CA Suketu Sheth
The dealers which are registered under the MVAT Act, 2002 waited for over 6 months for filing new return form in the Maharashtra VAT Portal and now finally the long awaited new return form was made available for filing of return by the Commissioner of sales tax department of Maharashtra by issuing Trade Circular No 22T dated 26 August 2016 which provides the introduction of new return filing process from 29 August 2016 in the MVAT portal. The department through this Circular has issued the details instructions and steps for the return filing under the New Automation System.
Though it looked like buoyant on prima facia, but what was the underlying surpriseis yet to be relieved. However, following are the upfront observations from the proposed Automation System.
The department within a short span of 4 days from the date of issue of the Trade Circular released the Corrigendum to Trade Circular 22T, indicating the Trade Circular was issued in utmost hurry or under the extreme pressure from various stakeholders to initiate the facility of filing new return. Though the changes in it were small, but essential are as follows:
1. Withdrawal of concession from filing Nil CST return:
Relevant Extract from Trade Circular no 52T of 2007 which reads as “It is now clarified circular No. 15 of 1981 holds good till today. It is hereby clarified that where there are no inter-State sales in any return period, no return is required to be filed under the Central Sales Tax Act, 1956 provided that the Maharashtra Value Added Tax Act, 2002 return for the same period shows NIL turnover of inter-State sales. This concession will be available to the dealer till he effects any sales in the course of inter- State Trade or commerce”
The same was further clarified in circular no 20T of 2014 which reads as “A dealer, who is claiming deduction, u/s. 8(1) of the MVAT Act or deduction u/s 6A (branch transfers etc.) of the CST Act, in the MVAT return shall be required to file a return under the CST Act. In other words, a dealer who is effecting the following types of transactions during a period shall be required to file CST return: (i) inter-State sales u/s. 3 of the CST Act,(ii) goods transferred u/s. 6A(1) of CST Act,(iii) Sales outside the state u/s. 4 of CST Act,(iv) Export sales u/s 5(1) and 5(3) of the CST Act,(v) Sales in the course of import u/s. 5(2) of the CST Act”
Through this, the said benefit from filing CST return even in case of Nil CST transaction from April 2016 return period onwards is with drawn through Corrigendum to Trade Circular No 22T.
[References – Trade Circular no 20T dated 25 November 2014, Trade Circular no 52T dated 31 July 2007 & Circular No. CST/1081/1497/19/Adm-3, dated 02.07.81 (Cir. No. 15 of 1981)]
2. Goods return claim:
In sale annexure, except in case of Goods return scenario, any date prior to the return period will not be accepted.
3. Extension in due date for filing return for the month of September 2016:
There is extension in due date for filing return for the month of September 2016 though minimal but was in interest of the dealers. Now the revised due date for filing return will be 31 October 2016 instead of 25 October 2016.Further, it also provided for the levy of Late fees, if the return is not filed within the extended/ prescribed due dates.
Shortcoming in New Automation System:
Though the return filing system under the New automation system was brought in force from 29 August 2016, the following are some of the deviations from the proposed Automation system in the first Trade Circular 7T dated 25 February 2016 issued by the department in this regard:
i. The very fundamental error to be faced by the dealers is that the return form (231, 232, 233,234,235) to be used for filing MVAT return fails to capture the details of local Sales return provided by the dealers in the sales annexure/ VAT return. This restrict the dealers to file and upload the return with correct details.
ii. The new return form was required to be uploaded in the new MVAT portal https://newautomation.mahavat.gov.in/newregistrationandreturn/index.html.However, due to some technical issues, department was unable to introduce the said portal before dealers. The dealers will be required to file the return in the existing portal only till further notice from the departmentin the below mentioned link: http://www.mahavat.gov.in/Mahavat/HomeController?login=login&logintype=DEALER
iii. The sales tax department has provided the step-wise due date for the purpose of filing of monthly return from April to September 2016 and quarterly return of April to June 2016 and July to September 2016 as follows:
Extended Date for uploading the return
The said due dates where at one instance provides for the intention of the department to streamline the due date of filing return from October 2016 for monthly return and January 2017 onwards for quarterly return as per the normal provisions of the act i.e 21st of the succeeding month/quarter. However, one must not forget that in such scenario the facility of Cross matching of Input tax credit (ITC) available to the dealers and ITC mismatch/ unmatch report will be available only when all the monthly/ quarterly returns are filed by the dealers as per the specified due date in the above table. This shall undermine the eminent purpose and feature of New Automation system which was promised to provide the Real time (or within 7-10 days) ITC mismatch report to the dealers. This means that the problem of Hawala dealers, Non filers/short filers, Registration certificate cancellation shall be still faced by the dealers in FY 2016-17 also.
iv. There is still no clarity with regard to return filing of MVAT TDS and situation is still in abeyance. With this, the facility of Transfer of credit of VAT TDS by the contractor to sub-contractor under sub-section 4 of Section 31 of MVAT Act,2002 seems far from this stage.
Where this is just a introduction to the new return filing system, what additional challenges this functionality has beneath are yet to come when the full fledged system will come into operation.
The question doesn’t ends over here. Where it shall be pleasant to see that how the Maharashtra sales tax department address these issues, the following challenges are ought to arise:
1. Where the state legislative assemblies around the country are in process of ratifying the GST, what shall be the fate of this new automation system if GST is implemented from April 2017 across India and whether new automation system of Maharashtra will be compatible with the GSTN ?
2. Where it took almost 6 months for the Maharashtra sales tax department to streamline the Automation system for the MVAT dealers, what will be the situation when GSTN will be launched for the business across nation ?