Sales Tax Review

October 2007

TRADE CIRCULAR.

No VAT-1007/1A/Adm-3

Gentlemen/Sir/Madam,            

              A Bill (Legislative Assembly Bill No. XLIII of 2007) to amend the Maharashtra State Tax on Profession, Trades, Callings and Employments Act, 1975, the Maharashtra Tax on the Entry of Goods into Local Areas Act, 2003 and Maharashtra Value Added Tax Act, 2002 was introduced in the Legislature and has since been passed by both the houses of the legislature. It is now gazetted as an Act of the legislature on the 6^th August 2007.

            The salient features of the amendments are briefly explained below:

2. Except the amendments to the Explanation in clause (b) of sub-clause (ii) in clause (24) of section 2(24), sections 8(3B), 26, 50(1), 69(3) and 91 (5) of the Maharashtra Value added Tax Act, 2002, all other sections of all Acts mentioned above are effective from 15^th August, 2007.

3. Gist of Amendments to the Maharashtra State Tax on Professions, Trades, Callings and Employments Act, 1975.

1. Amendment of section 6:

Proviso to sub-section (1) of section 6 is substituted by virtue of  which permission can be granted to an employer for filing a consolidated return for all his places of  business in Maharashtra.

2. Amendment of section 8:

This sections deals with composition. After amendment in clause (a) of sub-section (3) words and figures “rupees 2500 per annum” are retained. The reference to Rs. 1700/- p.a. and Rs. 2200/- p.a. are removed as these rates are no more in existence.

4. Gist of Amendments to the Maharashtra Tax on Luxuries Act, 1987.

Amendment in clause (iv) of sub-section (1) of section 20 is effected by adding the words “Sr. Deputy Commissioner of Sales Tax”.  This section deals with powers of recovery under Maharashtra Land Revenue Code, 1966 and now Sr. Deputy Commissioner of Sales Tax will have powers to recover Luxury Tax under Maharashtra Land Revenue Code, 1966.

5. Gist of Amendment to the Maharashtra Tax on the Entry of Goods into Local Areas Act, 2003.

Schedule entry 13 of the Entry Tax Act is revived and re-enacted from 1^st October 2002 to 31^st March 2005. The re-enacted entry is “13. Petroleum Fuel Oils including (a) heavy Furnace Oil, and (b) Residual Furnace Oil”. The rate of tax remains at 15 paise in the rupee.

The schedule entry was struck down by a decision of Bombay High Court on the ground that a dealer importing petroleum goods from a place outside Maharashtra had to face a higher effective burden than a dealer purchasing similar goods locally. The mistake pointed out by the High Court was set-right by amending the Bombay Sales Tax Act, 1959 With suitable retrospective effect. However, while deciding the appeal filed by the State Government the Supreme Court merely observed that the State Government has cured the mischief pointed out by the High Court. However, the entry struck down by the High Court is specifically required to be revived for that period. This has now been done.

6. Gist of Amendments to the Maharashtra Value Added Tax Act, 2002.

(a) Amendment of section 2:

1. In clause (16) the word “residence” is deleted. The definition of a non-resident dealer now states that he has no fixed place of business in the State but may or may not be residing in the State

2. In clause (24), in the Explanation in clause (b), in sub-clause (ii) the words “works contract namely” are substituted by the words “works contract including”. This part of the definition deals with the definition of “works contract”. The definition has become “inclusive” W.e.f. 20^th June 2006.

(b) Amendment of section 8:

1. In sub-section. (3) the words “export oriented unit” are substituted for the words “hundred per cent. export oriented unit”. This is done because the newly declared Foreign Trade Policy of the Government of India uses the expression “Export oriented Unit” in place of  “Hundred per cent. export oriented unit”.

2. In sub-section (3B) an explanation is added to include the ex-servicemen and families of the deceased personnel of the armed forces w.e.f. 20^th June 2006 so that they can get the benefit of purchases from Canteen Stores Department.

3. A new sub-section (3C) is inserted by virtue of which the State government now has powers to exempt fully from payment of tax the transfer of property in goods involved in the processing of textiles which are described in column (3) of the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957.

4. For sub-clause (h) of sub-section (5), a New sub-clause is substituted to widen the scope of “telephone service provider” to include national and international long distance service network provider and Telecom Infrastructure Provider Category – 1 (IP-I).

(C) Amendment of section 16:

1. One proviso is added to sub-section (2) of section 16 by virtue of which a dealer who desires to get voluntary registration shall have to pay Rs.25,000 /- as deposit in the Government Treasury. The amount of deposit can be adjusted towards tax, interest or penalty, if any, that may become due. This amount can be adjusted towards tax payable in the return to be filed in the year in which registration is granted and in the succeeding year. The amount of deposit remaining in excess can be claimed after the end of the succeeding year as refund as per section 50 of the Maharashtra Value Added Tax Act, 2002.

2. One proviso is added in sub-section (6) of section 16 by virtue of which registration certificate can be cancelled if a dealer who is voluntarily registered does not start business within six months of the date of registration.

(d)  Amendment of section 19:

An amendment is effected in sub-section (2) by virtue of which the requirement of providing information regarding application made for PAN is dispensed with as PAN is now in any case mandatory at the ti8me of registration.

(e)   Amendment of section 20:

Sub-section (4) of section 20 is amended so that revised return can now be filed within 9 months, (instead of 8 months) from the end of the year containing the period to which return relates.

(f)  Amendment of section 22:

Sub-section (3) of section 22 is deleted which is regarding powers to be delegated to the officers for Audit. Such powers are delegated by the commissioner of sales Tax under section 10(4) of the Maharashtra Value Added Tax Act, 2002. The Present sub-section was redundant and is hence deleted.

(g)  Amendment of section 23:

New Sub-section (3A) is inserted by virtue of which assessment of the dealers for the periods upto 31^st March 2008 can be done upto seven years from the end of the period for which notice for assessment has already been issued as per sub-section (3) of section 21 (3).

(h) Amendment of section 26:

In this section the words “appeal from every original order” are substituted by the words “appeal from every order”. This amendment is effective from 1^st April 2005. This is done to over come the decision of the Bombay High Court in the case of M / S. Shivshyam Sales Enterprises (W.P. No. 312 of 1989). In this case it was decided that a person affected by a revision order cannot go in appeal because revision is not an original order. This effectively meant that dealer has to file a writ petition to High Court. Now after the amendment the dealer can go in appeal against a review order.

(i) Amendment of section 42:

Sub-section (4) of section 42 is amended by virtue of which this sub-section becomes effective from 1^st April 2005. This sub
section deals with Mandep Contractors.

(j) Amendments of section 50:

1. Sub-section (1) of section 50 is amended by which the words “fee except when the fee is paid by way of court fee stamp” are inserted. By virtue of this amendment if a dealer has wrongly paid excess fee he can claim refund.

2. sub-section (2) of section 50 is amended by which the word “subsequent” is deleted. By virtue of this amendment a dealer can adjust the dues of the earlier as well as subsequent periods in a return in which there is a claim of refund.

(k)  Amendments of section 51:

1. An amendment is effected in sub-section (1) of section 51 by which the word “subsequent” is deleted. By virtue of this amendment the Commissioner can adjust earlier as well as subsequent dues if the dealer has made an application for refund.

2. In sub-section (2) of section 51 clause (a) is substituted and in clause (b) the second proviso is deleted. In this sub-section it is stated that on an application in the prescribed form by a dealer for refund the Commissioner may call for additional information within one month of receipt of the application and refunds relating to all the periods contained in one year may be granted by a single order.

3. Some amendment are effected in sub-section (3) of section 51 by virtue of which dealers selling goods in the course inter-State trade or commerce and the Canteen Stores Department or the Indian Naval Canteen Services can also claim refund for every return that they file.

4. (iv) Sub-section (4) of section 51 is substituted by a new sub-section in which it is provide that the Commissioner shall grant refund under section 51 within 3 months of the receipt of the application or receipt of additional information whichever is later. If the additional information is not furnished by the dealer then refund is to be granted within six months of the receipt of application.                 

5. Sub-section (5) is substituted by a new sub-section which states that if the dealer has furnished a bank guarantee then the Commissioner shall grant the refund within one month f the furnishing of the Bank Guarantee.  

(1) Amendments of section 61:

1. In Sub-section (1) in the Explanation words “a Cost Accountant within the                meaning of the Cost and Works Accountants Act, 1959” are added by virtue of which Cost and Works Accountants become eligible to conduct Audit under section 61.

2. An amendment is effected in sub-section (2) by virtue of which a penalty equal to one tenth per cent. of the total sales or purchases is imposable by the Commissioner if a dealer liable to get his accounts audited under sub-section (1) of section 61 fails to furnish, within time, a copy of the Audit report.

3. Sub-section (3) is added in section 61 by virtue of which the “departments of the Union government, any Department of any State Government, local authorities, the Railway Administration as defined under the Indian Railways Act, 1989, the Konkan Railway corporation limited and the Maharashtra State Road Transport Corporation constituted under the Road Transport Corporation Act, 1950” are exempted from compulsory Audit by Chartered Accountants, cost Accountants and consequently from submission of Audit Report.

(m)  Amendment of section 69:

A fresh sub-section (3) is added w.e.f. 1.4.2005 by virtue of which if any fresh certificate of registration is prepared on an automated data processing system and is issued to a dealer then such certificate will not be required to be signed by any officer.  

(n)  Amendment of section 79:

An amendment is carried out to substitute the words “shall bear a court-fee stamp of such value” by the words “shall be charged with such fee”. The amendment is technical in nature. 

(o)  Amendment of section 86:

Sub-section (3) is substituted for the existing sub-section. This is regarding issue of bill or cash memo. The amendment is also technical in nature.  

(p) Amendment of section 91:

In sub-section (5) the words “Entitlement Certificate” are substituted by “Entitlement Certificate other than an Entitlement Certificate granted under the new package Scheme of incentives for Tourism Projects, 1999” with effect from 1^st April 2005. This amendment is clarificatory in nature. Entitlement holders under Package Scheme of Incentives for Tourism Projects, 1999 are eligible to claim set off but not refund as per returns.  

7. 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.

8. 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,