TaxTMI 
TaxTMI 
TaxTMI 
2023 (8) TMI 115
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....e same under written agreements to buyers along with the underlying land or the interest in such land. 3. For the purpose of payment of VAT towards the aforesaid construction activity, the Appellant opted for the Scheme of Composition notified by Respondent No. 2 under Section 42(3A) of the MVAT Act vide Notification No. VAT 1510/CR-65/Taxation 1 dated 9th July 2010. The said Scheme was opted for by the Appellant for agreements in respect of sale of flats which were registered during the year 2013-14 and was to be the basis on which the Appellant was to pay VAT in respect of construction of such flats. The Scheme as notified by the said Notification dated 9th July 2010 reads as under: In exercise of the powers conferred by sub-section (3A) of Section 42 of the Maharashtra Value added Tax Act, 2002 (Mah .IX of 2005), the Government of Maharashtra hereby, provide a scheme of Composition for the registered dealers specified in column (1) of the following schedule, who undertakes the construction of flats, dwellings or buildings or premises and transfer them in pursuance of an agreement alongwith land or interest underlying the land and prescribes the rate of tax specified in column....
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....ion activity, second - purchases for office consumption and third - purchases at site. 5. The Appellant contended that the said Notification dated 9th July 2010 was issued in respect of discharge of liability on goods getting transferred in the construction contract and therefore the scope of the said Notification was restricted in relation to goods which were liable to tax. It further contended that since the aforesaid second and third category purchases were of goods that were not transferred, the said Notification was not applicable for such category of purchases and therefore the Appellant would be entitled to claim set-off of tax paid in respect of said purchases. 6. By an Assessment Order dated 28th March 2018, the Deputy Commissioner of Sales Tax (LTU-3), E-628, Mumbai, who was the Assessing Officer (AO) rejected the said claim of set-off of the Appellant. The AO took the view that the condition disallowing set-off in respect of purchases does not restrict itself to purchases in respect of which property is passed on to the buyer and that same was applicable to all purchases, regardless of whether the property in respect of them passes on to the buyer or not. In other word....
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.... the subject of setoff. He further submitted that Condition No. 3 of the Notification dated 9th July 2010, which prohibited claiming set off of taxes paid in respect of purchases, did not state that it applied to "all" purchases but only stated that set-off would not be claimed in respect of "the" purchases. He submitted that the expression "the purchases" in Condition No. 3 had to be read harmoniously with the enabling powers in Section 42(3A) of the MVAT Act whereunder the Scheme of Composition was introduced as well as the purpose of the Scheme of Composition, which is to levy tax at a reduced rate in lieu of tax on transfer of goods in a works contract. 10. Mr. Parghi submitted that when the composition tax itself is in lieu of the tax on transfer of goods in a works contract, the prohibition of claiming set-off should be applicable only to those purchases which are transferred to the buyer at the time of passing of the property in the works contract. The use of the word "the" as against the word "all" is telling and Respondent No. 2 had intentionally decided to make the prohibition on set-off applicable only to those purchases, the property in which passes on to the buyer. 1....
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.... (Supra), a dealer has the option as to whether to opt for such a Composition Scheme or not and there is no compulsion or obligation upon a dealer to opt for such a scheme. 15. As per the Composition Scheme notified by the said Notification dated 9th July 2010, the composition amount is one percent of the agreement amount specified in the agreement or the value specified for the purpose of stamp duty in respect of the said agreement under Bombay Stamp Act, 1958, whichever is higher. 16. Thus the Scheme provides for tax at a flat rate of one percent on the aforesaid amount. However, Condition No. 3 provides that a dealer who opts to pay composition under the said Scheme shall not be eligible to claim set-off of taxes paid in respect of the purchases. 17. In the present case, the Appellant's claim of set-off pertains to administrative expenses as well as expenses towards the lease of construction equipment which were used for the purpose of undertaking construction activity. The Appellant could not have executed the contract without the said expenses. 18. On a plain reading of Condition No. 3 of the said Scheme, it is clear that the said condition prohibits a dealer opting for th....