2023 (8) TMI 51 - HC - VAT and Sales Tax

Set off on the purchase of HSD - authorities disputed the admissibility of set off on the purchases of HSD on the ground that under Rule 54(b) of Maharashtra Value Added Rules 2005, the set off was barred - HELD THAT - The Hon ble Apex Court in ASSISTANT COMMISSIONER, INCOME TAX, RAJKOT VERSUS SAURASHTRA KUTCH STOCK EXCHANGE LTD 2008 (9) TMI 11 - SUPREME COURT has held that a judicial decision acts retrospectively. The Judges do not make law, they only discover or find the correct law. The law has always been the same and if a subsequent decision alters the earlier one, the later decision does not make a new law. It only discovers the correct principle of law which has to be applied retrospectively. The Hon ble Apex Court held that even when an earlier decision of the court operated for quite sometime, the decision rendered later on would have retrospective effect, clarifying the legal position which was earlier not correctly understood. The Tribunal was justified in rejecting the claim because the High Court has clarified in Gupta Metallics 2012 (8) TMI 818 - BOMBAY HIGH COURT that the provisions of Section 54(b) of the Act did not allow the set off to be granted on purchase of HSD. Certainly, the Commissioner in an application under Section 56 of the Act cannot say it will have prospective effect. There are no reason to interfere. Appeal dismissed.

Summary

Issues:
The issues involved in this case are the admissibility of set off on purchases of High Speed Diesel (HSD) under the Maharashtra Value Added Rules 2005, the effect of a High Court judgment on retrospective application of law, and the Commissioner's decision on the prospective effect of an amendment.

Admissibility of Set Off on HSD Purchases:
The appellant, a construction company, purchased HSD and claimed set off under the Maharashtra Value Added Rules 2005. However, the Sales Tax Authorities disputed this set off, citing Rule 54(b) of the Rules as a bar. Despite a favorable Tribunal judgment initially, subsequent High Court rulings clarified that the set off was not permissible under Section 54(b) of the Act. The law was amended to nullify the Tribunal's judgment, leading the Commissioner to reject the appellant's claim for prospective effect on the set off.

Retrospective Application of Law:
The appellant argued that they should be allowed to claim the set off until the High Court's judgment date, relying on the principle that judicial decisions act retrospectively. Citing the Assistant Commissioner of Income Tax, Rajkot vs. Saurashtra Kutch Stock Exchange Ltd. case, the court emphasized that judges do not make new law but discover the correct law, with later decisions clarifying legal positions previously misunderstood. The court held that the High Court's clarification in Gupta Metallics case precluded the appellant from claiming the set off retrospectively.

Commissioner's Decision on Prospective Effect:
The Tribunal rejected the appellant's claim for prospective effect on the set off, as clarified by the High Court's judgment. The court upheld the Tribunal's decision, stating that the Commissioner could not grant prospective effect in an application under Section 56 of the Act. The court concluded that the Tribunal was justified in rejecting the claim, and the appeal was dismissed accordingly.