MVAT Audit

i) Constitution of new format of Form-704

Chairman agreed for new format of form 704 for next year. However the proposed format would be finalized by obtaining feedback from trade, industry & concerned practitioner’s associations and it will be made final by incorporating feedback Inspite of this for current financial year chairman asked auditors to put appropriate remark while submitting form 704.

ii) Formation of Committee for Revised Form 704.

Please refer Trade Circular No. 26T of 2006  dt, 18-9-2006.Chairman declined the idea However if any issue arises it may be resolved by dialogue with concerned. However Chairman stated that suggestions by various bodies including CA institutes be taken as feedback for modifying form 704.The issue of compliance regarding details of purchases on form ‘C’ in existing form 704 was discussed. The members requested to accept partywise details instead of bill wise and datewise data. Accordingly Chairman opined that any compliance to the satisfaction of auditor will be treated as sufficient compliance including partywise ledger account as requested alongwith ‘C’ Forms No. It was further clarified that in case of bulky forms, soft copy in compatible format preferably excel formats will be accepted with undertaking that as and when hard copy is required it will be supplied.

i) Periodic Review of Refund out flow.

Chairman welcomed the idea and assured to  prescribe format for fortnightly reporting by  Refund & Refund audit branch. He further  opined that after receipt of bank gurantee and audit report the refund shall be processed with in maximum 15 days or else explanation of concerned officer may be called.

Please refer following Circulars
(a) Cir No. 18T of 2006 dt. 1-8-2006.
(b) Cir No. 8T of 2006 dt. 28-2-2006.
(c) Cir No. 2T of 2006 dt, 7-1-2006.
(d) Cir No. 33T of 2005 dt. 21-10-2005.
(e) Cir No. 3T of 2007 dt. 10-1-2007.

Chairman further informed that processing of refund electronically in terms of Electronic clearing system (ECS) will be studied and introduced so as to reduce interface between dealer and officials. The necessary instructions will be issued after introduction of ECS system.

ii) Grant of Refund  without declaration

The Chairman did not accept this suggestion. However he asked the committee for alternative method of compliance regarding postponement of refund or partial refund. The committee suggested that if production of bank guarantee to the extent of in incremental tax liability on amount of missing declarations is produced then refund claimed may be granted. Chairman accepted the suggestion and promised to issue circular instructions in this regard. Please refer Trade Cir No. 3T of 2007 dt. 10-1-2007.

iii) Time frame for  online issuance of CST declarations.

The Chairman appraised members regarding initiation of online issuance of declarations were successfully implemented by state of  Maharashtra. The Empowred committee has taken it on record and appreciated the Govt. of Maharashtra in this regard He further appealed to trade & industry to use this facility Addl. Commissioner, Enf (c) enquired regarding response of public in general regarding online issuance of declaration. Members appraised that barring few exception the move is welcome and appreciated by trade & industry. Please refer Trade Cir No. 17T of 2006 dt. 28-6-2006.

Notification regarding notified contract

The Chairman replied that the said notification  were issued on 30th November, 2006 viz. No.construction VAT 1506/CR134/Taxation-1.The members requested for date of effect of the notification from date of amendment.

VAT credit on and given on lease. 

Scope of refund audit

Chairman replied that a Trade Circular is being issued. Explaining scope of Refund Audit. The Trade Circular is now issued. Bearing No. Cir No. 3T of 2007 dt. 10-1-2007.In view of compensation by central claims under MVAT chairman further informed that the proposal to issue 90% of Refund on ad-hoc basis is under consideration and necessary instruction will be issued in due course. Please refer Trade Circular No. 4T of 2007 dt. 12-1-2007.

Non availability of form 101.

The stationery of amended form 101 is now made available to all concerned Sales Tax Officer in state of Maharashtra. Alternately chairman suggested that online print of the necessary form may be obtained.

Non receipt of TIN No & defects thereof.

FAM Chairman remarked that TIN No are  dispatched to all the dealers. He directed Addl.Commr. Enf (c) to instruct all registration authorities to take back faulty TIN No and issue fresh TIN No. within seven days.

Consultation with state Level Advisory Committee prior to any changes in Act, Rules and notification.

Chairman declined the idea of pre policy consultation. However he suggested that any inputs for policy improvement will always welcomed positively.

VAT. Audit to be given to STP

Chairman replied that the matter is subjudice as STPA preferred writ petition. Before Hon. Bombay High Court.

Delays in VAT Refund on account of business Audit.

Chairman replied that the Refund Audit is a  limited audit to ascertain the coorectness of refund claim. This is a transactional feature under VAT regime. The cross check of transactions and challans will help in establishing credibility of dealer. And refund claim which in turn will reduce the need for further cross checks. Once IT platform under MAHAVIKAS becomes fully operative, it will generate data base and also enable online cross checks of transactions. This will help in giving various gradations to the dealer which results into minimum physical cross checks, and will cause built in accountability. Chairman further clarified that under VAT require extent of refund is as high as 20-25% and hence refunds need to be disposed expeditiously on priority basis.

Exclusion of Co.op. Societies, Kirana dealers from VAT audit

It is clarified that selective exception from VAT audit is not contemplated under VAT regine.

Non receipt of Asst. order under Summary Asstt.

 It is clarified that vide Trade Circular No. 22T of 2006 dt. 7-9-2006 guidelines for summary assessment are already issued. Particular cases if any may be pointed out to concerned Jt. Commissioner (Adm) for suitable actions.

Provision of VAT Audit to be scrapped.

Last date for submission of Form 704

It is clarified that last date of submission of form 704 is 30-1-2006.

Is there any extension to last date of filling form 704

Chairman replied that no further extention will be granted. (As per directions of High Court the date is new extended to 31st March 2007.)

Revision of Form 224

It is expected that the dealer shall file only single return.

Exemption from

Chairman agreed to issue exemption for sale to SEZ developers with prospective effect.

Reduction of Tax rate on Hand Tools from 12.5% to 4%

 This issue is beyond the scope of this committee vide GR No. STAC – 2005/Adm No. 309/Taxation-1. Dt. 18-3-2006.