CA Lalit Munoyat
For the information of all LBT registered Dealers in Maharashtra
As all the dealers are aware that the Urban Development Department, Government of Maharashtra has informed all the dealers that from 1st August 2015, LBT shall apply only to those dealers whose turnover would exceed Rs. 50 Cr. in a year.
In order to give effect to the above proposal, the Government of Maharashtra has vide its notification no. LBT- 2015/CR-47/UD-32. Dated -01-08-2015 amended the Maharashtra Municipal Corporations (Local Body Tax) Rules 2010 so as to set fresh limits for Registration and to provide for automatic Cancellation of Registration for the purposes of levy of Local Body Tax. The following amendments have been made w.e.f.1st August 2015.
Rule 3. The limits of turnover for registration.- (1) The limits for registration shall be,-
a) in the case of a dealer, who is an importer and the value of all the goods imported by him during the year is not less than Rs. 1,00,000.
b) in any other case, including the case where a dealer has not become liable to pay local body tax under clause (a), and the turnover of all his sales or purchases during such year, is not less than Rs. 5,00,000.
|“Provided that for any period starting on or after 1″ April 2015, the dealer whose turnover of sales or turnover of purchases, DURING ANY YEAR, is not less than 50 cr. shall only be liable for registration.” (w.e.f. 01-08-2015)|
Cancellation of Certificate of Registration.–(1) Where,-
(a) any business, including that of a dealer who is deemed to be registered under sub-rule (3) of rule 9 of these rules, in respect of which a certificate of registration has been issued under these rules, has been discontinued, or has been transferred or otherwise disposed of, or
(b) neither the turnover of sales nor the turnover of purchases of a registered dealer, including a dealer who is deemed to be registered under sub-rule (3) of rule 9, has, during any year exceeded the relevant limit prescribed by these rules, then, the dealer shall apply in the prescribed manner, for cancellation of his certificate of registration and the Commissioner shall, after holding such inquiry as he deems fit, cancel the certificate of registration with effect from such date as he may fix in accordance with these rules :
(b) neither the turnover of sales nor the turnover of purchases of a registered dealer, during the year prior to the year starting on 1” April 2015 has exceeded rupees 50 cr. then, the certificate of registration of such dealers shall be DEEMED to have been cancelled with effect from 1st August 2015.
Some of the observations and questions on the above amendments are as under:
2) The limit of turnover for registration:
Up till now the upper limit for registration was set at Rs. 5 Lacs which was very low and almost all of the dealers were covered within the regime of LBT Law and each of them was paying LBT regularly every year. However, with the upper limit now raised to Rs. 50 cr certain confusions are bound to arise.
It has now been provided that for any period starting on or after 1″ April 2015, the dealer whose turnover of sales or turnover of purchases, during any year, is not less than 50 cr shall only be liable for registration. A few observations on the above amendments are as under:
a) Since GST is likely to subsume the LBT w.e.f. 1st April 2016, this phrase -during any year- would mean only the F.Y. 2015-16.
b) As per the statement of the Finance minister, Government of Maharashtra in lieu of LBT, the government will impose surcharge on the Value Added Tax (VAT) till the Goods and Services Tax comes into effect.
c) As per the available information Goods and Services Tax is likely to be implemented w.e.f. 1st April 2016. (However, given the ruckus in the present monsoon session of parliament, the chances of Rajya Sabha passing the 122nd Constitutional amendment Bill 2014 are very bleak and consequently the implementation of GST w.e.f. 1st April 2016 may also have to be postponed.)
d) A dealer will get exemption upto turnover of Rs. 50 for F.Y. 2015-16 and pay the LBT on the turnover, if any, exceeding Rs. 50 cr. for the balance part of the same year.
e) How much time will it take to modify the present online system available at gov.in so as to segregate the dealers based on their turnover so as to levy surcharge on the VAT, in lieu of LBT , on all those dealers whose turnover do not exceed Rs. 50 Cr, leaving aside the dealers who have to pay LBT based on their turnover. ?
f) If the turnover exceeds Rs. 50 cr during the financial year 2015-16 AND GST Law implementation is deferred for some part of the F.Y. 2016-17 whether the dealer shall again get an exemption upto a turnover of Rs. 50 cr beginning 1st April 2016 till the date GST is implemented and pay the LBT on the turnover exceeding Rs. 50 cr for the balance part of that year i.e. period before GST. ?
g) As is generally the case, for fixing liability for any tax for a particular financial year, the criterion of the turnover of previous year is considered. Examples are: Audit u/s 44AB of Income Tax Act,(Turnover of Rs. 1 Cr.), Small service provider exemption for levy of service tax (Turnover of Rs. 10 Lakhs) , SSI exemption under Central Excise Act (Turnover of Rs. 400 Lakhs).
h) But a plain reading of the amendment rules does not convey the same message leading one to conclude that the turnover limit of Rs. 50 cr for exemption is available for the F.Y. 2015-16 even if the turnover of the F.Y. 2014-15 was more than Rs. 50 cr. The same would be the case for the F.Y. 2016-17 if the implementation of GST law is postponed for some part of the year.
i) The above observations/questions may not be of any relevance given that 99.85 per cent of traders in Maharashtra will be out of LBT
Copy of notification no. LBT- 2015/CR-47/UD-32. Dated -01-08-2015 amending the rules of LBT is as follows. Readers are requested to give feedback if any error of fact or that of interpretation is noticed so that the correct factual position maybe depicted.
The above write up is the absolute personal opinion of the writer and does not amount to an expert legal opinion. It may or may not depict the legal position sought to be conveyed by the statute. Readers are cautioned to evaluate the actual legal position before acting on this write up. Further, this write up is meant only for an academic interest and not for any other purpose .
Compiled by: CA LALIT MUNOYAT, B.Com.(Hons.),CS,FCA, DISA, @ [email protected] # 98201 93508