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2018 (7) TMI 1706 - HC - VAT and Sales TaxScope of Trade Circular No.3T of 2018 dated 16th January 2018 - Recovery of Value Added Tax in excess of 3% - The prayer is that notification No.VAT 1517/C.R.136(A)/Taxation 1 dated 13th October 2017 should be given effect to and operated from 24th August 2017 - Inter-state Purchase. Whether the petitioners can seek the Writ of mandamus and the direction claimed by them? Held that - The Trade Circular dated 16.01.2018 says that the Maharashtra Goods and Services Tax Act was introduced with effect from 1.07.2017. Accordingly, the Maharashtra Value Added Tax Act, 2002 was amended from 01.07.2017. After the amendment to the MVAT Act, the definition of the term goods cover only six goods, petroleum crude, high speed diesel, motor spirit, natural gas, aviation turbine fuel and alcoholic liquor for human consumption. This Circular also invites the attention of all concerned to Section 16(6A) in the MVAT Act. According to this Circular, sub section (6A) is inserted in Section 16 of MVAT Act to provide for the deemed cancellation of the registration, with effect from 01.07.2017, of the dealers who have not effected any sales of the aforesaid six goods during the period 2016 2017. Therefore, only those dealers who are effecting the sales of these goods remain registered dealers under the MVAT Act. Until the Government intervened to bring about the parity or equality, there could not have been any assumption or inference as is drawn by the petitioners before us. The petitioners are not challenging the notifications. The Circulars, at best, are for internal guidance or clarification of queries of the Trade and officials, but their language cannot control the substantive notifications. The notifications amending the schedule would enjoy the same status as that of the rules under the Act. In the circumstances, we do not think that relying upon these circulars, the petitioners can claim the benefit in the intervening period, more so, when both dealers were not included under the earlier notification. The petitioners are not right in their contentions based on which the reliefs have been claimed. The relief claimed is that we should quash the Trade Circular dated 16.01.2018. That Trade Circular No.3T of 2018 is but clarifying the position resulting from issuance of these two notifications, namely, of August and October 2017. We cannot see how we can hold that the State Government intended to grant the benefit by circular to a taxable person registered under the MGST Act when he was not within the purview of the substantive law, MVAT. In other words, a taxable person registered under the MGST Act by virtue of the amendment to the MVAT Act went out of the purview of the MVAT Act. It is obvious from a reading of the subsequent notification dated 13th October 2017 that both the goods and taxable person under the MGST Act have been brought within the purview of Schedule B and Entry 16. In such circumstances by any interpretative process or by resorting to the exercise suggested by the petitioners, we cannot bring in the goods as defined under the MGST Act and the taxable person registered under the MGST Act in the Schedule B as amended - The benefit will have to be granted only from the date from which it is extended, namely, w.e.f. 14.10.2017. Petitions are dismissed.
Issues Involved:
1. Challenge to Trade Circular No. 3T of 2018 dated 16th January 2018. 2. Effective date and applicability of Notification No. VAT-1517/C.R.136(A)/Taxation-1 dated 13th October 2017. 3. Interpretation of the term "registered dealer" under the MVAT Act and its applicability to taxable persons under the MGST Act. 4. Validity of the amended Proforma-A and its retrospective application. 5. Locus standi of the petitioners to challenge the Trade Circular. Issue-wise Detailed Analysis: 1. Challenge to Trade Circular No. 3T of 2018: The petitions challenge the Trade Circular No. 3T of 2018, which declared that the concessional rate of 3% VAT on natural gas would only be applicable to registered dealers under the MVAT Act and not to taxable persons under the MGST Act. The petitioners argue that this circular rescinded the earlier clarification provided by Trade Circular 39T of 2017, which allowed the concessional rate to be applicable to taxable persons under the MGST Act. 2. Effective Date and Applicability of Notification No. VAT-1517/C.R.136(A)/Taxation-1: The petitioners contend that Notification No. VAT-1517/C.R.136(A)/Taxation-1 dated 13th October 2017, which amended Entry 16 of Schedule B to include taxable persons under the MGST Act, should be given effect from 24th August 2017. They argue that the amendment is curative and declaratory in nature and should have retrospective effect. 3. Interpretation of "Registered Dealer": The petitioners argue that the term "registered dealer" in the Notification dated 24th August 2017 should include taxable persons under the MGST Act. They contend that the primary condition of the notification was that natural gas must be used in the manufacture of goods, which is not limited to goods defined under the MVAT Act. The respondents, however, argue that the notification clearly excludes taxable persons under the MGST Act and is applicable only to registered dealers under the MVAT Act. 4. Validity of Amended Proforma-A: The petitioners argue that they were issued Proforma-A certificates with effect from 24th August 2017, which allowed them to avail the concessional rate of 3% VAT. They contend that the subsequent amendment to Proforma-A by the Trade Circular No. 3T of 2018, changing the effective date to 14th October 2017, is invalid and should be quashed. 5. Locus Standi of Petitioners: The respondents argue that the petitioners do not have the locus standi to challenge the Trade Circular as the matter is between the Gas Authority of India Ltd. (GAIL) and the State Government. They contend that the petitioners are not paying taxes under the State law and do not have a valid registration under the MVAT Act. Judgment Analysis: 1. Challenge to Trade Circular No. 3T of 2018: The court held that the Trade Circular No. 3T of 2018 merely clarifies the position resulting from the issuance of the two notifications dated 24th August 2017 and 13th October 2017. It does not amend or modify the substantive law. The court found that the circular is explanatory and does not alter the legal position established by the notifications. 2. Effective Date and Applicability of Notification No. VAT-1517/C.R.136(A)/Taxation-1: The court held that the notification dated 13th October 2017 is prospective and not retrospective. It clarified that the benefit of the concessional rate of 3% VAT is applicable only from 14th October 2017 and not from 24th August 2017. The court rejected the petitioners' argument that the amendment is curative and should have retrospective effect. 3. Interpretation of "Registered Dealer": The court held that the term "registered dealer" in the Notification dated 24th August 2017 does not include taxable persons under the MGST Act. It found that the notification clearly excludes taxable persons under the MGST Act and is applicable only to registered dealers under the MVAT Act. The court emphasized that the language of the notification is clear and unambiguous. 4. Validity of Amended Proforma-A: The court upheld the validity of the amended Proforma-A and the Trade Circular No. 3T of 2018, which changed the effective date to 14th October 2017. It found that the amendment was necessary to ensure parity between dealers registered under the MVAT Act and taxable persons under the MGST Act. 5. Locus Standi of Petitioners: The court did not rest its conclusion on the locus standi of the petitioners. It dealt with the merits of the case and found that the petitioners' contentions were not substantiated. The court held that the petitioners do not have a valid claim to challenge the Trade Circular based on the substantive notifications. Conclusion: The court dismissed the petitions, holding that the Trade Circular No. 3T of 2018 is valid and does not amend or modify the substantive notifications. The benefit of the concessional rate of 3% VAT is applicable only from 14th October 2017, and the term "registered dealer" does not include taxable persons under the MGST Act. The court found that the petitioners' contentions were not substantiated and that the reliefs claimed could not be granted.
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