TRADE CIRCULAR
No.VAT/AMD-1009/1A/ADM-6 Mumbai, Dt. 6th August, 2009.
Trade Cir. No. 22T of 2009
Gentlemen/Sir/Madam,
Honorable Finance Minister of Maharashtra presented the Budget on 4th June 2009. In order to give effect to the announcements made in the House, certain amendments have been made to the Maharashtra State Tax on Professions, Trades, Callings and Employment Act, 1975 (referred to as the “PT Act”) and the Maharashtra Value Added Tax Act, 2002 (referred to as “MVAT Act”). Further, various notifications have also been amended. The Maharashtra Act No XVII of 2009 is now published in the Official Gazette dated 27th June 2009. The amendments to the MVAT Act are explained in this circular. The amendments to the PT Act and the Simplified Refund Scheme for early refund, announced by the Hon. FM are being explained in a separate circular.
The salient features of the MVAT Act amendments are briefly explained below:
2. Revised Returns-Section 20 (4) is substituted:-
Earlier the revised returns could be filed anytime before the notice for assessment was served or within nine months from the end of the year, to which the return relates, whichever is earlier. Certain contingencies were not covered under aforesaid provision. Due to this many dealers could not file the revised returns in certain situations. Now section 20(4) is substituted and its scope is expanded to cover the following situations also:
(a) Revised Return after Audit Report in Form 704–Clause-(b):– If a dealer discovers any omission or incorrect statement in the return or books of accounts, as a result of the Audit Report in Form 704, he may file revised return within 30 days from the date prescribed for the filing of the Audit Report in Form 704. The prescribed date for filing the Audit Report is 31st January; hence a dealer may file the revised return within 30 days thereafter.
(b) Revised Returns after “intimation” by the Department-Clause-(c):– If dealer agrees with the contents of the “intimation” sent u/s 63(7) {explained in para 5 of this circular}, then the dealer may file a revised return within 30 days from the date of service of the intimation.
3. Penalty for non-filing or late filing of returns- Section 29 (8) is substituted:-
(a) Earlier penalty for late or non-filing of returns was at Rs. 10,000/ per default. Hon. FM in his budget speech had declared that the penalty amount shall be reduced. Accordingly, the penalty, in such cases, is reduced from Rs. 10,000/- to Rs. 5,000/-. Therefore, now the penalty of Rs. five thousand shall be levied for every default.
(b) The amended penalty provision is applicable to all the returns, which are filed on or after 1st July 2009.
(c) However, in the Budget Speech, Hon’ble Finance Minister had announced that if dealers who have not filed any return for the period starting on or after 1st April 2005 and ending on 30th June 2009, file all the pending returns electronically on or before 31st July 2009 then penalty for late or non-filing of returns shall not be levied.
(d) The Finance Department, Government of Maharashtra had also issued the Resolution dated 18th July 2009 thereby providing waiver of penalty subject to certain conditions. Further Trade Circular No. 21T of 2009 dated 4th July 2009 gives detailed instructions about the scheme. Therefore penalty shall not be levied in the situation stipulated in the said Trade Circular, if all the pending returns have been filed electronically on or before 31st July 2009.
(e) Amended sub-section provides mandatory penalty and is in addition to any other penalty provided under the Act.
(f) The officer shall not have any discretion whether to levy or not to levy the penalty as also to decide the quantum of penalty.
(g) The penalty order passed under this section is made non-appeallable; therefore there shall be no appeal against the levy of penalty. (Section 85(2) amended)
(h) Needless to state that since the levy of penalty for non-filing or late filing of returns has become mandatory; there is no need to issue the show cause notice before the levy of such of penalty.
4. Interest @ 25% on additional tax liability- Addition of Section 30(4):-
(a) Under the VAT system the emphasis is on self-compliance. The assessments are taken up only in exceptional cases. Business Audits are also conducted in very small numbers. Therefore, it becomes necessary that the dealer should comply voluntarily. On this background, it is essential to differentiate between the dealers filing correct returns and the dealer filing incorrect returns.
(b) Therefore, now it is provided that a dealer would be liable to pay an additional interest @ 25% on the additional tax payable, as per the return or the revised return and such interest shall be levied if a dealer files one or more return(s) (which was overdue) or revised return(s) under any of the following circumstances:-
(i) after the commencement of the business audit, or
(ii) Inspection of the accounts, registers and documents, kept at any place of business of the dealer, or
(iii) entry and search of any place of business etc., or
(iv) in consequence of the intimation sent under section 63(7).
It is further clarified that:
(i) This interest shall be in addition to any other interest leviable under other provisions of the Act.
(ii) The 25% interest shall be calculated on the additional tax payable as per return (which was overdue) or as the case may be revised return, filed after the commencement of any of the aforesaid proceedings or the intimation in respect of periods under Audit, Inspection, and Search etc.
(iii) In case if revised return is filed after the commencement of any of the proceedings referred above or in consequence of intimation; the interest @ 25% shall be calculated on the difference between the liability as per revised return and the original return or fresh return or as the case may be revised return filed earlier for that period.
(iv) It may be noted that in a case, where dealer fails to file one or more returns which were overdue before the commencement of proceedings, then 25% interest shall be calculated on entire amount of tax payable as per return(s) so filed after the commencement of the said proceedings. .
(v) This interest shall not be applicable in the cases where the refund gets reduced.
(vi) If the dealer files one or more returns (which were overdue) or a revised return on or after 1st July 2009 as a result of any of the aforesaid proceedings or in consequence with the intimation sent, then it is mandatory to pay interest @ 25 per cent on the tax found due as per such return or revised return.
(vii) If the dealer does not agree with the observations and tax liability shown in the intimation and thereby decides not to file the return or revised return, then assessment proceedings would be initiated which may attract penalty u/s 29(3) at 100% of the tax found due.
(viii) In case a dealer files revised return and pays 25 % interest u/s 30(4), then penalty u/s 29(3) shall not be levied.
(ix) The overdue return means a return which is due but filed after the commencement of the proceedings stated in (b) above.
(x) It is hereby clarified that the proceedings in case of Business Audit shall deemed to have been commenced on the date on which the dealer has received the letter from the concerned officer seeking the appointment for the Business Audit or on the date of receipt of Form-603, whichever is earlier.
(xi) In case of search and entry, on the date of taking entry for such search or as the case may be on the date of receipt of the notice in Form 603, whichever is earlier.
5. Intimation under Section 63(7)-Addition of new Sub-section-63(7):-
(a) A provision has been made for the issuance of intimation to the dealer. (Sub-section 7 added to Section 63 MVAT Act). The said intimation is being published separately.
(b) While conducting the business audit, investigation, or for that matter during any proceedings under the Act or otherwise, if it appears to the authority that the quantum of tax payable, or the amount of set off or refund, as shown in the returns or in the books of accounts is incorrect or understated, then an intimation shall be sent to the dealer. Such intimation will point out the discrepancies and state the likely additional tax liability or likely reduction in the set-off or refund. Further, the dealer may be advised to file return or revised return wherever necessary.
(c) Further, it may be noted that no intimation shall be issued in the cases where assessment proceedings have been initiated.
The provisions regarding intimation is further clarified as follows:-
(i) If the dealer agrees with the contents of the intimation, he may discharge the additional tax liability along with the mandatory interest as provided under section 30(4).
(ii) Further, the intimation is without prejudice to other proceedings, which can be initiated against the dealer under any of the provisions of the Act. In other words, intimation does not bar the authority from initiating any other fresh proceedings under the Act.
(iii) It may be noted that intimation does not bar an authority from initiating a fresh business audit proceedings or any other proceeding, for that matter against the dealer for the same period.
(iv) In case assessment proceedings have been initiated as stated in Para-4(vii) the assessing authority is free to form different opinion even after having sent the intimation. In such case the intimation shall not be binding upon him.
6. Penalty under section 29(8) made non-appeallable:-Addition of new sub clause to Section 85(2):-
(a) The section 85 deals with non-appeallable orders. A new sub-clause (b-2) is added.
(b) The amendment provides that, the penalty order passed under section 29 (8) for failure to file return within prescribed time limit is now made non-appeallable. Hence, the appeals against such orders shall not be entertained.
7. Revised Composition Scheme for Restaurants, Eating House, Caterers etc. Salient features of the revised Composition Scheme are as follows:
(a) The Government of Maharashtra, Finance Department had earlier issued notification bearing No. VAT.1505/C.R.-105/Taxation.-1 dated 1st June 2005 thereby notified a composition scheme for Hotel, Restaurants, Eating House and Caterers etc. This notification is now amended.
(b) The rate of tax under the Composition Scheme for Hotels, Restaurants, Eating Houses and Caterers etc. upto 3 star categories is reduced from 8 per cent to 5 per cent with effect from 1st July 2009 subject to the conditions explained hereinafter.
(c) The dealers, who have already opted for the Composition Scheme, are not again required to file a fresh application. The rate of tax for all such dealers will obviously be 5 per cent with effect from 1st July 2009.
(d) The dealers, who have not yet opted for the composition but wish to opt for the same in this Financial Year it self, shall submit an application (in Form-1 or Form-2 as applicable) on or before 30th September 2009. Needless to state that the dealers, who do not submit application on or before 30th September 2009, shall not be eligible to pay tax under Composition Scheme in this financial year.
(e) The notification provides that the dealers who have opted for the Composition Scheme shall not collect the tax. Therefore the dealer, who submits application on or before 30th September 2009 and have not, collected any taxes on or after 1st July 2009, would be eligible to pay tax @ 5% under Composition Scheme with effect from 1st July 2009.
(f) The newly registered dealers may apply in prescribed Form for the Composition Scheme along with Form-101. In case a dealer applies for the composition scheme either along with Form-101 or within one month from the date of registration, then the composition shall be effective from the date of registration.
(g) If dealer files application to opt for the composition at any time after the 1st April of any year then such dealer will be eligible for composition only from the 1st April of the next financial year.
(h) The dealers in Mumbai may submit such application to the Joint Commissioner of ST (Registration) and in other cases to the concerned Joint Commissioner of ST (VAT ADM).
(i) Relief to the dealers who have collected taxes:-
(i) There may be certain cases where dealers might have collected the tax on or after 1st July 2009 and may have filed application on or before 30th September 2009, under such circumstances, those dealers may also avail the benefits under the Composition for such period excluding the period during which the tax is collected.
Example: – The dealer may file return monthly, quarterly or as the case may be six-monthly. If he has collected tax say upto 15th July, 2009, under the circumstances such dealer will be eligible for composition scheme with effect from 16th July 2009. Further, such dealers are eligible to claim set-off on the corresponding purchases effected till 15th July 2009. In other words such dealer is not entitled to claim set-off on the purchases effected after 15th July 2009.
(ii) Returns filing by the Composition Restaurant etc. dealers in the year 2008-09:- On the administrative ground a concession is provided for the dealers who have collected tax say upto 15th July 2009 (as explained in above example) shall file return either in Form-231 or Form-233.
_ Returns to be filled as per the periodicity, applicable to the respective dealer.
_ If dealer is filing Form-233 then in that Form the dealer may show the turn over till the date tax is collected i.e. in above example Sales upto 15th July 2009 and may also claim set-off on the corresponding purchase effected till that date. The remaining turnover of the sales eligible for Composition shall be shown under the composition part of the return in Form-233. Thereafter, the dealer should not claim set-off.
_ Form, applicable up-to the date of composition i.e. 231/233. Only these Forms should be used till the end of the period in which the date for composition occurs.
_ Returns for further periods shall be either in Form-232 or 233. Therefore dealer shall file the returns for the subsequent periods, in the Form applicable to him.
_ It may be noted that the periodicity of the returns shall not be changed in any case. The above arrangement shall be applicable for the first return to be filed after submitting the application for composition.
8. Changes in the rate of tax due to amendments to Schedule entries and various notifications:- All the changes in the rates of tax, specified below are effective from 1st July 2009 except timber. The amendment of Schedule entry C 108(2) i.e. for Timber is effective from 1st April 2009.
A. Sales to Department of Space, Govt. of India:-
The order issued u/s 8(5) is amended. The new entry-3 is added. Accordingly now the sales of goods, used in the Satellite Launch System, by a registered dealer to the Department of Space, Govt. of India shall be subjected to VAT @ 4%. viz., Pressure Vessels, Reactors and Chemical Storage Tanks; covered by Excise sub-heading 8419 89 10” (By order u/s
8(5), new entry 3 added).
B. Amendment of Schedule Entries and various notifications:- Changes in the rate of tax are presented in the Table below: –
(i) Commodities, on which the rate of tax is decreased:-
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No. Commodity Schedule Entry (Current) Old Tax Rate (%) New Tax Rate (%) Remarks 1.Incense sticks commonly known as, agarbatti, Dhoop, dhupkathi or dhupbatti.A 554NILIncense sticks, agarbatti etc. shall not be subjected to tax.
(New entry 55 added in Schedule. As a consequence the Schedule entry C 52 is deleted2.Solar energy devices (notified)
and spare parts thereofA 564NILcovered by entry C 82 and taxable @4%. Now, following solar energy devices and their parts & components shall be tax-free: (New entry 56 added)
1) Flat plate solar collectors
2) Concentrating and pipe type solar collectors
3) Solar cookers
4) Solar water heaters and systems
5) Solar air heating systems, solar gas heating system or solar fluid heating system
6) Solar crop dryers and systems
7) Solar stills and desalination systems
8) Solar pumps based on solar thermal and solar photo voltaic conversion
9) Solar power generating systems
10) Solar photo voltaic modules and panels, for water pumping and other applications.
(Pl see the notification No. VAT 1509/CR 81- B(1)/Taxation dated 29-6- 2009)3Imitation Jewellery, beads of glass, plastic or of any metal, parts and components there of B 441Imitation jewellery, glass beads, plastic beads, metal beads and the parts and components of imitation jewellery shall now be taxable @ 1 % instead of 4 %.(New entry B 4 added to Schedule-B)
(As a consequence Glass beads have now been deleted from Schedule entry C 105.)
4Hair pins C 5144As a consequence this entry is re-drafted. Hair pins would continue to be taxed @ 4% being still covered by C 51.5Plastic mats C 74 (b)12.54Rate of tax on plastic mats is reduced from 12.5 % to 4%.6TimberC 108 (2)44Rate of tax on timber was 4 % for the period from 1-4-2008 to 31-3-2009.
Now the said period is extended upto 31-3-2010. (Sch. entry C 108(2) accordingly amended).
Hence with effect from 1st April 2009 the applicable rate of tax on Timber shall be 4 per cent.7Clearing nuts (Shikekai) and Soap nuts (Ritha) in whole or powder form.C 11012.54Rate of tax reduced from 12.5 % to 4 %. (New schedule entry C 110 added.).8Compact Fluorescent Lamps.C 11112.54Rate of tax reduced from 12.5 % to 4 %. (New schedule entry C 111 added).9LPG Stove for Domestic use; parts, components and accessories there of C 11212.54Rate of tax reduced from 12.5 % to 4 %. (New schedule entry C 112 added.) It is clarified that for the purposes of this entry the LPG stoves with 4 or less burners shall be considered as a stove for domestic use. Therefore, if the fact that a LPG stove has 4 or less burners is confirmed, Then it need not be ascertained as to whether the said LPG stove is actually being used for domestic purpose or not.10Cotton ginning and pressing machines covered by subheading 8445 19 10 of Central Excise Tariff Act, 1985C 11312.54Rate of tax reduced from 12.5 % to 4 %.
(New schedule entry C 113 added.)11Composting MachinesC 11412.54Rate of tax reduced from 12.5 % to 4 %. (New schedule entry C 114 added.)12Medical devices and implantsC 107(8)12.54In addition to earlier 25 devices and implants 13 more medical devices and implants are included in the notification under Schedule Entry C 107(8), hence would be taxed @ 4% instead of 12.5%. The following medical devices and implants are now included which are as follows:-
(1) Scalp veins/venflo
(2) Saline water/Distilled water
(3) Injections Desferal.
(4) Tablets Kelfer.
(5) Syringe driver.
(6) Needles for suture.
(7) Hollow needles for injection, aspiration, biopsy and transfusion.
(8) Hilerio venus fistula needles.
(9) Catheters (for urine, stool).
(10) Stethoscopes.
(11) Forceps, forcep clamps, clips, needle holders, introducers, cephalotribe one holding and other holding instruments.
(12) Chisel, gauges, elevators, raspatones, osteotome, craniotome, bone cutters.
(13) Retractors, spatulaprobes, hook dilators, sounds, mallets.
(Notification no. VAT 1509/CR- 81-C/Taxation 1 dated 29th June 2009.)
(ii) Commodities, on which the rate of tax is increased:-
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No.Commodity Schedule Entry (Current)Old Tax Rate (%)New Tax Rate (%)Remarks1Gypsum BoardsE-112.54The Gypsum Boards have been excluded from the Schedule entry C 41 hence would be taxable @ 12.5 per cent. Under Schedule entry E-1. Other forms of the Gypsum would continue to be taxable @ 4 per cent. being covered under Schedule entry C-412Foreign Liquor (IMFL), Excluding winesD 12025(1) Rate of tax on the IMFL covered under this entry is increased from 20 % to 25%.
(2) However, by subsequent notification No. VAT- 1509/CR-109/Taxation-1 dated 1st August 2009 the wine is excluded from thisentry, a new entry D 3A is added. The applicable rate of tax on wine shall be 20 per cent.3Country liquorD 22025Rate of tax revised from 20 %to 25%.4Foreign Liquor (Imported Liquor), excluding wines.D 32025(1) Rate of tax on the Imported liquor covered under this entry is increased from 20 % to 25%.
(2) However, by subsequent notification No. VAT- 1509/CR-109/Taxation-1 dated 1st August 2009 the wine is also excluded from this entry, a new entry D 3A is added. The applicable rate of tax on wine shall be 20 percent. Foreign Liquor (Imported Liquor)5Wines, as defined from time to time, in rule 3(6)(1) of the Bombay Foreign Liquor Rules, 1953 and in rule 3(4) of the Maharashtra Foreign Liquor (Import and Export) Rules, 1963.D 3A_20(1) Government of Maharashtra, Finance Department had issued a notification No. VAT- 1509/CR- 109/Taxation-1 dated 1st August 2009.
(2) A new entry D 3A is added. Therefore, the applicable rate of tax on wines covered by this entry shall be 20 per cent.6Tobacco, manufactured tobacco and products thereof ncluding cigar and Cigarettes but excluding those to which entry 45A of Schedule A andentry 101 of Schedule C
applies.D 1212.520Revision in the rate of tax is effective from 1st July 2009. Tax position after this
amendment is as follows: (i) Un-manufactured tobacco covered by Central Excise Tariff heading No 2401 continues to be tax free under schedule entry A
45A (a). Thus unmanufactured and tobacco refuse would continue to be covered by Schedule A 45A.
(ii) Biris (Ce. Excise tariff heading No 24031031,24031039 continues to be tax free under schedule entry A 45A (b).
(iii) Manufactured tobacco,tobacco productsincluding cigar andcigarettes etc. shall nowbe taxable @ 20% insteadof 12.5%.
(iv) In other words, tobacco,other than the tobacco,covered by 2401,24031031, 24031039would be taxable @ 20 %.
9. 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.
10. You are requested to bring the contents of this circular to the notice of the members of your association.
Yours faithfully,
(SANJAY BHATIA)
Commissioner of Sales Tax, Maharashtra State, Mumbai.
Ref.: 1. Budget speech delivered by Hon. Finance Minister
2. Maharashtra Act No. XVII of 2009 dated 27th June 2009.
3. Notification published in the Government Gazette, Extraordinary Part-IV-B No. 121 dated 29th June 2009.
4. Notification published in the Government Gazette, Extra ordinary Part-IV-B No. 122 dated 29th June 2009.
5. Trade Circular No 21T of 2009 dated 4th July 2009.
6. Govt. Resolution, Finance Department No. VAT-1509/CR-109/Taxation-1 dated 18th July 2009
7. Finance Department Notification No. VAT-1509/CR-109/Taxation-1 dated 1st August 2009.
