PROPOSED AMENDMENTS TO MVAT ACT 02 Sr
no
1
Issue/ Justification
Amendment of Section
2(25)
(Service tax to be
excluded from sale price)
Recommendation
Definition of Sales price (Present definition)
sale price
means the amount of valuable
consideration paid or payable to a dealer for any sale
made including any sum charged for anything done
by the seller in respect of the goods at the time of or
before delivery thereof, other than the cost of
insurance for transit or of installation, when such cost
is separately charged.
Explanation I.” The amount of duties
levied or
leviable on goods under the Central Excise Act, 1944
(1 of 1944) or the Customs Act, 1962 (52 of 1962) or
the Bombay Prohibition Act, 1949 (Bom. 25 of 1949),
shall be deemed to be part of the sale price of such
goods, whether such duties are paid or payable by or
on behalf of, the seller or the purchaser or any other
person.
Explanation II.” Sale price shall not include tax paid
or payable to a seller in respect of such sale.
Explanation III.” Sale price shall include the amount
received by the seller by way of deposit, whether
refundable or not, which has been received whether
by way of a separate agreement or not, in
connection with or incidental or ancillary to, the said
sale of good
Proposed amendment
Explanation IV to be added
Explanation IV The amount of tax levied or
leviable under Service tax Rules shall be
PROPOSED AMENDMENTS TO MVAT ACT 02 excluded.
OR
The amendment could be made in the definition of
sale price itself as under
sale price means the amount of
valuable
consideration paid or payable to a dealer for any sale
made including any sum charged for anything done
by the seller in respect of the goods at the time of or
before delivery thereof,
other than Service tax levied or leviable under
Service Tax Rules, the cost of insurance for
transit, or of installation, when such cost is
separately charged.
The said amendment should be clarificatory in
nature and therefore the effect should be
retrospectively w.e.f.1.4.2005.
Object for amendment
Service tax being tax on services cannot be
considered as part of Sale price for levy of Vat.
2
Amendment to Section 26 (6)
regarding filing of appeals under
CST Act
The Appellate authority or the Tribunal, as the
case may be, may, while admitting the appeal,
pending the disposal of the appeal, stay the order
appealed against in full or part, subject to such
conditions or restrictions as it may deem
necessary including a direction for depositing of a
part or whole of the disputed amount by the
appellant.
4
[Provided that, in case of an
appeal filed on or after the 1st July 2014
against any order, in which claim against
declaration of certificate, has been disallowed
on the grounds of non-production of such
declarations or, as the case may be,
certificates then,(a) Where such appeal is filed after two
years from the end of the year to
which such claim relates, then the
stay shall not be granted unless the
appellant makes 100 per cent.
Payment of tax, in respect of such
claim.
PROPOSED AMENDMENTS TO MVAT ACT 02 (b) Where such appeal is filed before
the expiry of two years from the end
of the year to which such claim
relates, the stay, if any, shall stand
vacated, if the dealer fails to produce
the required declaration before the
expiry of the said period of two years.
Explanation.- For the purpose of
computing payment in the appeal,
mentioned in the above clauses, the
amount of part payment made earlier,
if any, shall be included.]
The newly inserted subsection for full payment of
differential tax for non receipt of declaration forms
is very harsh. Obtaining C forms from other States
has become a task by itself. This is not because
the dealers are prolonging but the issue of C forms
by the State Government takes long time and for
which the dealer has to pay tax and then get refund
after 2/3 years. The blocking of the funds causes
lot of financial burden which hits the growth of
industries to a great extent. The tax has to be paid
without collecting it from thecustomers. Therefore
this provision may please be deleted. Or
alternatively only 15% of the differential tax should
be considered for payment and admission of
appeals.
3
Amendment to Section 42(3A)
Under this subsection the construction of
flats,
dwellings or buildings or premises and transfer
them in pursuance of an agreement along with the
land or interest underlying the land are granted a
scheme of payment of tax under composition @
1% . This provision is introduced w.e.f. 01/04/2010,
whereas the taxability of such category is held
liable to tax w.e.f. 20/06/2006.
The said subsection 3A under Section 42
should be considered effective from 20/06/2006
and not 01/04/2010
Amendments
proposed
in
Maharashtra Value Added tax
Rules
4
If the claimant dealer
has
used any
PROPOSED AMENDMENTS TO MVAT ACT 02 Rule 53 (1)
5
Rule 53 (3)
taxable goods as fuel, then an
amount equal to 3% of the purchase price shall be
reduced
of
the corresponding purchase
from the amount of set-off otherwise
Available in respect of the said purchase
Fuel is used in the process of manufacture. The
reduction of 3% is not justified nor there is any logic
behind making such provision. The cost of fuel is
increasing day by day. The selling dealer has paid
the full tax then the dealer should be entitled to full
set off.Therefore Rule 53(1) should be deleted
The reduction of set off specified is 4%. The
reduction is specified is for branch transfers outside
the State. The CST rate being 2% the reduction
should be reduced to 2% from the present reduction
at 4% Rule 54(1)
a. purchases of motor vehicles
1[(being passenger vehicles)] which
are treated by the claimant dealer
as capital assets and parts,
components and accessories
thereof 1a[***]and the expression
“motor vehicles” 1 b [ * * * ]
shall have the same meaning
respectively as
signed to them in the Motor
Vehicles Act, 1988;
The word passenger vehicle has not been
defined
either under the Motor Vehicle
Act1988 or under MVAT Act. When a dealer
purchases a car and pays 12.5% vat the set off
is not admissible under rule 54(a). But when the
car is sold the dealer is asked to pay 12.5% vat
on sale. This double taxation requires to be
avoided by providing deduction on sales side, if
the vehicle is purchased in the State of
Maharashtra from registered dealer.
This deduction could be provided under section
8 or under section 63 and corresponding Rule 3.
PROPOSED AMENDMENTS TO MVAT ACT 02 6
Rule 54(h)
This reads as under
purchases of any goods by dealer
the property in which is not transferred whether
as goods or in some other form
to any other person, which are used in the
erection of immovable property
other than plant and machinery;
Revised wording
purchases of any goods by
a dealer, whether capitalized or
not the property in which is not transferred wheth
er
as goods or in some other form) to any other
person,
which are used in the erection of
h i s o w n immovable property other than
plant and machinery;
The words in block letters “ his own” needs to be
incorporated in the rule
Object
THERE IS NO DOUBT THAT SET OF ON
IMMOVABLE PROPERTY OTHER THAN PLANT
AND MACHINERY IS TO BE DISALLOWED. But if
another person( contractor is using Centering/
Scaffolding material for the construction of building
of contractee and not for his own building
construction, The disallowance cannot be made.
Further the centering material/scaffolding material
may be treated as asset or debited to Profit and
Loss Account by different dealers. Therefore for the
purpose of clarity these amendments are required
for avoiding appeals which are pending.
It is heard that such disallowance is not made in
Mumbai but definitely made in Vidarbha
PROPOSED AMENDMENTS TO MVAT ACT 02 7
Rule 58 (1)
The value of the goods at the time
of the transfer of property in the goods or in some
other form) involved in the
execution
of a works contract may be
determined by effecting the following deductions
from the value of the entire contract, in so far as
the amounts relating to the deduction pertain
to the said works contract
a . labour and service charges for the
execution of the works
contract 1[*.*.*.];
1 These words were deleted by Notificati
on No. STR.1506/CR-38/Taxation1 Dt. 8th September 2006. Earlier these wor
ds read as, ‘where the labour and service
done in relation to the goods is subsequent
to the said transfer of property’
It is not understood why this correction is brought in
to effect w.e.f. 08/09/2006. In fact there was drafting
mistake which should have been corrected w.e.f.
01/04/ 2005.
This mistake needs to corrected by giving effect
from 01/04/2005
8
NOTIFICATION
ON
CONSTRUCTION
CONTRACTS (VAT/1506/CR134/TAXATION-1
DATED
30.11.2006)
(Construction Contracts to
include
repairs,
modifications,
improvements,
redevelopment)
The said notification has notified certain contracts
and at the end following Para is added
(B) Any works contract incidental or ancillary to the
contracts mentioned in Paragraph (A) above, if such
work contracts are awarded and executed before
completion of the said contracts.
It is suggested to consider para (C) as under
© Any works contract mentioned in Para (A)
above, would also include construction
contracts
of
repairs/renovation/
alterations/modification/redevelopment.
The
definition of works contracts given in Section 2(24)
of the MVAT Act 2002 already covers these items
but the notification for construction contracts does
not state these words.
PROPOSED AMENDMENTS TO MVAT ACT 02 Section 2(24) Explanation (ii) the transfer of
property in goods (whether as goods or in some
other form) involved in the execution of
a 13[14[works contract including], an agreement
for carrying out for cash, deferred payment or
other valuable consideration, the building,
construction,
manufacture,
processing,
fabrication, erection, installation, fitting out,
improvement,
modification,
repair
or
commissioning of any movable or immovable
property;]
Therefore a clarification needs to be added
retrospectively.
The main intention is to avoid tax liability in
assessment for want of clarity.
Most of repairs and alteration works are for
Government as most of the old constructions
are either demolished or major repairs to old
constructions are done.
Similarly old roads are repaired. On such work
under composition scheme, tax is levied at 8%
considering these contracts as other than
construction contracts instead of 5% tax
applicable to construction contracts.
In recent years redevelopment of old flat
schemes and commercial complexes is also
done. All the above activities are construction
activities and cannot be excluded from the
notified construction contracts.
All the repair work relates to construction and
therefore repairs to any original construction
would undoubtedly be construction work only.
Major construction works are coming through
State/Central Government departments and in
such cases if such contracts are not covered
under Construction then under composition
scheme the contractors will charge 8% tax as
against 5%. The Government will have additional
burden of 3% in all such schemes.
Therefore the Notification stated above needs
amendment w.e.f.01/04/2005.
PROPOSED AMENDMENTS TO MVAT ACT 02 9
Amendment
42[3]
to
section
Existing Section 42[3]
Where a dealer is liable to pay
tax on the sales effected by way
of transfer of property in goods[
whether as goods or in some
other form] involved in the
execution of a works contract,
he may subject to such
restrictions and conditions as
may be prescribed, in lieu of the
amount of tax payable by him
under this act, whether in
respect of the entire turnover of
sales effected by way of works
contract or in respect of any
portion
of
the
turnover
corresponding
to
individual
works contract, pay lump- sum
by way of composition ,
A] Equal to five percent, of the
total contract value of the works
contract in the case of a
construction contract, and
B] Eight percent, of the total
contract value of the works
contract in any other case, after
deducting
from
the
total
contract value of the works
contract involving goods to a
registered sub-contractor.
The provision to allow deduction of service tax
and composition tax from the contract value as
per 57[1] should be made. The deduction in case
of all inclusive contracts for the above charges
should be allowed.
Deduction on account of land cost should be
provided from the total contract value in case of
composition
Proposed Amendment:
Where a dealer is liable to pay tax on the sales
effected by way of transfer of property in goods
[whether as goods or in some other form]
involved in the execution of a works contract, he
may subject to such restrictions and conditions
as may be prescribed, in lieu of the amount of tax
payable by him under this act, whether in respect
of any portion of the turnover corresponding to
individual works contract, pay pump-sum by way
of composition,
A] equal to five percent, of the total contract value
of the works contract in the case of a
construction contract, after deducting from the
total contract value of the works contract, the
cost of the land as per provisions of rule 58[1][a],
and
B] eight percent, of the total contract value of the
works contract in any other case after deducting
from the total contract value of the works
contract, the amount payable towards sub
contract involving goods to a registered subcontractor, and the amount of service tax and
composition tax included in the total contract
value.
PROPOSED AMENDMENTS TO MVAT ACT 02 10
Section 23
Assessment
[3
B]:
Deemed
Provision for deem assessment.
At present If any dealer has filed returns as per
the prescribed date, then in such case the
notice for assessment as per provisions of
section 23[2] in form no 301 may be issued, and
assessment order should be passed before
completion of the four years from the end of the
year to which return relates.
If the dealer has not filed the returns in time
then in such case assessment should be
completed within five years from the end of the
financial year to which return relates. The
intention to insert this section is no dealer
should be assessed under section 23 if no
notice for assessment is issued to him within
that period. After that the returns submitted by
the dealer are deemed to be accepted and
dealer’s assessment is completed.
Proposed Amendment:
If the Commissioner is satisfied that the
returns furnished by the [registered dealer] in
respect of any period are correct and
complete, he shall assess the amount of tax
due from him on the basis of such returns.
[If any refund which is due to the dealer as per
the returns should be granted suomoto without
making application in form 501.]
11
SECTION 30[2] Interest
Notwithstanding anything contained in any
section or anything contained in the act, no
order under any of the sub section of section
23 in respect of any period shall be made after
completion of the five years from the end of the
year containing the said period
AT present levy of interest is non-appealable,
and no powers are delegated for remission.
The levy of interest u/s 30[2] should be made
appellable and powers to grant remission in
genuine cases should be granted.
PROPOSED AMENDMENTS TO MVAT ACT 02 Existing section 30[2]
A registered dealer who has
failed to pay the tax within the
time specified by or under this
act, shall be liable to pay by way
of simple interest, in addition to
the amount of such tax, a sum
calculated at the prescribed rate
on the amount of such tax for
each month or paid thereof after
the last date by which he should
have paid such tax:
12
SECTION 26[5]
Existing provision
Subject to such rules of
procedure
as
may
be
prescribed, every appellate
authority [ both in the first
appeal and the second appeal
] shall have the following
powers, namely:A] In an appeal against the
order of assessment, it may
confirm, reduce, enhance or
annul the assessment:
Provided that, where the
appeal is filed before the
Tribunal, the tribunal may set
aside the assessment and
refer the case back to the
assessing
authority
for
making a fresh assessment
in accordance with the
direction given by it and after
making such further enquiry
as may be necessary; the
assessing authority shall
thereupon proceed to make
such fresh assessment and
determine, where necessary,
After the proviso to section 30[2]
Provided that the Commissioner [or any
appellate authority or revisional authority may,
subject to rules and] for reasons to be recorded
in writing, remit the whole or any part of the
interest payable in respect of any period.
30 [4] TO BE AMENDED ACCORDINGLY
Proposed sub section B]
In appeal against an order imposing a penalty,
or interest the appellate authority may confirm,
reduce, remit or cancel such order or modify it
in accordance with the provisions of the act;
D] In any other case appellate authority may
pass such order in the appeal as it deems just
and proper:
PROPOSED AMENDMENTS TO MVAT ACT 02 the amount of tax payable on
the basis of such fresh
assessment;
B] In appeal against an order
imposing a penalty, the
appellate
authority
may
confirm or cancel such order
or modify it in accordance
with the provisions of this
act;
13
SECTION 85 [2]
[2] No appeal shall lie against,[B-3] An order passed under sub section [2] or
[4] of section 30 regarding the interest payable
by the dealer under any provisions of this act, or
Sub section [B-3] should be deleted.
14
SECTION 51 REFUNDS
Presently as per the provision refund is required
to be claimed in form 501 i.e. refund application.
If refund application is not submitted in the
prescribed time limit of 18 months from the end
of the year to which refund is related no refund
is granted irrespective of it is shown or claimed
in return. This is a very harsh provision from the
dealer’s point of view. The huge numbers of
dealers have to forgo the refunds due to nonsubmission of application in form 501. The
working capital is blocked to that extent.
SUGGESTION
The express provision of submission refund
application should be done away and refund
should be granted as per the returns submitted
by the dealer subject to cross checking or
verification. It should be granted after cross
checking of Regular return annexures which are
submitted along with the returns.
PROPOSED AMENDMENTS TO MVAT ACT 02 SECTION
PROVISION
51
EXISTING
1] Where a registered dealer has
in any return, fresh return or
revised return shown any
amount to be refundable and
has not undertaken to adjust
such
amount
against
the
amount due as per any return in
accordance with section 50, the
commissioner shall, on an
application made by the dealer
and subject to rules, and the
other provision of this act, grant
refund of such amount to the
said dealer.
Proposed
51[1]
Where a registered dealer has in any return,
fresh return, or revise return shown any amount
to be refundable and has not undertaken to
adjust such amount against the amount due as
per any return in accordance with section 50,
THE COMMISSIONER SHALL, ON THE RECEIPT
OF THE RETURN ALONG WITH THE REGULAR
RETURN ANNEXURES SUBMITTED BY THE
DEALER, SUBJECT TO RULES AND OTHER
PROVISIONS OF THIS ACT GRANT REFUND OF
SUCH AMOUNT TO THE SAID DEALER.
Provided
that,
the
Commissioner may, subject to
such conditions and restrictions
as may be prescribed, reduce
the refund and grant only part of
the refund claimed in such
application.
Section 2[a]
PRPOSED
EXISTING PROVISION
he registered dealer may, after
the end of the year to which the
return, fresh return or revised
return
relates,
make
an
application in the prescribed
form for grant of refund of the
amount claimed refundable as
aforesaid. The Commissioner
may, [on receipt of application]
call
for
such
additional
information from the dealer, as
he may think necessary. The
The registered dealer may, at the time of submission of
any return, fresh return or revised return, claim the
amount of refund which is due to him as per the return,
fresh return or revised return. The Commissioner may
on receipt of the return, fresh return or revised return
along with the regular return annexures, subject to the
provisions of this act call for any such additional
information from the dealer, as he may think
necessary. The refunds relating to all the periods
contained in one year may be granted by a single
order.
PROPOSED AMENDMENTS TO MVAT ACT 02 refunds relating to all the
periods contained in one year
may be granted by a single
order]
15
SECTION 51 [3] [A]
EXISTING
Notwithstanding
anything
contained in the sub section [2]
if a dealer is,I] an exporter within the
meaning of sub section [1] or
sub section [3] of section 5 of
the central sales tax act, 1956,
or
ii]
Unit
specified
in
the
explanation to subsection [3] of
section 8; or
iii] a holder of a certificate of
entitlement under any package
scheme of incentives except the
new
package
scheme
of
incentives for [ Tourism projects
1999; or a holder of an
identification certificate issued
to a mega unit covered under
the
package
scheme
of
incentives 2001 or, as the case
may be package scheme of
incentives 2007; or]
iv] Deleted
v]
The
canteen
stores
department or the Indian Naval
Canteen [services; or]]
vi] Selling the goods in the
course of interstate trade or
commerce and turnover of the
said
interstate
sales
in
immediate
previous
year
exceeds fifty percent. Of his
total turnover of sales for that
Proposed:
I] An exporter within the meaning of sub section
[1] or sub section [3] of section 5 of central
sales tax act 1956, or
Ii] unit specified in the explanation to subsection
[3] of section 8; or
Iii] a holder of the certificate of entitlement
under any package scheme of incentives except
the new package scheme of incentives for
[tourism projects 1999 or a holder of an
identification certificate issued to a mega unit
covered under the package scheme of
incentives 2001 or, as the case may be, package
scheme of incentives 2007; or
Iv] deleted
V] selling the goods in the course of interstate
trade or commerce [and turnover of the
interstate sales in immediate previous year
exceeds fifty percent of his total turnover of
sales for that year] words in bracket should be
deleted.
May claim the refund which is due as per return,
in the return, fresh return, or revise return
submitted along with the regular return
annexures
for
the
return
period,
the
commissioner on receipt of the return, fresh
return, or revised return may grant the refund
subject to due verification as may be required as
per the rules.
PROPOSED AMENDMENTS TO MVAT ACT 02 year.]
then he may apply in the
prescribed
form
to
the
commissioner after filing the
return for grant of refund
relating to the period covered by
a return, fresh return or revised
return.
[B]
EXISTING
Proposed
The Commissioner, on receipt of
the said application, may require
the dealer to furnish such bank
guarantee for such for such
amounts, from such banks, for
such periods, and to such
authorities
as
may
be
prescribed]
16
It should be deleted. Or
The Commissioner on receipt of the return,
fresh return or revised return submitted by the
dealer, may require the dealer to furnish such
bank guarantee for the amount of refund
claimed by the dealer as per the return, fresh
return or revised return from such bank for such
period and to such authorities as may be
prescribed.
51[4]
EXISTING
Save as otherwise provided in
this section, the commissioner
shall grant the refund under this
section within eighteen months
from the end of the month
containing the date of the
receipt of the application for
refund.
Proposed
The Commissioner shall grant the refund
under this section within eighteen months
from the end of the month containing the
period of return , fresh return or revised return.
PROPOSED AMENDMENTS TO MVAT ACT 02 17
51 [7]
Existing
18
No refund under this section
shall be granted unless an
application as provided is made
and no application under this
section shall be entertained
unless it is made within
[eighteen months] from the end
of the year containing the period
to which return relates
(A) Denial of set off to purchaser
for no fault of his own but of the
Seller. Harsh Provisions of Sec
48(5) of MVAT Act
Proposed
Subsection [7] should be deleted.
1. For claim of set off, a purchaser has to depend upon
the tax invoice issued by seller. He has no authority
to check whether tax payment on the said invoice is
made in the Government treasury or not, more
particularly at the time of making purchase. Further,
there is no mechanism under MVAT Act, 2002 to
check up tax payment by vendor on the goods
purchased by the buyer. Therefore, the purchasing
dealer is justified in relying upon invoice received by
him.
However purchaser is penalized in cases where
seller has not paid to the government, tax collected
by him from such purchaser, by taking recourse to
the provisions of Sec 48(5), which allows authorities
to deny credit for tax on purchases in cases where
such tax is not actually paid to the Government.
2. Need for an undertaking from the government itself
proves the fact that the provisions of this Section are
too harsh and create an element of uncertainty about
final cost of purchase in the minds of businessmen.
Such a harsh provision in VAT is big impediment for
ease of doing business.
3. It is submitted that a purchasing dealer should not be
made to suffer in respect of at least those cases of
set off credit which relate to genuine purchase
transactions conducted with bonafide intentions, so
that hanging sword effect of set off denial is not
faced by the purchaser for the defaults made by his
seller and reasonable certainty about his cost of
purchases will be available to him.
PROPOSED AMENDMENTS TO MVAT ACT 02 Existing Provision
Suggested provision
For the removal of doubt it
is hereby declared that, in
no case the amount of setoff or refund on any
purchase of goods shall
exceed the amount of tax in
respect of the same goods,
actually paid, if any, under
this Act or any earlier law,
into
the
Government
treasury except to the
extent where purchase tax
is payable by the claimant
dealer on the purchase of
the said goods effected by
him:
For the removal of doubt it is hereby declared that, in
no case the amount of set-off or refund on any
purchase of goods shall exceed the amount of tax in
respect of the same goods, actually paid, if any,
under this Act or any earlier law, into the
Government treasury except to the extent where
purchase tax is payable by the claimant dealer on
the purchase of the said goods effected by him:
Provided that, where tax
levied or leviable under this
Act or any earlier law is
deferred or is deferrable
under any Package Scheme
of Incentives implemented
by the State Government,
then the tax shall be
deemed to have been
received in the Government
Treasury for the purposes of
this sub-section.
Provided further that where the claimant dealer
proves to the satisfaction of Commissioner that the
tax on purchase of the goods in respect of which set
off or refund is not allowed under foregoing
provisions of this sub section, pertains to a bonafide
transaction of purchase on his part supported by
evidences for receipt of the goods and for payment
of entire purchase price of the goods to the seller
and gives an undertaking to the Commissioner to
make good any loss that may arise to the
Government due to non recovery of such tax by the
Commissioner from the seller of the goods in spite of
all efforts taken for the same, the Commissioner
shall grant to the claimant dealer amount of such set
off or refund.
Wrong Dues of tax arising out of
Partial assessment done under
Desk Audit under Section 23(5) of
the MVAT Act
After issuing assessment order u/s 23(5) the provision to
make cancellation of the assessment on the ground that he
had not been able to attend or remain present for said
proceeding may please be inserted in section 23(11).
Provided that, where tax levied or leviable under this
Act or any earlier law is deferred or is deferrable
under any Package Scheme of Incentives
implemented by the State Government, then the tax
shall be deemed to have been received in the
Government Treasury for the purposes of this subsection.
19
PROPOSED AMENDMENTS TO MVAT ACT 02 20
21
22
Section 32 of the MVAT Act.
Recovery
Proceeding
Rectification order.
Mandatory
provision
for After successful implementation of e governance Under
application of refund in Form 501
MVAT Act. There is no need of separate application for
Refund in Form 501. Since the limitation of Revise return
and introduction of Annual return as well as mandatory
provision of filing of Annexure 704 for non audited dealer,
now department has all the relevant information regarding
Input Tax credit, Status of Declaration forms.
The provision should as similar to recovery on the basis of
return filed.
Provision of Interest levied on
1. Interest should not be levied if the balance
balance dues.
assessment dues are less than 10%.
2. Interest should not be levied more than 18 months.
Interest on Refund
23
Voluntary Registration Deposit
24
Profession Tax
25
The assessing officer should wait up to 30days to recover
after the dues. The recovery proceeding should not be initiated
within 30 days.
Some of the officers are avoiding to pay interest on refund
amount in spite of mandatory provision.
The online assessment template should be amended
accordingly to calculate automatic interest on refund.
Locking period of Three years should be waived. Either the
provision should be removed or Auto refund or credit
should be provided through system to the dealer
The provision of periodicity of return as per Profession Tax
Act is confusing. The example given in Rules in earlier
periods is now missing on website. More than 90% dealers
have filed returns mentioning the month for which salary is
paid instead of the next month in which salary is paid. It
also feels absurd that the due date for say Jan 2015 is 31
Jan 2015. Due to this technical misunderstanding majority
of the dealers are required to face interest, late fee and
penaly for late filing of returns even though they have just
mentioned wrong month on the return and payment chalan.
Appropriate administrative instructions along with suitable
amendment in law may be carried out to avoid large
number of litigations
If the dealer has paid excess profession tax, provision for
Refund adjustment / refund should be made easy.
PROPOSED AMENDMENTS TO MVAT ACT 02 26
27
28
Acknowledgment of letters given
Despite of instructions issued by the Higher Authorities, the
acknowledgment is not given for letters / documents
submitted to the epartmental Authorities. Central and
efficient Document inward may be provided where the
visitor will get acknowledgment and also a reference
number.
Interest on refund granted through The provisions of interest as per assessment should be
business audit
made applicable for refund granted as per business audit.
Revised returns
If the original return is filed in form 231 and revised return is
required to be filed in form 233, the system has provided a
lock and unnecessary original return with late fee is
required to be filed. This happens mainly in case of annual
revised return post Audit. Considering the fact that original
returns are filed by the dealer, such system locks should be
removed.
29
ECS for refund
30
DIS (Dealers Information System)
The refund may be credited to dealers bank account
instead of issuing cheque
The dealer information system should be updated to give
following details
1. Assessments orders passed
2. Dues payable by dealer in tabular form with full
details
3. Appeal made and appeal orders
4. Copy of Electronic Registration certificate
5. Online amendment to products, place of business
and any other information
6. Match mismatch report in excel downloadable format
7. Important amendments and changes in new
procedures
8. C forms status
9. Corrections in payment chalan period
10. TDS Credit available
11. Vat payment details
12. Returns not filed details
13. Find the assessing officer, appeal officer along with
cabin number and phone number.
14. Application for cancellation of TIN
PROPOSED AMENDMENTS TO MVAT ACT 02 31
Utilities for dealer
32
Stringent procedures should be System locks many times affect genuine dealers. The
relaxed
system locks should be tested to see whether it is not
harming genuine dealers and not resulting in harassment to
mass dealers
Sufficient number of Appeal Considering the technical faults, the number of appeal have
Authorities
increased to a large extent. The number of Appeal
Authorities should be raised sothat each officer shall have
limited cases to be disposed per month.
Annual return
The annual return should be recognized as final return to
avoid C form issue problems and various other problems.
Refund Adjustment orders
The refund adjustment orders are not recognized in the
system and hence various demand notices are issued to
the dealers. System should be improved and made flexible
to facilitate easy issue of RAO
33
34
35
Sec. 22 Time Limit for business
audit
Online utility to be provided to verify
1. TIN
2. CST TIN of all over India dealers
3. Whether a particular dealer is shortfiler, non filer or
hawala
4. Upload bill wise details if required for verification of
refund
Sec 22 provides for business audit. Initially as per
scheme of introduction of VAT it was the decided
that there will be self assessment and only in few
select cases dealers will be called for assessments.
The provision of business audit was made mainly to
guide the registered dealers to pay the tax properly.
It was expected that departmental authorities will act
as counselors. That the business audit will be
conducted immediately after the end of the year.
However for want of clarity of purpose,
this
procedure is used to make poking and fishing
inquiries to raise unreasonable tax demands on the
basis of debatable and questionable issues. Officers
do not have any responsibility towards dealers and
they are not required to make any speaking order.
PROPOSED AMENDMENTS TO MVAT ACT 02 Since there is no time limit prescribed this exercise
has become endless worry to the dealers. We are in
the era of real time decisions and inquiries in
relations to 6/7 years earlier period are ancient
concepts. It is therefore suggested that in Sec 22
time limit shall be prescribed as follows
A) time limit of one year from the end of the year
to select the case for business audit. The
dealer be informed about it.
B) time limit of one month from initiation of
business audit or two years from the end of
the year whoever is earlier.
Conclusion and finding of business audit shall be
intimated to the dealer.
36
Sec 23 - Assessments
At present in case assessment can be taken up if the
Commissioner deems it necessary. Dealers also
may be given an option to demand assessment by
making an application. In case business audit is
initiated then unless business audit report is
prepared
and
intimated
to
the
dealer
no
assessments shall be initiated.
37
Sec 23(5)
Assessment in case any transaction is not shown or
tax is evaded. This provision is used indiscriminately
even when the transaction is reported in audit. This
provision be deleted
PROPOSED AMENDMENTS TO MVAT ACT 02 38
Sec 52 : Interest on refunds
1) The interest on refund shall be for the period from
the last day of the period of refund till refund is
actually paid.
Interest shall be granted alongwith
refund. At present the dealers are required to make
an application for interest. Restriction of 24 months
was provided as the time limit for issue of notice for
assessment was two years. Rate of interest on
refund shall be raised to 1% per month. This will
make the department efficient and alert in granting
refund claims expeditiously and within time. Since all
processes are computerized the interest shall also
be automatically calculated, granted and paid.
39
Sec 55 Advance ruling
It provides for advance ruling. Notification may
please be issued as provided in the section and
procedure may be prescribed. This will avoid
litigations.
40
Sec 56 DDQ
At
present
no
time
limit
is
prescribed
for
determination of questions raised as per provisions
of Sec 56. Many times decisions are given after a
lapse of two/three years and mean time the honest
and straight forward dealers, who do not want to err
on wrong side, suffers. Hence time limit of 4 months
may be prescribed.
PROPOSED AMENDMENTS TO MVAT ACT 02 41
Rule 53(6)
Rule 53(6) was primarily meant for the deemed
dealers as mentioned in proviso to definition of
dealer. However this was not mentioned in the rule.
In many cases dealers undertake multiple activities.
Some of them are liable to sales tax and some are
not liable. In all such cases this rule becomes
applicable. The time limit of three years from the
date of registration is unreasonable in case of
expansion, addition to plant and machinery. It is
suggested that set off on plant and machinery, tools
and equipments for manufacturing or processing of
goods for sale be allowed even if the sales are less
than 50% of the gross receipts. Suitable amendment
may be made in rule 53(6).
42
Rule 53(7A)
The reduction of set off on furniture, fixtures, office
equipment
serves
no
purpose
but
increases
compliances. We request to allow full set off
43
Rule 54 Set off on software
The government at all levels is promoting computers
and e’ governance. Due to continuous change in
technology almost every businessman has to buy
software to keep pace with modernization in every
field. Software is now like any other business
revenue expenditure. It does not make any sense to
deny set off on software purchases. It is therefore
suggested that Rule 54(f) may be suitable amended
PROPOSED AMENDMENTS TO MVAT ACT 02 44
Administrative
Since
Multiple proceeding
last
nine
years
the
department
has
experimented with function based administration. It
has resulted into multiple proceedings in respect of
same dealer for same year by different authority.
This has created innumerable problems for dealers
as well as the departmental authorities. The system
needs to be scrapped. One window is recognized
system of good governance. The same be adopted
at the earliest. There are number of cases where
even if assessment order is passed the dealers get
another notice and assessment orders are also
passed. Before sending notice the department shall
ensure that no assessment order is passed for the
same period. This can be verified from departmental
record.
45
Mismatch proceedings
Large number of dealers have received notices for
mismatches in J1-J2 for very small amounts. The
mismatch is possible for number of reasons mainly
on account of different methods of accounting,
software systems, overlapping period etc. It is
requested that mismatch of less than Rs. 5% or Rs
5000 whichever is more be ignored. The cost to
department
for
initiating
the
proceeding
and
completing the formalities is enormous and can be
easily saved. It will also save the tax payers from
huge efforts. Further the correction of J1/J2 covering
all mistakes be allowed to be made online.
PROPOSED AMENDMENTS TO MVAT ACT 02 46
Pending refunds
Huge number of refunds are pending. The pendency
is mainly due to un-practicable insistence of cross
checks and too much of compliances. The export
business depends upon timely refunds from sales
tax, service tax and excise refunds. Similar is the
case of units located in backward regions holding
eligibility certificates. The time limit for grant of
refunds is provided in the act but it is hardly
honoured.
Cross
check
mechanism
of
the
government was not effective and reliable at least till
2009-10. Early solution is needed. Denial of refund
on some ground or other, is likely to create flood of
litigation. One of the solution can be that the dealers
may be allowed to carry forward refund to any
subsequent
period/year
without
any
monetary
limit.(At present the dealers are allowed to carry
forward if refund is less than Rs. 5 lac)
47
Refund of deposit
Provision for automatic refund of Deposit collected in
case of Voluntary Registration:- The computerization
has really progressed at the Departmental end. The
dealer should not be required to make application at
the end of 36 months. The provision of automatic
refund should be made in Law. In case the dealer
has filed all returns for a period of one year from the
date of registration and has paid taxes accordingly
such dealer be allowed to adjust the deposit against
his tax payable as per return.
PROPOSED AMENDMENTS TO MVAT ACT 02 48
Refund under CST
At present the refund under CST act is not allowed
to be adjusted against the dues under the MAVT Act
though
the
vice
versa
is
allowed.
Suitable
amendment be made so as to allow such adjustment
49
Maintenance of E record
Large number of dealers are now keeping record in
electronic format. The same may be legally allowed.
Dealers may be allowed to submit information in
electronic format in business audit/assessment
proceedings.
50
Mahavikas Officer
At present uploading the data is carried on by
officers or their staff and they encounter various
difficulties. We suggest that at each district place
one Mahavikas officer shall be appointed to assist
the updating departmental data.
51
Central Sales Tax
Obtaining C forms has become a major problem. To
C forms
many parameters are laid for rejection of application.
Minor mistake or difference of Rs.1 also is ground for
rejection. The insistence of 100% accuracy is good
in principle but not practicable as it puts heavy
burden in Department as well as the dealers.
Description of goods undergo change from time to
time and from dealer to dealer. C form get rejected
on that account. Hence goods mentioned in
application may be incorporated in registration
automatically. No need to apply for inclusion of such
goods.
PROPOSED AMENDMENTS TO MVAT ACT 02 52
Refund under CST
At present the refund under CST act is not allowed
to be adjusted against the dues under the MAVT Act
though
the
vice
versa
is
allowed.
Suitable
amendment be made so as to allow such adjustment
PROPOSED AMENDMENTS TO MVAT ACT 02 PROPOSED AMENDMENTS TO MVAT ACT 02