MVAT – Budget 2011-12 – Filing of Returns by dealers dealing in liquor

TRADE CIRCULAR

Date: 21/06/2011

No. VAT/Liquor/Returns Module/ADM-7

Trade Circular No. 10T of 2011

Sub: Budget 2011-12: Filing of Returns by dealers dealing in liquor.

Ref: 1) Mah. Act No. XV of 2011 dated 21st April 2011.

2) Notification No. VAT-1511/C.R.57/Taxation-l dated 30th April 2011.

3) Trade Circular No.8T of 2011 dated 04/05/2011.

The amendments carried out in respect of taxation of liquor have been explained in details in the Trade Circular No. 8T of 2011 referred here in above at Sr. No.(3). The procedure to fill up the information about turnover of liquor sales while uploading the Returns is explained in this circular. No new form of Return has been introduced for liquor dealers. The dealers dealing in liquor shall continue to file returns in the same form (form 231 to 235) in which they were filing returns before the amendments.

2) Applicability of the circular: This circular is applicable to:

i) The manufacturers and importers dealing in liquor covered by the entries (1), (2) and (3) of Schedule D to the MVAT Act, 2002 and covered by Notification dated 30.4.2011.

ii) All classes of liquor dealers who have to pay tax oh the liquor sales out of opening stock as on 1.5.2011.

3) The guidelines to disclose the sale price in case of sales out of purchases effected on or after 1.5.2011 in case of various classes of dealers are as follows:-

While entering information in the electronic returns the Gross Turnover of Sales (GTO of Sales) is entered in the box no.5(a) of the e-Return form 231. Similarly the GTO of Sales is entered in box no. 6(a) and 8(a) of the e-Return forms 233 and 234 respectively.

Various classes of liquor dealers should enter the GTO of Sales in the e-Return forms as follows:

A) Manufacturers and Importers of liquor:-

a) The liability to pay tax on local sales of liquor should be worked out in two ways as follows:

i) Tax payable @ 50% on the turnover based on actual sale price.

ii) Tax payable on the turnover based on MRP calculated by multiplying the turnover by the factor 25/125.

Ø From (i) and (ii) above, if the tax liability worked out as per (i) is lower, then the turnover to be disclosed is the turnover based on actual sale price.

Ø If the tax liability worked out as per (ii) is lower, then the turnover to be disclosed is the turnover on the basis of MRP.

b) In case of other sales of liquor like interstate sales, exports etc. the turnover should be mentioned on the basis of actual sale price. –

Example (I): Consider total sales of liquor of Rs.10,000/- with following break up:

Sr. No.	Description	Amount in Rs.
1.	Local taxable sales on the basis of actual sale price	6,000
	MRP based sales price of above sales	8,000
2.	Interstate sales	3,000
3.	Exports outside India	1,000

Amount to be disclosed in Returns as Turnover of Sales of liauor:

Sr. No.	Description	Amount in Rs.
1.	Net taxable sales price on the basis of MRP to be shown as turnover	8000 X100 125 = 6,400
2.	Add: Turnover of interstate sales and exports.	4,000
3. *	Turnover to be included in the GTO of sales	10,400

*To enter Taxable Turnover in the table for computation of tax in the e-Returns

(Box no. 6 of Form 231, Box no. 10 of Form 233, Box no. 9 of Form 234):

i) In the above example the tax payable worked out @50% on actual local sales of Rs.6000/- is Rs,3000/- while tax payable @ 25% of local turnover based on MRP is Rs. 1600/-. Since tax payable after availing exemption as per Notification dated 30.4.2011 (reference number 2) is less, the turnover of local sales liable to tax should be worked out on the basis of MRP. So the local taxable turnover of liquor is to be shown at Rs.6,400/-.

ii) In case of other sales viz. interstate sales and exports the turnover is to be disclosed on the basis of actual sale price. In the above example such turnover is Rs.4,000/-.

Thus the turnover of liquor sales to be disclosed in the Return is Rs.10,400/-.

The turnover should be entered in the table for computation of taxable turnover as follows:

Sr. No.	Description	Where to enter
1.	Net taxable sales price on the basis of MRP (Rs. 6400/-)	Tax rate 25% should be selected in the drop down and this amount should be entered next to tax rate of 25%.
2.	Interstate sales of Rs.3000/- and Exports of Rs. 1000/-.	There is no change in entering these amounts due to amendment.

Example (II): Consider total sales of liquor of Rs. 10,000/- with following break up:

Sr. No.	Description	Amount in Rs.
1.	Local taxable sales on the basis of actual sale price	2,000
	MRP based sale price of above sales	8,000
2.	Interstate sales	6,000
3.	Exports outside India	2,000

Amount to be disclosed in Returns as Turnover of Sales of liquor:

Sr. No.	Description	Amount in Rs.
1.	Turnover of sales on the basis of actual sale price	2,000
	Turnover of local sales on the basis of MRP	8,000 x 100 125 = 6400
2.	Add: Turnover of interstate sales and exports	8,000
3. **	Turnover to be included in the GTO of sales	10,000

**To enter Taxable Turnover in the table for computation of tax in the e-Returns

(Box no. 6 of Form 231, Box no. 10 of Form 233, Box no. 9 of Form 234); In the above example the tax payable worked out @50% on actual local sales of Rs.2000/- is Rs.1000/- while tax payable @ 25% of local turnover based on MRP is Rs. 1600A. Since tax payable @50% on actual sale price is less, the turnover of local sales should be worked out on the basis of actual sale price. Thus the net taxable turnover of liquor comes to Rs.10,000/-. The turnover should be entered in the table for computation of taxable turnover as follows:

Sr. No.	Description	Where to enter
1.	Local turnover of sales on the basis of actual sale price (Rs.2,000/-)	Tax rate 50% should be selected in the drop down and this amount should be entered next to tax rate of 50%.
2.	Interstate sales of Rs.6,000/- and Exports of Rs.2,000/-.	There is no change in entering these amounts due to amendment.

B) Hotels (4 star and above) if they are importing liquor:

i) In case of sales of liquor out of purchases not effected from local dealers registered under the MVAT Act (interstate purchases or imports from outside India etc.) the liability to pay tax on local sales of liquor should be worked out in two ways as follows:

a) Tax payable @ 50% on the turnover based on actual sale price.

b) Tax payable on the turnover based on MRP calculated by multiplying the turnover by the factor 25/125 and tax payable @ 20% on the actual sale price taken together.

Ø From (a) and (b) above, if the tax liability worked out as per (a) is lower, then the turnover to be disclosed is the turnover based on actual sale price.

Ø If the tax liability worked out as per (b) is lower, then the turnover to be disclosed is the turnover on the basis of MRP plus actual turnover,

ii) For these dealers the sales of liquor purchased from dealers registered under the MVAT Act are taxable @20% from 01/05/2011 The tax is payable on actual sale price. So the turnover of such sales should be disclosed on the basis of actual sale price.

Example: Consider total sales of liquor of Rs.10,000/- with following break up:

Sr. No.	Description	Amount in Rs.
1.	Local taxable sales on the basis of actual sale price	4,000
	MRP based sale price of above sales	1500
2.	Local sales of liquor out of purchases effected from RD after 01/05/2011	6,000

Amount to be disclosed in Returns as Turnover of Sales of liquor:

Sr. No.	Description	Amount in Rs.
1.	Local turnover of sales out of purchases other than RD purchases, on the basis of actual sale price	4,000
	Sale price of liquor on the basis of MRP in case of above sales	1500 x 100 125 = 1200
2.	Local sales of liquor out of purchases effected from RD after 01/05/2011	6,000
3. #	Turnover to be included in the GTO of sales	11,200

#To enter Taxable Turnover in the table for computation of tax in the e-Returns

(Box no. 6 of Form 231, Box no. 10 of Form 233, Box no. 9 of Form 234):

i) In the above example the sales of liquor out of imports or interstate purchases are at Rs.4000/- and MRP based turnover of such sales is Rs.1500/-. The tax payable on actual sales of Rs. 4000A @ 50% comes to Rs. 2000A-, while tax payable after availing exemption as per notification dated 30.4.2011 (reference number 2) comes to Rs. 1100/- (Rs.4000X20% + 1500X25/125). Since tax payable after availing exemption as per Notification dated 30.4.2011 (reference number 2) is less, the turnover of local sales should be worked out on the basis of MRP as well as actual turnover taken together. So the local taxable turnover of such liquor sale comes to Rs.5,200/-.

ii) In case of sales out of purchases effected from dealers registered under the MVAT Act, the tax is payable on actual sale price @ 20%. So in case of such sales the turnover is to be disclosed on the basis of actual sale price i.e. Rs.6,000/-. Total turnover of sales to be included in the GTO of sales comes to Rs. 11,200/-.

The turnover should be entered in the table for computation of taxable turnover as follows:

Sr. No.	Description	Where to enter
	Net taxable sales price on the basis of MRP (Rs. 1,200/-)	Tax rate 25 % should be selected in the drop down and this amount should be entered next to tax rate of 25%.
	Actual sale price (In the above example Rs. 10,000/-). In case of sales out of purchases other than RD purchases, tax is to be paid on MRP based sale price as well as actual sale price. So both the amounts have to be mentioned in the computation table.	In case of this class of dealers tax is to be paid @20% on actual sale price. Tax rate of 20% should be selected in the drop down and this amount should be entered next to tax rate of 20%.

4) The guidelines to disclose the sale price in case of sales of liquor effected out of opening stock as on 1.5.2011 are as per Annexure I

5) Deduction to be claimed on account of tax collection or deduction under Rule 57(1):

b) Where turnover is calculated on the basis of MRP:

i) In the above examples wherever the amount to be disclosed in GTO of sales is calculated on the basis of MRP, net taxable sales price has been worked out. If such net sales price is disclosed in the GTO of sales then the dealer should not claim deduction on account of tax collection or for component of tax under Rule 57(1) in respect of net sales price on the basis of MRP.

ii) If the dealer collects tax on the sales of liquor and wants to claim deduction on account of tax collection then the amount of tax collected should be included in the GTO of sales.

c) Where turnover is to be disclosed on the basis of actual sales price:

i) In the above examples only net sales price has been considered for disclosing turnover in returns. If net price is disclosed then the dealer should not claim deduction on account of tax collection or for component of tax under Rule 57(1).

ii) If the dealer collects tax on the sales of liquor and wants to claim deduction on account of tax collection then the amount of tax collected should be included in the GTO of sales.

iii) In case of interstate sales the turnover is to be disclosed on the basis of actual sales price. In the above examples the CST collected has not been included to determine GTO of sales. If a dealer wants to claim deduction on account of CST collected in the returns under the CST Act then the amount of CST collected should be included in the GTO of sales.

6) In case of liquor dealers other than manufacturers and importers, in case of sales effected on or after 1.5.2011, out of RD purchases effected from 1.5.2011 onwards, the turnover is to be disclosed on the basis of actual sale price.

7) If the dealers dealing in liquor face any difficulty in filing returns they can contact officers in the LTU at Mumbai or outside Mumbai.

8) 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.

9) 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.

Annexure I

The guidelines to disclose the sale price in case of sales of liquor effected out of opening stock as on 1.5.2011 in case of various classes of dealers are as follows:

A) Whole salers. Retailers and country liquor bar:

a) In case sales of liquor effected on or after 01/05/2011, out of purchases effected prior to 30/4/2011, from dealers registered under the MVAT Act and which were in the closing stock, the liability to pay tax on local sales should be worked out in two ways as follows:

i) Tax payable @ 50% on the turnover based on actual sale price, ii) Tax payable on the turnover based on MRP calculated by multiplying the turnover by the factor 25/125.

Ø From (i) and (ii) above, if the tax liability worked out as per (i) is lower, then the turnover to be disclosed is the turnover based on actual sale price.

Ø If the tax liability worked out as per (ii) is lower, then the turnover to be disclosed is the turnover on the basis of MRP.

b) In case of sales of liquor other than discussed above, like interstate sales, exports etc. the turnover of such sales should be disclosed on the basis of actual sale price.

Sr. No.	Description	Amount in Rs.
	Local taxable sales on the basis of actual sale price	4,000
	MRP based sale price of above sales	8000
	Interstate sale of liquor	6,000

Amount to be disclosed in Returns as Turnover of Sales of liquor:

Sr. No.	Description	Amount in Rs.
	Sales price of liquor on the basis of MRP in case of sales out of closing stock	8000 x 100 125 = 6400
	Actual sales turnover in case of interstate sales.	6,000
#	Turnover to be included in the GTO of sales	12,400

##To enter Taxable Turnover in the table for computation of tax in the e-Returns

(Box no. 6 of Form 231, Box no. 10 of Form 233, Box no. 9 of Form 234):

i) In the above example the tax payable worked out @50% on actual local sales of Rs.4000/- is Rs.2000/- while tax payable @ 25% of local turnover based on MRP is Rs. 1600/-. Since tax payable after availing exemption as per Notification dated 30.4.2011 (reference number 2) is less, the turnover of local sales liable to tax should be worked out on the basis of MRP. So the local taxable turnover of liquor is to be shown at Rs.6,400/-.

ii) In case of other sales viz. interstate sales the turnover is to be disclosed on the basis of actual sale price. In the above example such turnover is Rs.6,000/-.

Thus the turnover of liquor sales to be disclosed in the Return is Rs.12,400/-. The turnover should be entered in the table for computation of taxable turnover as follows:

Sr. No.	Description	Where to enter
	Net taxable sales price on the basis of MRP (Rs. 6,400/-)	Tax rate 25% should be selected in the drop down and this amount should be entered next to tax rate of 25%.
	Interstate sales of Rs.6000/-	There is no change in entering this amount due to amendment.

B) Hotels, Bars, Restaurants and clubs (3 star and below):

In case of sales of liquor out of purchases effected prior to 1.5.2011, the liability to pay tax on local sales of liquor should be worked out in two ways as follows:

a) Tax payable @ 50% on the turnover based on actual sale price.

b) Tax payable on the turnover based on MRP calculated by multiplying the turnover by the factor 25/125 and tax payable @ 20% on the actual sale price taken together.

Ø From (a) and (b) above, if the tax liability worked out as per (a) is lower, then the turnover to be disclosed is the turnover based on actual sale price.

Ø If the tax liability worked out as per (b) is lower, then the turnover to be disclosed is the turnover on the basis of MRP plus actual turnover.

Example: Consider total sales of liquor of Rs.10,000/- with following break up:

Sr. No.	Description	Amount in Rs.
	Local sale of liquor from closing stock	10,000
	MRP based sale price of above sales	6,000

Amount to be disclosed in Returns as Turnover of Sales of liquor:

Sr. No.	Description	Amount in Rs.
	Actual sale price of liquor in case of sales out of closing stock	10,000
	Sales price of liquor on the basis of MRP in case of above sales	6,000 x100 125 = 4800
***	Turnover to be included in the GTO of sales	14,800

***To enter Taxable Turnover in the table for computation of tax in the e-Returns (Box no. 6 of Form 231, Box no. 10 of Form 233, Box no. 9 of Form 234):

In the above example the sales of liquor out of opening stock are at Rs.10,000/-and MRP based turnover of such sales is Rs.4,800/-. The tax payable on actual sales of Rs. 10,000/- @ 50% comes to Rs. 5,000/-, while tax payable after availing exemption as per notification dated 30.4.2011 (reference number 2) comes to Rs. 3,200/-. Since tax payable after availing exemption as per Notification dated 30.4.2011 (reference number 2) is less, the turnover of local sales should be worked out on the basis of MRP as well as actual turnover taken together. So the local taxable turnover of liquor comes to Rs.14,800/-. The turnover should be entered in the table for computation of taxable turnover as follows:

Sr. No.	Description	Where to enter
	Net taxable sales price on the basis of MRP(Rs.4800/-)	Tax rate 25% should be selected in the drop down and this amount should be entered next to tax rate of 25%.
	Actual sale price (In the above example Rs. 10,000/-). In case of sales of liquor out of opening stock as on 1.5.2011, tax is to be paid on MRP based sale price 11 as actual sale price. So both the amounts have to be mentioned in the computation table.	In case of this class of dealers tax is to be paid @5% on actual sale price. Tax rate 5% should be selected in the drop down and this amount should be entered next to tax rate of 5%.

C) Hotels, Bars, Restaurants and clubs (4 star and above) : In case of sales of liquor out of opening stock as on 1.5.2011 by this class of dealers, the procedure to disclose the turnover of sales is same as explained above in case of Hotels, Bars, Restaurants and clubs (3 star and below). Only difference is that the rate of tax on the turnover of sales based on actual sale price is 20%, instead of 5% as in case of the class of dealers in paragraph number (B) above. Such treatment would also apply to the sales of goods held in stock on 30n April 2011 purchases of which were not effected from the registered dealers.