Sales Tax Review

August  2006

Replies to Queries

Query No. 1

My client is registered under MVAT, read with Bombay Sales Tax Act. He also has been allotted tin, which is effective from 1-4-2006.

Recently he has shifted his place of business from Satpur Industrial Estate, Nashik, where Pin Code is 422 007, to Taluka Dindori where pin Code is 422 202 w.e.f 1-5-2006. Accordingly we have informed the Sales Tax authority for the same.

I would like to know whether the above procedure is correct or whether I would have to apply for fresh Registration, in which case there would be URD period.

The query is raised because due to latest amendment in section 16(a) dated 20-6-2006.

Kindly reply me the said query as early as possible, since heavy set off is involved.

Subodh Magar, Nashik

Reply

As rightly stated in query, by amendment effected in section 16(6) by Ordinance VI of 2006 dt. 20-6-2006, the requirement for taking new registration on change of place of business is deleted. Though the amendment is effective from 20-6-2006, it should be practically operative from 1-4-2006. As informed by Sales Tax Authorities from time to time, TIN will operate for whole State of Maharashtra and there is no need to obtain new number for change in PIN Code.

Informing to the registration authority of new place is sufficient. This position applies from 1-4-2006; i.e., from the date TIN scheme has become effective. Under above circumstances the procedure done by you is correct and no further action is required.

In June, 2006 issue of STR a query has been replied at Sl. No. 2 (page 44 of STR). However due to inadvertent printing mistake only one part of reply is printed. The question is repeated for ready reference along with complete reply.

Query No. 2

One of my clients doing business as proprietary concern holding TIN under MVAT Act, 2002 has taken his son as partner from 1-4-2006 and since then they have continued the business in their partnership. He filed a letter of Intimation as provided u/s. 18(1)(d) of MVAT Act, r.w. Rule 15(1) on 20-5-2006.

The S.T.O. has directed my client to apply for cancellation of old Registration Certificate from 1-4-2006 and to apply for fresh TIN for partnership firm in view of section 3(8) r.w. rule 8(1)(d) of MVAT Act and Rule. If he applies for fresh registration then he will be treated URD till the date from which fresh R. C. is granted.

According to me section 44(4) says that person who succeeds and person who is succeeded both shall be liable to tax, penalty, interest etc., which is due on the date of succession or which may be assessed afterwards. Sub-section 8 of section 3 says that the person succeeding shall be liable to pay tax on sales or purchases immediate from the date of succession and will not be entitled to get the benefit of proviso to section 3(2). Thus both these provisions have nothing to do with point of Registration which is dealt in section 16 of MVAT Act. Section 16 nowhere specifically mentions that the successor has to apply for fresh registration, as was specifically provided u/s. 22 as well as u/s. 19(6) of the B.S.T. Act. Had the legislature intended that the successors should apply for fresh Registration then what for the provisions of section 18(1)(d) under MVAT Act are enacted. When there is no provision under the MVAT Act for obtaining fresh Registration under above situation, then under what authority of law rule 8(1)(d) is formulated? Whether it is beyond Rule making powers hence redundant?

Please give your detail reply after considering all these provisions. My client has submitted letter of Intimation within 60 days as per section 18(1)(d) r.w. rule 15(1) but has not filed Registration application within 30 days, what remedy is available to him.

2. As per section 20 of MVAT Act, 2002 every Registered dealer is liable to file returns as provided under MVAT Rules, 2005. “Registered Dealer” is defined u/s. 2(21) of the MVAT Act, which means a dealer registered under MVAT Act. The dealers who were registered under B.S.T. Act, were not required to get registration under MVAT Act but have been granted registration under MVAT Act (TIN) from 1-4-2006. I have not come across any provision under MVAT Act, which says that the dealer registered under B.S.T. Act shall be deemed to be registered under MVAT Act. In absence of any such deeming provisions whether the dealer continuing to hold R.C. under B.S.T. Act is liable to file return u/s. 20 of MVAT Act during F.Y. 2005-06 though they are registered under MVAT Act.

Please guide.

R. S. Singhania, Advocate,
Yavatmal.

Reply

1. According to me the suggestion given by the S.T.O. is correct. The proprietary concern and firm are two different entities for Sales Tax Laws and when proprietary concern is converted into firm, the proprietary concern gets vanished. Its R.C. is required to be cancelled. Thereafter, as rightly stated by you, section 3(8) makes the transferee (successor) of business liable to pay tax. Once the person is liable to pay tax then as per section 16(1) he must possess the valid Registration. Your case is covered by above provision. Since the new entity; i.e., firm is liable to pay tax but does not hold registration, it has to obtain the same. The Rule 8(1)(d) etc. is enacted as per section 16(2) and cannot be said to be ultra vires. Section 18(1)(d) cannot be linked with liability to get registered. The above section will operate in cases like yours as well as other cases also. For example, both transferor and transferee are already holding registrations. In such case there will not be any need to obtain new registration but requirement of giving intimation u/s.18(1)(d) will apply. The above requirement therefore can be said to be one mode of securing information from dealer but cannot substitute requirement of registration, where necessary. Therefore you should obtain new R.C. in the name of firm. For delay of in between period you can apply for Administrative Relief to Joint Commissioner of Sales Tax and get retrospective effect to new R.C..
    

2. As per second proviso to section 16(1) the dealer registered under BST Act will be considered to be registered dealer under MVAT Act. Therefore provisions of section 20 will apply to such dealers also.