Recent amendments to MVAT Act, 2002

Amendments are effected in Maharashtra Value Added Tax Act,
2002 and Maharashtra Value Added Tax Rules, 2005 to carryout Budget proposals
announced by the Finance Minister in his Budget Speech.

The gist of important changes can be given as under :

The amendments are effected by the Maharashtra Act No. XII of
2010, dated 29-4-2010. The amendments are in the Maharashtra State Tax on
Professions, Traders Callings and Employment Act, 1975, Maharashtra Tax on
Luxury Act, 1987 and Maharashtra Value Added Tax Act, 2002. The changes in
general are applicable from 1-5-2010, except for S. 42(3A) of the MVAT Act,
2002, which comes into operation from 1-4-2010.

(i) S. 18 of the MVAT Act enumerates various occurrences on
happening of which intimation is required to be given to the Sales Tax
Department. By amendment in S. 18 of the MVAT Act, 2002 it is now provided that
the dealer should also give intimation in the following two circumstance, (i) If
there is a change in the nature of business, and (ii) change in bank account.

Vide Circular No. 17T of 2010, dated 17-5-2010, it is
clarified that the change in nature of business means if the activity is shifted
from manufacture to trading or import or vice versa.

Similarly in relation to the bank account it is mentioned
that the details about closing or opening of the bank account should be
intimated.

(ii) S. 23(5) is about transactionwise assessment. Up till
today, only officers of Investigation Branch acting u/s.64 were entitled to
carry out transac-tionwise assessment. By amendment in S. 23(5) it is now
provided that the other sales tax authorities will also be entitled to carry out
transaction- wise assessment in case of tax evasion, etc.

(iii) By amendment in S. 29 the following changes are
effected :

(a) The quantum of penalty u/s.29(6), which relates to
offence about contravention of tax invoice, is enhanced from Rs.100 to
Rs.1,000.

(b) The quantum of penalty u/s.29(7), which relates to
offence about non-compliance of notices, is enhanced from Rs.1,000 to
Rs.5,000.

(c) U/s.29(11) it was provided that no penalty order should
be passed after 5 years from the end of the concerned year for which penalty
is to be levied. The period of 5 years is now extended to 8 years.

(iv) In Budget speech it was announced that a special 1%
composition scheme will be provided for builders/developers who transfer
immovable property also in the construction contract. An enabling provision is
inserted by way S. 42(3A) to give power to the Government to notify that
composition scheme. However the actual scheme will be known only upon issue of
Notification, which can be effective from 1-4-2010.

(v) Input Tax Credit and refund of excess credit is backbone
of successful VAT implication. Up till today, the position was that the
authorities were bound to grant refund as per amount shown in refund application
in Form 501. However now by amendment in S. 51, a proviso is inserted by which
powers are given to the sales tax authorities to reduce the refund from the
refund amount claimed in the refund application. Simultaneously Rule 55A is also
inserted to implement this proviso, which is discussed subsequently.

(vi) S. 61(3) is about VAT Audit. Till today, the turnover
limit is Rs.40 lakhs and a dealer having turnover of sale/purchase exceeding the
above limit is liable to VAT Audit. By amendment in S. 61(1) the following
changes are made :

(vii) S. 85 enumerates orders which are not appealable. By
amendment to S. 85, appeals in the following matters are debarred :

(a) Appeals against orders levying interest u/s.30(2)/30(4) :

U/s.30(2) interest is levied for delay in payment of tax as
per return. U/s.30(4) additional interest is levied when the dealer revises his
returns as per contingencies given in the said Section. Appeals against both the
orders are debarred. This will affect the dealers harshly. There are various
circumstances under which interest is not justified or justified at lower
amount. Now the dealers will not have any opportunity to get relief in interest,
though they may deserve the same.

(b) Appeals against Provisional attachment order
u/s.35(1)/(2) :

Provision attachment orders are passed u/s. 35(1)(2).

S. 35(5) provides special mode of appeal against such orders.
The dealer has to file application to the Commissioner of Sales Tax against the
attachment order and if such order is upheld by the Commissioner of Sales Tax,
then to file appeal before the Tribunal. This mode is untouched. However there
was no prohibition to file direct appeal before the Tribunal against attachment
order and in one of the matters the Tribunal held so. Now the specific
prohibition is brought in. Therefore, no direct appeal will be entertained
before the Tribunal and one has to go through the route of application to the
Commissioner of Sales Tax and then to the Tribunal.

(c) Appeals against intimation u/s.63(7) :

Intimation is in nature of proposal. It is issued to convey
findings of business audit with suggestive redressal action on part of
the dealer. Therefore appeal was otherwise also not maintainable, as such
intimation may not be an order. However, now the doubt, if any, is put to rest.
No appeal will be maintainable against such intimation issued u/s.63(7).

(viii) S. 86 — Tax invoice :

S. 86 enumerates requirements of Tax Invoice as well as other
than Tax Invoice. By amendment in S. 86 it is now provided that the selling
dealer while issuing Tax Invoice should also mention the TIN of the purchasing
dealer. Therefore, on the Tax Invoices issued from 1-5-2010 onwards, the selling
dealer should mention TIN of the purchasing dealer.

For buyers it will be necessary to have Tax Invoice containing his TIN, otherwise set-off will not be eligible in respect of such purchase.

S. 7A is inserted in the Act. By this Section the provisions of the Business Audit, as existing in S. 22 of the MVAT Act, 2002, are made applicable to P.T. Act, 1975. Accordingly, the Department can do Audit under Profession Tax Act, 1975 also.

Simultaneously, the provisions in the MVAT Rules, 2005 about Electronic Filing of Returns, Electronic Payment are made applicable to the Profession Tax?Act?also.?However?exact modalities are awaited by specific rules under P.T. Act and Circular.

The other change is that the provisions in the MVAT Rules, 2005 about Electronic Fil-ing of Returns, Electronic Payment are made applicable to the Luxury Tax Act also.

Maharashtra Valued Added Tax Rules, 2005?:
The Government has also issued Notification dated 30-4-2010, whereby the MVAT Rules are amended from 1-5-2010. The gist of amendment is as under?:

    1) The due date for filing returns in the following categories is extended?:
    a) In relation to six-monthly returns, to be filed by retailers under composition scheme, the due?date?is?extend?to?30?days?from?the?present 21 days. The same applies from 1-5-2010 onwards [Rule 17(4)(a)(i)].

    b) In case of dealer whose periodicity to file returns is six months (due to tax liability below Rs.1 lakh or refund less than Rs.10 lakhs in previous year), the time limit for filing returns is extended to 30 days from the present 21 days. [Rule 17(4)(b)].

    c) New dealers?:

The periodicity for filing returns in case of new dealers is revised. Now they will be liable to file quarterly returns instead of previous position of six-monthly returns.

(2) Conditions of grant of refund?:

Rule 55A has been newly inserted in the MVAT Rules from 1-5-2010. As per the said Rule, Refund will be curtailed in the following two situations?:

    i) If tax has not been paid on earlier transactions of sale of goods on which set-off is claimed. The provision will affect innocent buyers harshly. By rule, it appears that simply on ground that tax is not paid earlier, the refund will be curtailed without due process of law. Against the refund order in Form 502, the dealer will be required to file appeal and contest the issue. This will involve long-drawn legal process. This rule is not desirable when general class of dealers is going to be affected.
    ii)If C/F forms are not received. The process to claim the refund where forms are received afterwards is required to be clarified by the Department.

    3) New Form 604 is inserted, which will be used for giving intimation u/s.63(7) i.e., to convey Business Audit findings.