1.
S. 6A :
This Section refers to
branch transfers and production of ‘F’ forms.
In this sub-section two
amendments are proposed.
(i)
Ss.(2) of S. 6A :
As per the present position,
if the assessing authority is satisfied that the particulars mentioned in ‘F’
forms are correct, he can allow the transfers as other than interstate sale
i.e., branch transfer.
By amendment, it is proposed
that the authority should satisfy that the particulars are true and also that
there is no interstate sale and then he should pass the order that the transfers
are other than interstate sale. It is further provided that this allowance will
be subject to Ss.(3), which is newly inserted.
This amendment now provides
more powers to the sales tax authorities. The authorities will now be entitled
to examine whether the transfers are inter- state sales, in spite of the fact
that the particulars in the ‘F’ forms are true. This appears to be with a view
to counter the observations in certain cases, where courts have held that once
the particulars are not disputed by the authorities, the claim has to be
allowed. Even if the transaction might have been interstate sale, because the
particulars in ‘F’ form would be correct, the branch transfer claim would have
been required to be allowed. The amendment is now proposed to correct the above
position.
(ii) By another amendment in
S. 6A, Ss.(3) is proposed to be inserted. By this sub-section, the powers of
reassessment/revision are proposed to be given to the sales tax authorities. As
per this new sub-section, the respective reassessing/revision authorities will
be entitled to modify the order passed u/s.6A(2), if new facts are discovered or
that the findings of the lower authorities were contrary to law. This amendment
appears to reverse the ratio of judgment of the Supreme Court in case of Ashok
Leyland Ltd. (134 STC 473) (SC). In this case, the Supreme Court has held that
once the ‘F’ forms are allowed, it cannot be reversed through reassessment or
revision, unless the same were found to be produced fraudulently. The
interpretation put by the Supreme Court was certainly appreciable as it can save
dealer from unending fishing inquiries, in spite of completion of assessments.
This judgment, in Ashok Leyland Ltd., has been followed in many other judgments
like in the case of Steel Authority of India Ltd. (10 VST 451) (CSTAA), etc.
Now, as per proposed amendment even if the ‘F’ forms are genuine and particulars
are true, the authorities will be entitled to reassess/revise, if the order
u/s.6A(2) was contrary to law. The dealers will now be required to be prepared
for long-drawn battles in spite of initial completion of assessments.
In Maharashtra there will be
one more issue.
Under the MVAT Act, 2002
there is no provision for reassessment/revision, but there is provision for
review. The terms used in newly inserted Ss.(3) are ‘reassessment/revision’,
thus an issue may arise whether it will take into account a ‘review’. Though,
the review is in the nature of revision, its legality is certainly debatable.
2.
Chapter VA :
By another amendment,
Chapter VA is proposed to be inserted in the CST Act, 1956. This Chapter
contains S. 18A, which has (5) sub-sections. The intention of this provision is
to provide appeal against the order passed u/s.6A(2) or (3) to the highest
appellate authority of the State. This appears to avoid first appeal stage. As
per the provisions of Chapter VI, the order passed by the highest appellate
authority of the State in relation to S. 6A is appealable to the Central Sales
Tax Appellate Authority (CSTAA). Normally, the original order is passed by
assessing authorities and against the same the first appeal is provided, before
going in appeal to the highest appellate authority of the State. The amendment
appears to cut down the first appeal stage. As per this amendment, the appeal
against the original order (assessment order) u/s.6A(2) and (3) will lie to the
highest appellate authority. It is also provided that if the appeal is filed
before the highest appellate authority, involving S. 6A(2) or (3), the dealer
will be entitled to take other incidental issues like rate of tax, computation,
penalty, etc. in the same order before the said highest appellate authority.
From such order of the highest appellate authority the further appeal will lie
to CSTAA.
This S. 18A is a
self-contained code giving procedural provisions also like time limit for filing
appeal, grant of stay, time limit for deciding appeal, etc. The
proposed S. 18A can be analysed as under :
S. 18(1)
: It provides that irrespective of any provisions under the General Sales Tax
Law of the State, the appeal against the order passed by the assessing authority
u/s.6A(2) or (3) of the CST Act should lie to the highest appellate authority of
the State. By explanation at the end of S. 18A, the meaning of the highest
appellate authority is provided. As per said Explanation, the highest appellate
authority means the Appellate Authority or Tribunal constituted under the
General Sales Tax Law except the High Court.
In other words, in Maharashtra, the highest appellate authority will be the Maharashtra Sales Tax Tribunal. Thus, from order of the assessing authority u/s.6A (2)/(3) appeal will be required to be filed directly before the Tribunal.
S. 18(2) : The time limit for filing appeal is prescribed by this sub-section, which is 60 days from service of impugned order. There appears to be no speaking power for condonation of delay in filing appeal.
By proviso to the said sub-section, it is provided that where the appeal is forwarded to the first appellate authority by the highest appellate authority as per proviso to S. 25(2), such pending appeal on appointed day should get transferred to the highest appellate authority. The appointed day will be notified in the official Gazette. So this will take place in future on a day as may be notified.
S. 18(3) : The highest appellate authority will pass appropriate order, after giving opportunity of hearing to both the parties.
S. 18(4) : Time limit for passing the order — As far as possible, the highest appellate authority should pass the order within six months from filing of appeal.
S. 18(5) : Powers of granting stay against the demand— It is stated that on making application to the highest appellate authority, it can grant stay after considering the tax already paid on the subjected goods in the said State or in other State. However, it is also provided that the highest appellate authority may ask to deposit certain amount as pre condition for admission of appeal.
3. S.20:
Amendment is also proposed in S. 20 of the CST Act, 1956, which relates to appeals to CSTAA. The Ss.(1) is proposed to be substituted. The substituted Ss.(1) provides that the appeal against the order of the highest appellate authority of the State, determining issues relating to stock transfer or consignment of goods, insofar as they involve dispute of inter-state nature, will lie to CSTAA. The present Ss.(1) is narrow in scope, as it mentions order u/s.6A r/w S. 9. The substitution appears to correct a technical flaw in existing sub-section. Since the appeal to CSTAA is from the order of the highest appellate authority, it may be passed under particular appeal provisions and hence references to S. 6A may not be necessary here. This amendment appears to be for correcting the above position.
4. S.22:
An amendment is also proposed in S. 22 to replace the words ‘pre-deposit’ as ‘deposit’. The amend-ment is procedural in nature.
By another amendment in S. 22, Ss.(1B) is proposed to be inserted. This appears to fill up the lacuna in present provision. There is no speaking provision for directing refund of tax to the dealer or to other State. This insertion is to give power to CSTAA to direct a particular State to refund the tax which is not due to it or to transfer the same to other State to whom CST belongs, based on appeal findings. The direction to refund will not be exceeding the amount which will be payable as CST.
Though the amendment is welcome, it has not tak-en care of all the issues, particularly arising under the Local Act. For example, in transferee State the dealer has paid Local tax and CSTAA considers it as inter-state sale from moving State, disallowing branch transfer claim. Now CSTAA can ask the transferee State to refund the amount equal to CST to moving State. However the purchasing dealer in transferee state will be at loss. He might have claimed set-off considering it as local purchase which is now considered as intersate purchase which will result in denial of his set-off claim. Remedial provisions are required to be provided to tackle such a situation.
5. S.25:
By one more amendment, the proviso to Ss.(2) of S. 25 is proposed to be omitted. This proviso provides for availment of first appeal by the dealer. However, now, since the said first appeal is sought to be avoided, the omission of this proviso is consequential.
B) Recent amendments in MVAT Act, 2002 :
The Government of Maharashtra has issued Ordinance No. II of 2010, dated 18-2-2010, by which S. 9(1) of the MVAT Act has been amended. By this amendment the proviso to S. 9(1) is deleted from the statute book. This proviso puts a limitation on the Government that it cannot amend schedules to increase the rate after two years from 1-4-2005. However, due to removal of the said proviso, now the Government can change the rates after two years also. Thus, the Government has assumed wide powers about increasing the rate of tax in VAT schedules.
By using the expanded powers, the Government of Maharashtra has issued Notification u/s. 9(1), dated 10-3-2010. By the said Notification changes are ef-fected in Schedule A and C. On most of the goods contained in Schedule C, the rate of tax is increased from 4% to 5% from 1-4-2010. The rate of tax on declared goods contained in Schedule C is retained at 4%, whereas on all other goods contained in Schedule C, the rate is increased to 5%.
On about 101 non-declared items contained in Schedule-C, the rate is increased from 4% to 5% from 1-4-2010. The same is done just before the Budget presentation.
[This is also against the accepted principle of uniformity of rate of tax in VAT regime.]
Amongst others, the changes will affect the necessities of common person like wheat and cereals/pulses, etc. The changes can be said to be of far-reaching effect. It will also affect the prices of goods, which are already high due to inflation and other reasons.
In fact, the Government of Maharashtra proposed to levy tax even on fabrics and sugar. However, by Circular 11T of 2010, dated 17-3-2010, it is clarified that the tax position in relation to sugar and fabrics will continue as it is at present and no change will take place from 1-4-2010. We hope that the Government will reconsider this mass increase in other items also, keeping into account the common good.
