Ref No. YPA/284/ 2006-07                                            Date : 23-9-2006

The Dy. Commissioner of Sales Tax (Act & Rules)
Maharashtra State, Mumbai

Dear Sir,

Kindly clarify whether set off of tax input is admissible under M.V.A. Tax Rules 2005 in the following cases:-

1. Set off of tax input on purchases in case of resales of Sim Cards for use in Mobile Phones:–

The Govt. of Maharashtra vide Notification No. VAT – 1505 /CR -114/Taxation-1, Dated 1-4-2005 at Sr. No 11, has specified that Sim Cards used in Mobile Phones are intangible goods covered by Entry No.39 of schedule ‘C’ appended to the MVAT Act 2002, thus, attracting VAT @ 4% on their Sales / resales. As per the provisions of Rule 54 (f) of MVAT Rules 2005, Sim Cards used in Mobile Phones are excluded for set off.

Further, vide Revised Govt. Notification No. VAT -1505/ CR 237/Taxation-1, at Sr. No. 32 the Maharashtra Govt. has specified the Sim Cards as "Information Technology Products" covered by Entry No. 56 of Schedule "C" appended to the said Act. Thus, Sim Cards being Information Technology Products, full set off of input tax paid on purchases is admissible under Rule 52, on their resales.

In view of the above, please clarify whether set off input tax is admissible on resales of Sim Cards used in Mobile Phones. If set off is admissible, from which date the same is admissible.

2. Set off on closing stock of goods lying at the end of the year:–

Please clarify whether set off of input tax paid on purchase of goods lying at the end of the year as on 31-03-2006 which are meant for resales in the subsequent year is admissible in the year of purchase? Or whether set off of input tax is admissible on consumption basis by reducing the set off on closing stock?

Please clarify the above matters very early urgently to enable us to advise our clients accordingly.

Thanking you and expecting necessary clarification from your goodselves within 7 days.

Yours faithfully,
For YARDI PRABHU & ASSOCIATES,
CHARTERED ACCOUNTANTS,
PARTNER

To,

Yardi Prabhu & Associates,
2, Samadhan, Agarkar Chawk,
Opp. Railway Station,
Andheri (East), Mumbai – 400069

No VAT/DSR-1006/88/Adm-3/B -747                      Mumbai, Dt. 27-12-2006

Sir,

With reference to above subject position of set off on sim cards is as under:

1st April 2005 to 16th October 2005 – No set off will be available as per rule 54(f) on sim cards, as they were classified under only one schedule entry i.e. C-39 (intangible / incorporeal goods).

17th October 2005 to 7th September 2006 – As the entry is included in the information technology product set off is available.

8th September 2006 onwards – Full set-off will be available irrespective of the classification of goods in any of the entries, as from 8th September 2006 set-off on sim cards is allowed by excluding them from rule 54(f) which is the rule for denial of set-off.

Further, dealer should take input tax credit in the month of purchase only irrespective of consumption of goods in same financial year or in next financial year.

Yours faithfully,
(S. D. BHANDARE)
Sr. Deputy Commissioner of Sales Tax,
(Act & Rule) Maharasthra State, Mumbai.

Date : 6-2-2007

To,

The Commissioner of Sales Tax,
Maharashtra State, Mumbai

Sub : Revised returns for the year 2005-2006 filed after 30-11-2006.

Sir,

The year 2005-2006 was the first year of implementation of Vat system. In the initial stages most people were confused about the manner in which the tax and set off is to be calculated. Many dealers have not claimed set off even though entitled. Similarly many dealers have paid short tax, claimed excess set off. During the course of audit these things have been brought to the notice of the dealers/management as the case may be. The date for filing audit report was initially extended to 31st January 2007 and is now extended up to 31st March 2007. Similarly as per your circulars the last date for filing revised returns was initially extended up to 28th Feb. 2007 and now it is extended up to
30th April 2007.

The circular says that time is extended to give effect to the observations in the audit report. Thus it presupposes the completion of audit report. Some times after examining of the records but prior to audit report many of the dealers on their own have filed revised returns. It is also likely that relying upon the circulars extending the date of filing revised returns many dealers might have filed the revised returns after 30th Nov. 2006 but prior to audit.

Secondly many dealers tax liability has changed due to retrospective amendments to the Act and set off rules. In such cases also the dealers might have filed revised returns after Nov. 2006. The intention of dealers in all such cases is to abide by the law and rules. According to a stricter legal view, technically they should have waited for audit report and then filed revised returns. In such cases a doubt has been raised that such returns may not be treated as valid revised returns.

Some times even the auditors have taken into consideration such revised returns. A clarification is also necessary whether the auditor can take into consideration such revised returns i.e. filed after Nov. 2006 but prior to finalization of audit report.

It is therefore requested that a clarification that all the revised returns filed up to 30th April 2007 will be treated as valid returns and audit report can take into consideration all revised returns filed up to the date of audit.

In addition to relief to genuine honest dealers lot of paper work by the auditor and also by the department will be saved.

Thanking you,

Yours faithfully,
G. Y. Patwardhan
Chairman, State Taxation Sub Committee of
Mahratta Chamber of Commerce, Industries & Agriculture, Pune

11th January, 2007

Jt. Commissioner of Sales Tax –VAT
(Shri Dilip Dixit)
Mumbai

Dear Sir,

Purchase of Duty Entitlement Pass Books (DEPB)

Many of my clients are purchasing Duty Entitlement Pass Books from the local market. The said DEPB is covered by Entry C-39. Thereafter the said Duty Entitlement Pass Book (DEPB) is utilized for payment of Customs Duty for import of bulk drugs covered by Entry C-17. Under the law, set off is available on the purchase of Duty Entitlement Pass Book. In many cases, the dealer transfers the imported goods on which duty is paid by utilization of DEPB to the branch outside Maharashtra State.

The question is whether under Rule 53(3), set off equal to 4% of the proportionate DEPB purchased is to be disallowed to the extent of the branch transfer.

Your immediate clarification in the matter shall be appreciated.

VAT Audit

With reference to the VAT audit, I find in many cases that the 12 monthly returns are to be revised in order to give effect to the changes being made after the time of filing return. In such cases, the dealer who has already filed 12
returns as original one has to file 12 revised returns for each month for the year 2005-06.

In my opinion, filing of revised return for 12 months or for few months will load the Department with greatest possible paper work and there will be absence of annual figures which are very relevant for audit.

I, therefore, suggest that Form 221, 222, 223, 224, and 225 may be allowed to be utilized for filing one single annual return for the period 1-4-2005 to
31-3-2006 so that it will take into consideration all the adjustments effected in each month. Please note that the advice of the Commissioner regarding filing the return in the month of March creates a problem particularly when there is a change of entry, absence of 6(2) claim, goods returned, price rebate, cancellation of bill, etc. The same may be the position of purchase side. Possibility of a negative return in the month of March arises and therefore the same is not proper in my opinion.

I give the following illustration which will make the position very clear why annual return is a better alternative rather than revising one return for March.

"Suppose, in the month of June 2005, the transactions are shown under 6(2) and dealer does not want to claim 6(2) and wants to file revised return for C.S.T. In other words, column of 6(2) is to be reduced and the column of ‘C’ Form plus tax is to be increased. Now if there are no transactions of 6(2) in March, how to file a negative return?

The same will be the position in respect of goods returned, price rebate, cancellation of bill. Similarly it will also be the position on purchase side."

Yours faithfully,
(V. V. Mody)

To,

V. V. Mody
Advocate
1704, Pancharatna,
Opera House, Mumbai – 400004

No.Sr.DC(A & R)/Vat/Audit/1007/ 3 / Adm-3 /B -55  Mumbai, dated , 17/2/07

With reference to above mentioned subject, the clarification is as follows:

1. It is to be noted that DEPB used for payment of custom duty for import of goods becomes part of dealer’s purchase price. If such goods are sent on Branch Transfers, the retention of 4% would be applicable as per rule 53(3) of Maharashtra Value Added Tax Rules, 2005.
    

2. After Vat Audit the dealer may file a single revised return for the period ending March of the F.Y. If it is not possible then he have to file revised return for every month, quarter or, as the case may, be for six month. Since there is no provision for filing annual return in Maharashtra Value Added Tax Act, 2002, filing of revised annual would be bad in law. Kindly note.

(S. D. Bhandare)
Sr. Dy. Commissioner of Sales Tax, (A&R)
Maharashtra State, Mumbai

To,

Mahabirprasad S. Deora
49, Bhupen Chambers, 2nd floor,
9, Dalal Street, Fort, Mumbai 400001

With reference to above mentioned subject, the clarification is an follows:

Sr. No.	Querry	Clarification
1)	There is a dispute regarding the rate of Tax. Say the dealer contends that the rate should be 4% and Auditors feels that it should be 12.5% and he puts a note to that effect in his Audit Report.Now, if the dealer files the Revised Return and pay Tax @12.5% then he	It is Not compulsory for a dealer to file revised return. There are three alternative available with the dealer as regards to CA's advise 1) to agree with the advice. 2) Partly agree with the advise 3) Total disagreement with the advice. can contest the rate of Tax. Accordingly the dealer should take appropriate action.
2)	During April 2005, the rate of VAT The Vat Tax on Towels was only 4%, but the Department feels it was 12.5%. The Notification is also clear. Here also if the dealer pay 12.5% then how he can claim Refund.	Tax on towels was 4% during April 2005. Administrative relief is granted to the dealers who have not collected taxes and not paid at 12.5% Adm relief is difference between taxes payable and paid. If the dealer has paid 12.5% there will be no refund
3)	Certain C-Forms are either not received or the same are defective the Auditor asks for filing the Revised Return and pay additional Tax. Can the dealer do so and pay Taxes.	Yes
4)	In one case the Auditor came across a mistake of Rs.62-50p. tax mistake of Rs.62-50p. tax mistake while the Net Refund for the whole year is about Rs.25,00,000-00.VAT REFUND AUDIT is also completed by Department. The  Auditor is insisting for filing one 12 Revised Returns. How far it is fair.	It is not necessary to file 12 revised returns. The dealer may file revised return for the month ending March to correct the mistake.
5)	In one case due to change in Constitution, the application for Fresh Registration was late by 5 days and the dealer remained URD for 35 days. Application for Adm. Relief was also sub- mitted in time, but for the reasons best known to the Department. No decision is being taken. What should be the procedure for the Audit of URD period.	Single Audit report for the whole year covering both periods RD as well as URD period should be submitted.

Thank You.

(S. D. Bhandare)
Sr. Dy. Commissioner of Sales Tax, (A & R)
Maharashtra State, Mumbai

To

State Public Information Officer
Office of the Commr. of Sales Tax
MSTD, Mumbai

Ref: MSTD/                                                          Date: 13th, Dec, 2006

Dear Sir

Kind Attention : Shri V V Kulkarni

We are in receipt of the above and confirm that no Information officer is stationed at 7th Floor. New Vikrikar Bhavan, Mazgaon, Mumbai 400 010. The above letters are being returned along with this letter. You may write to our Information Officer stationed at ECIL Hyderabad. His address is as given below.

Chief Information Officer (under RTI)

Administrative Building, Electronics Corporation of India Limited

Industrial Development Area, Cherlapally, Hyderabad 500 062

Thanking you,

Yours sincerely
H.J. Mehta
Sr. DGM & Relationship Manager

To,

The Electronics Corporation of India Ltd.
Instruments & System Division,
7th Floor, New Vikrikar Bhavan,
Mazgaon, Mumbai 400010

No DC (I & E) ADM -13/Rt inf 205/2006/B-260,     Mumbai, Date 04-12-2006.

The application dt. 26-11-2006 from Shri Kishor T. Lulla under the R.T.I. Act. has been received by this office on 29-11-2006. As per the R.T.I. Act, 2005. this application is to be disposed within a month. The application has been addressed to you. Also information sought is about contract undertaken by you for the Sales Tax Department.

Hence as per provision of section 6(3) of the RTI Act, 2005 the application is transferred to you for providing information to the Applicant. You are requested to provide the information directly to the applicant.

Encl:-

1) Application dt. 26-11-2006 from Shri Lulla under the R.T.I. Act.

(V. V. Kulkarni)
State Public Information Officer,
Office of the Commr. of Sales Tax,
Maharashtra State, Mumbai.

To

The Chief Information Commissioner,
(Right to Information)
15th Floor, New Administrative Building,
Opp. Mantralaya, Mumbai – 400 032

Respected Sir,

1. We have made an application in Annexure A on 26/11/06 to above mentioned 1 & 2 and asked information as under –

VAT (TIN) Certificate

1. Total number of VAT (TIN) Certificates dispatched & not dispatched.
    

2. As per agreement or commitment with Finance Department or Sales Tax Department, what was the last date before which these certificates were supposed to be dispatched?
    

3. Give us copies of agreement / minutes / documents / correspondence on your record in respect of outsourcing to you by the Finance Dept. or the Sales Tax Dept. about the entire work of printing & dispatching of Certificates
    

4. Reasons on your record for delay to do the above mentioned work.
    

5. What is the contract amount for this job, how much advance received by you (give date-wise figures).
    

6. Give us the copies of the return cum challan of the MVAT paid by you for this contract.

Profession Tax Courtesy Letters

1. Give us copies of agreement / minutes / documents / correspondence on your record in respect of outsourcesing to you by Finance Dept. or the Sales Tax Dept. about the entire work of printing and dispatching of Courtesy letters.
    

2. What is the contract amount for this job, how much advance received by you (give date wise figures).

2. 1. The public information officer Shri. V. V. Kulkarni forwarded our letter to Shri Santoshkumar (Additional Comm. of Sales Tax, Enf . C) of the same department on 30-11-2006.

2. Shri Santoshkumar returned back the letter to Shri V. V. Kulkarni on 4-12-2006

3. Shri V. V. Kulkarni sent letter to Electronics Corporation of India Ltd., Mumbai on 4-12-2006.

4. Electronics Corporation of India Ltd. replied to V. V. Kulkarni on 13-12-06 & asked to approach their office at Hyderabad.

5. Shri V. V. Kulkarni forwarded the same letter to us on 16-12-2006.

6. We sent the letter to Electronics Corporation of India Ltd. Hyderabad on 28-12-06 which is returned back without accepting on 11-1-2007.

7. Again we sent same letter by RPAD to Electronics Corporation of India Ltd, Hyderabad on 12-1-2007 of which acknowledgment also not received till today.

8. We lodged complaint to post office on 23-2-2007.

3. From the above correspondence, it is very clear that neither Sales Tax Dept. nor Electronics Corporation of India Ltd. want to provide us the information. The Sales Tax Dept. has declared vide their Circular No. 37T of 2005 dated 19-11-2005. That TIN Certificates would be dispatched from 15-03-2006.

The Commissioner of Sales Tax says in his circular No. 13T of 07 dt. 7-2-2007 that ‘All the dealers may have received the VAT/CST registration certificates by now. Our survey reveals that most of the dealers have not received the said certificates. In fact, the dealers are not at all concerned with the internal arrangement of printing, dispatching etc by Sales Tax Dept. with Electronics Corporation of India Ltd. The Sales Tax Dept. is avoiding its responsibility by diverting us to Electronics Corporation of India Ltd.

4. Hence it is proved beyond doubt that the Sales Tax Dept. does not want to furnish all above mentioned information. They are misleading us as well as dealers at large.
    

5. We therefore request your honour to direct the Sales Tax Dept. or Electronics Corporation of India Ltd. to furnish the information at the earliest.

Necessary action may please be taken for the above mentioned default.

Appropriate penalty as provided under R.I.I. Act may be please be levied.

Thanking you,

Yours faithfully,
Kishor Lulla
Convenor
Tax Payers Protection Council
S.T.P.A.M.

17-1-2007

To

The Commissioner of Sales Tax
Maharashtra State, Mumbai.

Dear Sir,

Ref: Clarification in respect of Trade Circular No. 23T of 2004 dt. 1-9-2004

We refer to above circular. The copy of said circular is enclosed herewith for ready reference.

Your kind attention is drawn to para 6(vii) which reads as under.

"vii. It is possible that many of the Textile Processors and photo developers have obtained the registration number only after the judgment of M/s. Matushree Textiles Ltd. In such cases it will not be necessary to assess these dealers for unregistered period prior to and up to 31-3-2004 for granting the administrative relief. Similarly in case of dealers registered under Works Contract Act, there is no need to take up the assessment for periods ending on or before 31-3-2004. However, the assessing officer should confirm that the dealer has obtained the registration under the Works Contract Tax Act and is not engaged in any other works contract activity other than the Textile Processing and Photo developing for which administrative relief is being granted." (underlining ours)

In above para it is mentioned that in case of URD works contractor, covered by circular, there is no need to assess him. It is also mentioned that in case of RD contractor also there is no need to take up assessment upto 31-3-2004. However it is further mentioned that "however, the assessing authority officer should confirm that the works contractor has obtained the registration under the Works Contract Tax Act …"

We are URD till 31-3-2004 and hence there is no need of assessment. However the learned assessing authority is of the view that since subsequently also we have not got ourselves registered under Works Contract Tax Act, 1989 we will not be entitled to above relief, even for period up to 31-3-2004.

Sir, we submit that the view of the assessing authority is not correct nor justified on facts of the case. It is very clear that in the main G.R. there is no such condition that the dealer should obtain registration under Works Contract Act for being eligible to Adm. Relief till 31-3-2004. The above mention in circular appears to be with a view that if at all the dealer is carrying on contract activity, (including exempted activity up to 31-3-2004) after 1-4-2004, and therefore liable to tax the assessing authority should see that the dealer gets himself registered. However this cannot be said to be a condition precedent for grant of Adm. Relief up to 31-3-2004.

Otherwise also, it is a fact that Works Contract Act is abolished from 1-4-2005 and there is no possibility of any dealer getting registered under above Act.

If, while scrutinizing case after 1-4-2005, the assessing officer insists upon above fact of registration then no such dealer will be able to get the relief, even otherwise he is entitled to same as per the G.R. We feel that the confusion has arised because of not putting the above sentence with more clarity. It is required to be clarified that the Adm. Relief should be granted till 31-3-2004 in all cases. If the dealer is liable subsequently also then, while scrutinizing his case the assessing officer can advise him to get himself registered, now of course, under MVAT Act, 2002.

We request that the above issue be clarified at the earliest. The assessing authority is holding upon our case because of above confusion. We once again request for early clarification and oblige.

Thanking you,