry as defined under the Act did not take within their import the goods defined under the MGST Act. Hence, merely because the 24.08.2017 notification employs the words "or any other good's, whatsoever" for the purposes of availing of the concessional rate of duty that is not enough. By that we cannot infer that from 24.08.2017 itself both, the goods as defined the MGST Act and the taxable persons contemplated thereby, are included in the amendments to Schedule­B as the August­2017 notification at page 51 first time brings in a substitution in Entry­15 and after Entry....
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....on the judgment of the Hon'ble Supreme Court in the case of I.D.L. Chemicals Ltd V/s. Union of India 1996 (86) E.L.T. 182 (S.C.). There, an exemption notification was issued by the Central Government exempting Ammonium Nitrate from the whole of excise duty leviable thereon if it was intended to be used in the manufacture, inter alia, of explosives, provided the procedure set out in Chapter X of the Central Excise Rules, 1944, was followed. The Appellant before the Supreme Court enjoyed benefit of the exemption notification. It was found that a show cause notice was issued to the appellant as to why ammonium nitrate should not be reclassified under Tariff item No.68. One of the authorities came to the conclusion that there was no need to reclassify ammonium nitrate. Later on, there was some communication from the Central Board of Excise and Customs and the Ministry of Chemicals and Fertilizers. The reclassification would be necessary because ammonium nitrate is accepted as a fertilizer and hence it was not falling within the Tariff item 14HH. With the result the exemption notification could not have been availed of and the benefit thereof was sought to be denied. That is how the....