TRADE CIRCULAR.

No. VAT/R & RA/B.G.1/2008 Mumbai, Dt. 1st March 2008

Trade Circular No. 6 T of 2008

Gentlemen/Sir/Madam,

Sub: Grant of Refunds : Bank Guarantee

1. Section 51 of the Maharashtra Value Added Tax Act, 2002 deals with grant of refunds. The corresponding Rules are Rule 60 and Rule 61 of the Maharashtra Value Added Tax Rules, 2005. The provisions of Bank Guarantee are prescribed in Rule 61. The Trade Circulars No. 33T of 2005 Dt. 21.10.2005 and 56 T Dt. 23.08.2007 were issued by this office in respect of Bank Guarantee for the purpose of grant of refunds under the Maharashtra Value Added Tax Act, 2002.

2. As per the amended provisions, it is necessary to issue fresh guidelines in respect of submission of Bank Guarantee by the dealer. As per the provisions of the Rule 61, the Bank Guarantee should be obtained from any branch of a bank notified as a Government Treasury. The maximum period for Bank Guarantee is prescribed for 36 months. The provisions of submitting of Bank Guarantee are also prescribed in the Rule 61.

3. The format of Bank Guarantee was annexed with Trade Circular No. 33T of 2005 Dt. 21.10.2005, previously. Now after amended provisions, the format of Bank Guarantee is also amended to facilitate the dealer. The new format is annexed with this circular.

4. This circular cannot be made use of for legal interpretation of provisions of law, as it is clarificatory in nature. If any member of the trade has any doubt he may refer the matter to this office for further clarification.

5. You are requested to bring the contents of this circular to the notice of all the members of your association.

(Sanjay Bhatia)

Commissioner of Sales Tax,

Maharashtra State, Mumbai.

No. VAT/R & RA/B.G.1/2008 Mumbai, Dt. 1st March 2008

Trade Circular No. 6 T of 2008

Copy forwarded to:

a) All the Addl. Commissioners of Sales Tax in the State.

b) All the Jt. Commissioners of Sales Tax in the State.

c) All the Sr. Dy. Commissioners of Sales Tax in the State.

d) All the Dy. Commissioners of Sales Tax in the State.

e) All the Asstt. Commissioners of Sales Tax in the State.

f) All the Sales Tax Officers in the State.

2. Copy forwarded with compliments for information to:

a) The Officer on Special Duty, Finance Department, Mantralaya, Mumbai.

b) The Under Secretary, Finance Department, Mantralaya, Mumbai.

c) The Accounts Officer, Sales Tax Revenue Audit, Mumbai and Nagpur.

3. Copy to all the Desks and Desk Officers in the office of the Commissioner Sales Tax, Maharashtra State, Mumbai.

(N.B. Sisodiya)

Joint Commissioner of Sales Tax,

Refund & Refund Audit, Mumbai.

FORMAT OF BANK GUARANTEE

To

The ………………..,

…………………………………..,

…………………………..,

………………………..,

Mumbai.

1. In consideration of the Governor of State of Maharashtra acting through the ………………….. Authority (mention the name of the appropriate authority) (hereinafter called the “Authority”) having agreed to pay Mr .………………………………………… (name of the person claiming refund and his full address) (hereinafter called the “Obligator”) to make a provisional refund of tax due as per return filed by the Obligator (hereinafter called the “Return”) in compliance of Section 51 of the Maharashtra Value Added Tax Act, 2002 (herein after called as the “Act”) read with Rule 61 of the Maharashtra Value Added Tax Rules, 2005 (herein after called as the “Rules”) and various conditions contained thereto, which inter-alia provides for production of a Bank Guarantee to the extent of Rs…………………./- (please mention the amount) (Rupees ………………………….. only) by way of security for the provisional refund of Value Added Tax paid by the Obligator.

2. We, _____________________________(Full Address of the Bank) (hereinafter referred to as the “Bank”) at the request of the Obligator hereby irrevocably and unconditionally guarantee to the Authority that the Obligator shall pay all or such sums, including but not limited to a maximum of the provisional refund made by the Authority.

3. We, the ________Bank at the request of the Obligator do hereby undertake to pay to the Government an amount not exceeding for Rs. ……………./- (Rupees ………………………… only) against any loss or damage caused to or suffered or would be suffered by or caused to the Authority by reason of any breach by the said Obligator (s) of any of the terms and conditions in the said Act

4. Any such demand on the Bank shall be conclusive as regards the amount due and payable by the Bank under this guarantee. However, our liability under this Guarantee shall be restricted to an amount not exceeding for Rs……………………/-(Mention the amount guaranteed) (Rupees ……………………………………… only).

5. We undertake to pay to the Government any money so demanded not withstanding any dispute or disputes raised by the Obligator (s) in any suit or proceeding pending before any court or tribunal relating thereto our liability under this present being absolute and unequivocal. The payment so made by us under this guarantee shall be valid discharge of our liability for payment thereunder and the Obligator (s) shall not have any claim against us for making such payment.

6. We, the Bank, further agree that the guarantee herein contained shall remain in full force and effect during the period that would be taken for the Authorities to decide whether the Obligator is eligible for a refund and that it shall continue to be enforceable till all the claims are satisfied or discharged or till __/__/200__ or till the ………………………………………..(name the authority and their full address ), certifies that the issue relating to the refund has been sorted out completely and accordingly can discharge this guarantee.

7. The Authority shall have the fullest liberty without the Bank’s consent and without affecting in any manner our obligations hereunder to vary any of the terms and conditions of the arrangement with the Obligator or to extend time of performance of any obligations by the Obligator from time to time or to postpone for any time or from time to time any of the powers exercisable by the Authority against the Obligator and the Bank shall not be relieved from our liability by reason of any variation or extension being granted to the Obligator or forbearance, act of omission on the part of the Authority or any indulgence by the Authority to the Obligator or to give such matter or thing whatsoever which under the law relating to sureties would but for this provision, have effect of so relieving us.

8. Any claim which the Bank has against the Obligator shall be subject to the prior payment and performance in full of the Bank’s obligations hereunder and the Bank will not without prior written consent of the Authority exercise any legal right or remedy of any kind in respect of any such payment or performance so long as our obligations hereunder remain owing and outstanding.

9. This guarantee will not be discharged due to the change in the constitution of the bank or Obligator.

10. The guarantee hereby given shall be continuing one and shall not be revoked by the Obligator.

11. This Guarantee is Valid from __________200…. to ___________200….

Notwithstanding anything contained hereinabove, our liability is restricted to Rs………………. (Rupees ……………………… only) in the aggregate. This guarantee will remain in force upto __/__ /200__. Unless a claim or a demand in writing is made against the bank in the terms of this guarantee on or before the expiry of _______200____,all your rights in the said guarantee shall be forfeited and we shall be discharged from all the liability therein irrespective of whether guarantee is received back by us or not

Date:

Place: Mumbai

Bank Authorized Signatory

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