2011 (9) TMI 487 - HC - VAT and Sales Tax

Constitutional validity - Repeal of the Maharashtra Purchase Tax on Sugarcane Act 1962 and amendment to MVAT Act, 2002 - held that - The Amending Act provided that the MVAT Act, 2002 would come into force from 01 April 2005. Simultaneously, the State Legislature provided for the deletion of clause (c) of Sub-section (1) of Section 95, in Section 55 of the Amending Act 2005. The net consequence was that simultaneously with the enforcement of the MVAT Act, 2002, the repealing provisions contained in Section 95(1) stood amended so as to delete a reference to the repeal of the Maharashtra Purchase Tax on Sugarcane Act, 1962. The State Legislature was within its plenary power to do so. As a matter of fact, the repealing provisions of Section 95(1)(c) were never brought into force. Simultaneously with the enforcement of the MVAT Act, 2002 on 01 April 2005, the repealing provisions were reconstructed so as to exclude a reference to the repeal of the Purchase Tax Act. Hence, there is no merit in the first submission. Discrimination in Remission of Tax in respect of certain industries - right of assessee to claim remission from tax - legislative powers - held that - The levy of tax is a sovereign function. The power to remit the payment of tax is an incidence of the sovereign power of the State. No assessee has a vested right to claim a remission from the payment of tax. An assessee may in a given situation, be aggrieved if a remission has been granted to one but not to any other assessee similarly situated. - However, in this case a challenge on the ground of discrimination has not been set up with any particularity. Consequently, as a matter of first principle, we do not find any substance in the contention of the Petitioner. In the application for remission that was submitted by the Petitioner on 28 July 2010, it was only stated that the Unit is a new unit and facing financial difficulties. No details whatsoever were furnished to the State Government. The State Government was in those circumstances justified in rejecting the request for remission. The exercise of the power by State Government cannot hence be faulted.

Summary

Issues:
Challenge to constitutional validity of Section 55 of Maharashtra Value Added Tax Act, 2005; Legality of three notices issued by Purchase Tax Officer; Rejection of application for exemption under Section 12B of Maharashtra Purchase Tax on Sugarcane Act, 1962.

Analysis:
1. The petitioner challenged the constitutional validity of Section 55 of the Maharashtra Value Added Tax Act, 2005, and the legality of three notices demanding payment of purchase tax. Additionally, the rejection of the petitioner's application for exemption under Section 12B of the Maharashtra Purchase Tax on Sugarcane Act, 1962 was contested.

2. The petitioner, a company, sought exemption from purchase tax under Section 12B of the Act, which was rejected by the State Government. Notices were issued for payment of tax for the years 2008-09, 2009-10, and 2010-11 as the returns were not accompanied by tax payments as required.

3. The Maharashtra Value Added Tax Act of 2002 was enacted, repealing various Acts including the Maharashtra Purchase Tax on Sugarcane Act, 1962. However, the MVAT Act provisions were not enforced until 2005. The Amending Act of 2005 deleted the provision repealing the Purchase Tax Act, effective from April 1, 2005, when the MVAT Act came into force.

4. The challenge to Section 55's constitutional validity was dismissed as the State Legislature had the power to amend the repealing provisions. The Purchase Tax Act was not repealed as the MVAT Act provisions were not enforced until 2005.

5. Section 12B allows the State Government to remit tax to encourage new factories or units. The power to remit tax is a sovereign function, and no vested right exists for an assessee to claim remission. The petitioner's request for remission was rejected due to lack of details provided to the State Government.

6. Section 6(1) mandates submission of monthly returns with full tax payment receipts. The petitioner's returns for 2008-09, 2009-10, and 2010-11 were not accompanied by tax receipts, justifying the authorities' actions in issuing demand notices for payment.

7. After considering the petitioner's grievances, the court found no reason to interfere in the writ jurisdiction under Article 226 of the Constitution. The petition was dismissed for lack of merit.