Sales Tax Review

March  2008

TRADE CIRCULAR.

No.VAT/AMD-1007/1B/Adm-6

Gentlemen/Sir/Madam,

          Honorable Finance Minister in his Budget speech delivered on 19^th   March, 2008 has made announcement for filing of the Electronic returns. The relevant part of the Budget speech is as under:- 

“9. All the tax payers are required to file periodic returns. If any amount is to be paid with the returns then the returns are filed with Nationalized Banks. If no payment is to be made or if refund is claimed, then the return is filed with the Sales Tax Department. Under this procedure it becomes difficult to consolidate or analyze the information contained in the returns. After considering these issues, I have decided to introduce a procedure to file Electronic returns through the internet. Initially the new procedure would apply only to very large tax payers. But in a few months the new procedure would be made applicable to all those dealers who are required to file monthly returns. This would help in early identification of return defaulters.”

2. In view of this a Trade Circular is issued for the information of the trade about the amendments carried out in the Rule 17 and Rule 18 of the MVAT Rules, 2005.

3. Introduction:
   The Government by Notification No. VAT/1507/CR-94/Taxation-1 dated 14^th March 2008 has carried out certain amendments to Rule 17 and Rule 18 of Maharashtra Value Added Tax Rules, 2005 pertaining to filing of return.  The amendment also provides for filing of e-return by certain categories of dealers.  The rule authorised the Commissioner of Sales Tax to notify the date for mandatory filing of e-return by certain categories of dealers.  In pursuance of this delegation the Commissioner of Sales Tax has issued the notification dated 14^th March 2008. It has now been made mandatory for registered dealers whose tax liability in the previous year was Rs. 1 Crore or more to file returns electronically for the periods starting on or after 1^st February 2008.
   
   This office had earlier issued a Trade circular dated 12^th September 2007 regarding electronic filing of returns.  In the said circular, it was stated that it is proposed to introduce a system whereby returns can be filed electronically.  It was further stated that various alternatives regarding electronic filing of returns are under consideration and discussion and that the representatives of the trades and tax consultants are being consulted while finalizing the new procedure.  The new procedure is now finalized and the amendment to the rule is made accordingly.
    

4. Electronics filing of returns:  Sub-rule (5) of rule 17 is substituted. The substituted sub-rule provides for filing of returns electronically.  The registered dealer liable to file return electronically should first make the payment of tax alongwith interest, if any, in chalan 210 in the designated banks.  As per the notification issued by the Commissioner of Sales Tax  the registered dealers whose tax liability during the previous year was Rs. one Crore or more, shall make payment and file electronic returns as provided in the said sub-rule (5). For the purposes of the notification, the expression ‘tax liability’ has the same meaning as assigned to it in the Explanation-I to sub-rule (4) of the said Rule 17.

4.1)  These dealers shall file the return electronically in the respective form applicable to them.  The templates of new return form are provided on the new website of the Sales Tax Department http://www.mahavat.gov.in/.  Every dealer to whom the above notification applies shall download the relevant template of the form and after making data entry in the relevant field upload it using his digital signature.  The uploading shall be done on or before the due date prescribed for filing of the returns. The system shall generate an acknowledgement in duplicate.

4.2)  However, if the dealer does not have or has not used digital signature then he shall submit a copy of the acknowledgement duly signed by an authorised person within 10 days from the uploading of the return to the respective authority specified in sub-rule (2). For the time being if a dealer is with LTU a copy of the acknowledgement may be submitted to their respective officer of the Large Tax Payers Unit (LTU) who is regularly in liaison with the dealer.

4.3) To facilitate filing of e-return, detailed guidance note explaining the procedure to file of e-return is placed on the website http://www.mahavat.gov.in/. If any dealer requires further assistance for filing of e-return he may contact the respective liaison officer who has been assigned for this job. If dealer requires further assistance in filing e-return, he or his authorised representative may visit respective Sales Tax authorities wherein he will guide regarding the e-filing of return. A dedicated help desk is also created in Mazgaon Office to answer the queries pertaining to e-returns. The dealer may contact the help desk at 022-23735621/ 022-23735816.

4.4)   Since this is the first month for filing of e-return, the dealers may face some difficulties in preparing and uploading the electronic return. Considering the likely difficulties faced by the dealers, a concession is provided only for this month to upload the e-return even after the due date i.e. 21^st March 2008, but on or before 31^st March 2008.  The e-return uploaded upto 31^st March 2008 shall not be treated as late, provided the payment of tax as per return is made on or before due date.  This concession is applicable only for the first month and for the subsequent period the dealers will remain required to upload  the return on or before the due date.

5. Change in return forms: The earlier return Forms 221, 222, 223, 224 and 225 have been replaced with the new returns Forms-231, 232, 233, 234 and 235, respectively.  These forms are made available on the website of the department. (http://www.mahavat.gov.in/ and http://www.vat.maharashtra.gov.in/)  The dealer can down load these forms from the menu download section of the website.  All the returns including the returns for the earlier period, should now be filed in the aforesaid new return forms. 

5.1) The new return forms are applicable to all dealers including those who are not required to file electronic returns. The efforts are being made to make these forms available at all the locations in the state.  However, the dealers except, the dealers required to file e-return may file returns in the old forms 221 to 225. This facility will be available only in the respect of returns which are to be filed before 31^st  March 2008.  Thus, all the returns filed after 1^st April 2008 (including the returns for the earlier period, if any) should invariably be in the new return form.

5.2)    Another amendment is made to sub-rule (1) and sub-rule (3) of Rule (5) of the Central Sales Tax (Bombay) Rules, 1957 to provide for Electronic return. The old return Form IIIB is now replaced by new Form IIIE.  Therefore, dealers filing returns on or after 1^st February 2008 shall file return in the new form.

6. Filing of returns by oil companies:    The first amendment to sub-rule (2) provides that notified oil companies shall file a copy of their return in Form 235 with the Joint Commissioner of Sales Tax (LTU), Mumbai within 3 days of filing of the return in Form 235.

7. Returns of dealers covered by Package Scheme of Incentives:  By this amendment a new procedure is prescribed for certain dealers under Package Scheme of Incentives.  The amendment provides that if the dealer holds a certificate of entitlement under any Package Scheme of Incentives except the Power Generation Promotion Policy, 1998, then the dealer shall file return to the registering authority having jurisdiction over the respective place of business of the dealer in respect of which he holds the certificates of entitlement.
   
   The proviso appended to this clause states that if the dealer has two or more entitlement certificates issued to him then he shall file the required return with that registering authority which has jurisdiction over the place of business pertaining to the entitlement certificate whose period of entitlement ends later.  This return should show aggregate figures of all sales and purchases pertaining to all the eligible units of the dealer. A complimentary amendment is also carried out in rule 81.

8. No separate return:   Earlier by Clause (c) of sub-rule (2) of rule 17 certain dealers were permitted to file separate returns for their respective places or constituents of the business. The said rule is now deleted. Therefore, the permissions granted earlier, if any, stands automatically cancelled.  
   
   A technical amendment is made to sub-rule (3).

9. Yearly return by deemed dealers:   The explanation to clause (8) of section 2 define certain persons and authorities to be deemed dealers.  These dealers were required to file return as per the regular periodicity applicable to dealers.  By this amendment it is provided that every dealer to whom the Explanation to clause (8) of section 2 applies shall file annual return if his tax liability during previous year is Rs. 1 crore or less.  The annual return is to be filed within the 21 days from the end of the year.  However, the facility to file annual return is not automatic.  The dealer covered by the Explanation to clause (8) of section 2 will have to apply to the Joint Commissioner of Sales Tax (Returns) in Mumbai and to the respective Joint Commissioner of Sales Tax (VAT administration) in the rest of the State to be entitled to file annual return.  There is no prescribed format of the application. The annual return can be filed only after the Joint Commissioner of Sales Tax concerned grants the required permission.

10. Change in periodicity for newly registered dealers:  Sub-rule (1) of rule 18 has been amended.  So far newly registered dealers were required to file quarterly returns.  It is now provided that these dealers shall file six monthly returns for the period starting from 1^st April 2008.

11. This circular cannot be made use of for legal interpretation of provisions of law as it is clarificatory in nature. If any member of the trade has any doubt, he may refer the matter to this office for further clarification.

12. You are requested to bring the contents of this circular to the notice of the members of your association.

Yours faithfully,
(SANJAY BHATIA)
Commissioner of Sales Tax,
        Maharashtra State, Mumbai.