Case Note & Summary
The writ petition under Article 226 of the Constitution of India was filed by a partnership firm registered as a dealer under the Maharashtra Value Added Tax Act, 2002, challenging the constitutional validity of Section 48(5) of the Act and an assessment order passed by the Deputy Commissioner of Sales Tax, Kolhapur. The petitioner, engaged in reselling cotton bales, had filed returns for the financial year 2009-10 and claimed input tax credit (ITC) on the basis of purchases supported by tax invoices from its vendor. A refund of Rs.21.08 lakhs was claimed but the assessment order allowed set-off only to the extent of Rs.48.95 lakhs and reduced the refund to Rs.2.17 lakhs, disallowing credit in respect of transactions where the vendor's data was unmatched. The main bone of contention was Section 48(5) which declared that no set-off or refund shall exceed the amount of tax actually paid into the government treasury. The petitioner contended that the selling dealer acts merely as an agent of the government for collecting tax and that the purchasing dealer has no means to verify whether the vendor has deposited the tax; hence the condition of actual payment imposed an impossible burden and led to arbitrary denial of credit. The petitioner further argued that the tax invoice issued under Section 86, containing a certificate of the vendor, constituted sufficient proof of tax payment and that the provision should be read down to mean 'ought to have been paid' instead of 'actually paid'. The State defended the provision. The High Court after hearing counsel took up the matter for final disposal at the stage of admission itself, but the text provided does not include the final reasoning or the conclusion of the court.
Issue of Consideration
Whether Section 48(5) of the Maharashtra Value Added Tax Act, 2002 is constitutionally valid; whether the phrase 'actually paid' should be read down to mean 'ought to have been paid'
