Bombay High Court Admits MVAT Appeal on Questions of Law Regarding Package Scheme of Incentives and Retrospective Amendment. Appeal Challenges Pro-Rata Exemption Applied Under Amended Section 93 of Maharashtra Value Added Tax Act, 2002, Asserting Full Exemption After Exhaustion of Benefits Before Amendment.

Tax appeal against assessment order under Maharashtra Value Added Tax Act, 2002, disputing denial of full exemption under Package Scheme of Incentives.

Appellant seeks to set aside orders of the Maharashtra Sales Tax Tribunal and the Commissioner of Sales Tax, and to claim full exemption from tax for the entire turnover of its Ratnagiri unit for FY 2005-06, instead of the pro-rata exemption applied by the authorities.

The assessing authority applied the retrospectively amended Section 93 of MVAT Act and granted only a pro-rata exemption of 35% on the ground that separate accounts for old and new units were not maintained, leading to a tax demand. The appellant contended it had already exhausted the cumulative quantum of benefits under the entitlement certificate in March 2009, before the amendment came into force.

Assessment order dated 22.02.2013 by Deputy Commissioner of Sales Tax; First Appellate Authority (Joint Commissioner) confirmed on 29.09.2015; Maharashtra Sales Tax Tribunal dismissed second appeal on 27.02.2017.

(A) Whether in the facts and circumstances of the case, exemption from whole of tax under Serial No.1 of Notification No. VAT/1505/Cr 122/Taxation dated 1.4.2005 issued under Section 8(4) of Mah.VAT, 2003 is available for the entire turnover of Ratnagiri unit, despite of Chapter 14 of MVAT Act, 2002 as retrospectively amended/substituted by Mah.Act 22 of 2009? (B) Whether in the facts of the circumstances, Section 93 of MVAT Act, 2002 as amended by Act 22 of 2009 is applicable to turnover of Ratnagiri unit which has already exhausted the monetary ceiling limits of exemption before 28.08.2009 being the date of coming into force Maharashtra Act 22 of 2009? (C) Whether in the facts and circumstances of the case, in view of the validation and saving provision contained in Section 5 of Maharashtra Act 22 of 2009, full exemption is available for entire turnover of Ratnagiri unit, particularly when the eligibility certificate/certificate of entitlement both dated 10.02.2003 did not contain any condition of proportionality for availing of incentives under 1993 Scheme?

Amended Section 93 of MVAT Act not applicable to units availing exemption under the Package Scheme, being confined only to deferment or interest-free loan schemes. The monetary ceiling limit specified in the eligibility certificate was fully exhausted by March 2009, prior to the amendment of Section 93 which came into force on 27.08.2009, thus the retrospective operation cannot affect the appellant. The retrospective amendment would not apply to units whose Cumulative Quantum of Benefits had already been fully utilized during the eligible period, after which the appellant paid full tax on sales from 01.04.2009. The eligibility certificate dated 10.02.2003 did not contain any condition requiring availment of incentives on a proportionate basis linked to the increase in production capacity, and the appellant was recognized as a Pioneer Unit under the 1993 Scheme. The lower authorities ignored the settled legal position and erroneously applied the amended Section 93 to restrict the exemption pro-rata.

Whether in the facts and circumstances of the case, exemption from whole of tax under Serial No.1 of Notification No. VAT/1505/Cr 122/Taxation dated 1.4.2005 issued under Section 8(4) of Mah.VAT, 2003 is available for the entire turnover of Ratnagiri unit, despite of Chapter 14 of MVAT Act, 2002 as retrospectively amended/substituted by Mah.Act 22 of 2009? Whether in the facts of the circumstances, Section 93 of MVAT Act, 2002 as amended by Act 22 of 2009 is applicable to turnover of Ratnagiri unit which has already exhausted the monetary ceiling limits of exemption before 28.08.2009 being the date of coming into force Maharashtra Act 22 of 2009? Whether in the facts and circumstances of the case, in view of the validation and saving provision contained in Section 5 of Maharashtra Act 22 of 2009, full exemption is available for entire turnover of Ratnagiri unit, particularly when the eligibility certificate/certificate of entitlement both dated 10.02.2003 did not contain any condition of proportionality for availing of incentives under 1993 Scheme? It is the specific case of the appellant that for the Financial Years 200506, 200607, 2007 08 and 200809 and in particular, for the Financial Year 2005 06 in respect of which the present Appeal is filed, the appellant relied upon the eligibility certificate and the Entitlement certificate issued in its favour and claimed complete exemption from taxes for the entire turnover of sales made by it from Ratnagiri unit. On the basis of this eligibility certificate, Sales Tax Department issued entitlement certificat

Assessment order for period 2005-06 passed on 22.02.2013 by the Deputy Commissioner of Sales Tax, Pune, applying pro-rata exemption under amended Section 93. The appellant's first appeal to the Joint Commissioner of Sales Tax (Appeals) II Pune City was dismissed on 29.09.2015. Second appeal to the Maharashtra Sales Tax Tribunal, Mumbai was dismissed on 27.02.2017. The present appeal was filed under the MVAT Act before the High Court, admitted on the substantial questions of law, and taken up for final hearing by consent.

• Maharashtra Value Added Tax Act, 2002: 8(4), 93
• Maharashtra Value Added Tax Rules, 2005: 78
• Central Sales Tax Act, 1966:
• Companies Act, 1956:
• Maharashtra Act 22 of 2009: Section 5
• Package Scheme of Incentives 1988:
• Package Scheme of Incentives 1993: para 3.12, 3.12(b)