CA Umesh Sharma
Arjuna (Fictional Character): Krishna, Sales Tax Department has issued the circular of granting of VAT Refund within 45 days, what is it?
Krishna (Fictional Character): Arjuna, MVAT Act comes under the purview of the Maharashtra State Government. The dealers have been irritated due to the complicated and time consuming provisions of MVAT Laws for refund. There is also too much delay in receiving VAT Refund. Because of which Taxpayers have many a times requested the Department for quicker Grants of Refunds. In the last two years Budget speech of Finance minister has stated refunds will be processed fast. However no major difference has been seen in the process of granting refunds. Now government has issued circular on 6th February for granting refund in 45 days. Before starting Make in India and Make in Maharashtra 13th Feb to 18th Feb week by issuing this circular of VAT refund government may have tried to reduce the frustration of entrepreneur.
Arjuna: Krishna, What is Refund in MVAT?
Krishna: Arjuna, In Maharashtra the Taxpayer has to pay Tax on the difference between Sales and Purchases value. In this if there is less VAT payable on sales and more VAT setoff on Purchases then the refund arises. E.g. if taxpayer has purchased Goods for production @ 12.5% and levied VAT @ 5% on finished goods while making sale then there is a refund. Otherwise for e.g. if taxpayer has Rs. 10 lakhs of VAT payable and VAT Setoff of is Rs. 16 lakhs then refund of Rs. 6 lakhs will arise.
Arjuna: Krishna, What are the two methods of claiming VAT refund?
Krishna: Arjuna, Every dealer has to file his VAT return according to his periodicity. If VAT Refund is above Rs. 5,00,000/- then there are two methods of claiming VAT refund, they are as follows:
1) Filling of Form 501: Within 18 Months from the end of financial year dealer has to file VAT refund Application in Form 501. In this he has to provide details of Invoice wise purchases made, details of “C” and “H” form received and not received, etc
2) On the basis of Returns filed: Dealer has to get VAT refund by getting Assessment done from sales tax department. Many times his assessment was not done and never got refund on the basis of VAT returns.
Many times the Dealer’s Refund money is kept by the department itself without assessment. That means taxpayer has to beg to the Department for his own money. There are also lots of Difficulties faced, relating to Annexure J1 and J2, i.e matching of Sales and Purchases.
Arjuna: Krishna, According to VAT Refund Circular, does dealer will get MVAT Refund within 45 days?
Krishna: Arjuna, according to VAT Refund Circular, Refund will be granted as follows:
1) If VAT Audit is applicable to the taxpayer and he has filed Refund Application in Form 501 before due date of VAT Audit, then VAT refund will be granted within 45 days after the due date of VAT Audit e.g. for the F.Y 2014-15, if VAT Audit Report and Refund Application is submitted on 2nd January 2016 and if Vat Audit is applicable to him, then after the due date, i.e. 15th January 2016, within 45 days, i.e. on or before 29th February 2016 refund will be granted.
2) If VAT Audit is not applicable to the taxpayer and he has filed Refund Application in Form 501, then after the due date of VAT Audit, within 45 days VAT refund will be granted e.g. for F.Y 2014-15, Refund will be granted after Vat Audit due date, i.e. 15th January 2016, within 45 days, i.e. before 29th February 2016.
3) If VAT Audit is applicable to the taxpayer and he has filed Refund Application in Form 501 and is submitted after the due date of VAT Audit, then after the due date of filing Form 501, within 45 days VAT refund will be granted e.g. for the F.Y 2014-15, if Refund Application is submitted on 2nd March 2016 and if Vat Audit is applicable to him, then after the due date of filing Form 501 i.e. 30th September 2016, within 45 days, i.e. before 15th November 2016 refund will be granted.
Arjuna: Krishna, Can the dealer carry forward VAT Refund?
Krishna: Arjuna, the dealer can carry forward his VAT refund up to Rs. 5 lakhs to next year but if it is exceeds Rs. 5 lakhs then he has to claim it in the same year to Sales Tax department. It’s mandatory to claim such refund above Rs. 5 lakhs.
Arjuna: Krishna, what should one learn from this Sales tax department and VAT refund?
Krishna: Arjuna, due to lack of money with the Department, it is behind the Taxpayers for collecting the money, and on the other side has issued the circular on VAT Refund. Due to which it is difficult to say about getting refund within time. How Sales tax officer will co-operate is also important as instead of making the procedures easier it has made more complex. Many times dealers were not given interest on the Refund. The Situation of Dealers claiming VAT Refund is like, “Bheek Nako pan Kutra Avar.” In Contrast to this, other Departments, for example- Income Tax Refund’s computerized System is very appreciable and Quick, which is opposite in case of Sales Tax Department. From April 2016, Sales Tax Department is coming up with new SAP System. We hope that the benefits of the same are given to the businessman. Otherwise, it will be like “Someone comes out from one trouble but gets into another.”