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TMI Blog2018 (7) TMI 1706X X X X Extracts X X X X X X X X Extracts X X X X ..... uor for human consumption. This Circular also invites the attention of all concerned to Section 16(6A) in the MVAT Act. According to this Circular, subsection (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 20162017. 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 und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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.VAT 1517/C.R.136(A)/Taxation 1 dated 13th October 2017 should be given effect to and operated from 24th August 2017. The argument is that the Trade Circular No.3T of 2018 dated 16th October 2018 and the Addenda 30th January 2018 enabled recovery of Value Added Tax in excess of 3% 5. Since, the petitioner Deepak Fertilisers and Petrochemicals Corporation Ltd., in WP No.2424 of 2018 more or less represented the common case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 set off 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 taxation on natural product prior to 01.07.2017 was 3%, the effective rate after 01.07.2017 rose to 13.5%. 11. Realizing the above, the Respondents sought to provide relief to the taxpayers. As stated earlier, the net effective rate of tax on natural gas prior to 30.06.2017 was 3%. Hence, vide Notification No.VAT 1517/CR 136(A)/Taxation 1 dated 24.08.2017, w.e.f. 24.08.2017, E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15.09.2017. At the request of the respondent No.5, the petitioner applied for a revision of Proforma A and was duly issued a new Proforma A dated 1st November 2017 w.e.f. 24.08.2017 itself. Exhibit F to the petitions are copies of the original Proforma A and the revised Proforma A. It is claimed that the respondent No.5 charged rate of ₹ 13.5% upon the petitioner from the period of 24 08 2017 to 13.10.2017, but after the issuance of the amended Proforma A, 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 Exh G to the petition. 16. However, the second respondent issued a subsequent Trade Circular No.3T of 2018 dated 16.01.2018 declaring that the earlier clarification issued by Trade Circular 39T of 2017 had been discussed by the Ministry of Finance, Maharashtra. The said Circular No.3T of 2018 further provided that the Ministry disagreed with the previous clarification and therefore the earlier clarification was in effect rescinded. Thus, the Trade Circular No.3T of 2018 provided that the concessional rate of 3% would only be applicable to per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 (Exhibit E) 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 fundamental rights are violated. Circular No.39T dated 08.09.2017 mentions that the purchaser of natural gas is required to be a registered dealer under MVAT Act or MGST Act, though requirement of being registered under the MGST Act was not included in the notification under consideration. In absence of such reference to requirement of registered dealer under the MGST Act in notification dated 24.08.2017, circular mentioning it as such, is irrelevant. Notification dated 24.08.2017 must be rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 Exhibit C to the petition, and the notification, copy of which is at Exhibit E to the petition which amends the rate of tax on natural gas as prescribed in Schedule B 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 as the law is clear, the circular does not either modify or amend it. The language of the notifications referred to above is clear. Even without the circulars being referred their ambit and scope is plain and clear. Therefore, the prayer to quash the circular cannot be granted particularly when the notifications are not amended or modified by the Government in exercise of its power under law. It is in these circumstances that in the further paragraphs it is clarified that there is no tax liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tration 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 Department cannot challenge the Trade Circular No.3T of 2018. Hence, it is only open to the purchaser to challenge the circular as the burden of taxation in indirect taxes falls on the purchaser. In any event, this aspect need not be gone into in this matter wherein the rate of tax depends on to the purchaser and such certification issued to the petitioners is also under challenge. 25. In the other petitions Mr.Rafique Dada, learned Senior Advocate has also argued on identical lines and invited our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tinue 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 petitions. 31. Mr.Sonpal while answering the contentions of Mr.Rafique Dada, learned Senior Counsel appearing for the petitioners that the triggering point is the initiation of the Maharashtra Goods and Service Tax Act contended that the petitioners, are not paying any taxes under the State law. There is no registration obtained by these petitioners under the MVAT Act. The matter is entirely between the Gas Authority of India Ltd. and the State Government. The GAIL has rightly understood the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Proforma A) 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..VAT 1517/CR 136(a)/Taxation 1 dated 13th October 2017, the Schedule Entry B16 was amended with effect from 14th October 2017. In addition to certain other amendments, an explanation is inserted to the effect that the benefit of the Entry 16 in Schedule 'B' shall not be available to a registered taxable person if it is a hotelier or restaurant and has opted to pay tax under Section 10 of the MGST Act.' 37. After, the above notifications were issued, the matter was discussed within the Finance Department. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Chapter IX of the amendment Act contains the amendments to the MVAT Act 2002. In Section 54,55 and 56 of the amendment Act, the following amendments have been made: 54. In the long title of the Maharashtra Value Added Tax Act, 2002 (hereinafter, in this Chapter, referred to as the Value Added Tax Act ), the words or purchase shall be deleted. 55. In the preamble of the Value Added Tax Act, the words or purchase shall be deleted. 56. In section 2 of the Value Added Tax Act, (1) clauses (1),(2) and (3 a) shall be deleted; (2) after clause (3 a) so deleted, the following clause shall be inserted, namely: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the cancellation of his registration, if he intends to carry on the business in these goods. 41. A perusal of sub section (6A) would reveal as to how the original Section 16 which dealt with the registration would now provide for, by this sub section, a deemed cancellation of registration of a dealer, who has not affected sales during the year 2016 2017, of any goods specified in column (II) in Schedule A or, as the case may be in Schedule B 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 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. 42. There are various other amendments made to MVAT Act by this Chapter XI of the amendment Act, but they have not been relied upon. 43. The Notification dated 24.08.2017, copy of which is at page 51 of the paper book in Writ Petition No.2424 of 2018, reads as under : NOTIFICATION Maharashtra Value Added Tax Act, 2002: No.VAT 1517/CR 136(A)/Taxation 1 In exercise of the powers conferred by sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try 15 in Schedule B 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 A also would read accordingly. 46. After that a Trade Circular was issued on 08.09.2017 and that refer to this amendment to the scheduled entry. It is stated that for better implementation of this scheduled entry, the Trade Circular was issued, copy of which is at Exhibit D to the petition. 47. Then, there is substantive notification dated 13th October 2017, a copy of which is at page 57 of the paper book which reads as under: NOTIFICATION Maharashtra Value Added Tax Act, 2002 No.VAT.1517/C.R.136(a)/Taxation 1 In exercise of the powers conferred by sub section (1) of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow 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 MGST Act does not continue to be registered under the MVAT Act would result in denial of input tax credit or refund of tax paid on purchases of goods covered by MVAT Act. That is because under MGST Act any tax paid under MVAT Act is not available to be claimed as input tax credit. Hence, in order to benefit the person under the MGST Act and in order to ensure that the impact of tax on the dealers registered under both laws is same, the notification which we reproduced above, namely, Exhibit E page 57 of the paper book, has been issued. In the earlier notification of 24.08.2017 the parity between both dealers was not brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id 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 Schedule B as the August 2017 notification at page 51 first time brings in a substitution in Entry 15 and after Entry 15, inserts the portion as reproduced from the notification of 24.08.2017. Thus, the conditional relaxation from the rate of duty from 13.5% to 3% was a benefit not extended to taxable persons under the MGST Act as also to the goods defined under the MGST Act. 51. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 there was a further show cause notice, adjudication and the demand. After this controversy reached the Supreme Court, the Hon'ble Supreme Court relied on observations, based on the contentions, noted from paras 9 to 12. The Supreme Court held that there was enough material to hold that the appellants suffered adverse consequences. Therefore, the Writ Petition filed by the appellant should have been entertained. The High Court should have dealt with the contention of the appellant that ammonium nitrate was exempt from excise duty by reason of exemption notification until 21st July 1979 after which it was removed from the preview thereof. 55. We must at o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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