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Sales Tax Review |
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June
2006 |
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Replies to
Queries |
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Query No. 1
Our client is dealing in installation of cleaning system. He
is registered under MVAT and CST. In local he pays tax under composition scheme
for work contract under MVAT @ 8%. Recently he got order from UP for
installation of cleaning system at the place of his customer in UP. Most of the
materials, machinery and spares will be supplied from Maharashtra only but some
materials will be purchased by him from UP local market to complete the work
contract.
Our queries are:
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How to raise bill to UP customer with CST liability for
work contract?
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What will be the tax liability for the purchase in UP?
Shall the transaction attract section 6(2) of CST Act?
Please explain in details.
A. R. Gaziani,
Sales Tax Practitioner
Reply
The bill under CST Act will be same as it is made for normal
CST sale. The sale price of goods involved will be required to be determined. If
the same is mentioned in sale bill (labour charges separate) then on such value
of goods CST can be charged. If value of goods not available separately in sale
bill then you will be required to determine sale value of goods from total
contract price. For this purpose you can follow the guidelines given by Supreme
Court in Gannon Dunkerley & Co. (88 STC 204). The rate of tax will depend
upon rate of tax of same goods under MVAT Act and the receipt of ‘C’ form.
For goods purchased in U.P. and used in U.P. itself, there
cannot be 6(2) transaction. For 6(2) transaction there must be inter-State
movement represented by transport documents which are then transferred to
purchaser. In your case there is no such movement, as goods are purchased and
used in U.P. itself. This will be a local purchase/sale in U.P. where tax will
be required to be discharged as per U.P. Sales Tax Act.
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 filled 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
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.
Query No. 3
Before VAT it is the procedure of filing annual return of BST
and CST in Form No. N18B and Form IIIBB respectively. Please clarify whether we
want to file annual return of MVAT for the period 1-4-2005 to 31-3-2006 and if
so please confirm form number of the same and do the needful on our behalf.
Mechelonic Welders Pvt. Ltd.
Reply
There is no scheme of filing Annual Returns under MVAT Act,
2002. The periodic returns are only required to be filed and no annual return
etc.
Query No. 4
Please state rate of tax of "Briquetted coal" made from
grass, bugas, agriculture wastage etc.
A. J. Hasmani, Shahada
Reply
In case of M/s. Haryana Briquettes Ind. 64 STC 33.(P & H)
and M/s. Bajranbali Coke Ind. 66 STC 128 (Pat). The briquetted coal is
considered to be coal. Entry C-22 in MVAT Act is similar to entry referred to in
above judgments. Therefore, the rate of tax on briquetted coal will be 4% as per
entry C-22. You have mentioned that in your case briquetted coal is manufactured
from grass, bugas, agriculture wastage etc.. Nothing is mentioned about use of
coal/coal dust etc. Coal/coal dust should be part of it, to be briquetted coal.
Verify this fact. If coal/coal dust is not part of it, then above judgments will
not apply and the issue may require different consideration, which may be noted.
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