Amendment to the Maharashtra Value Added Tax Act, 2002
Trade Circular No 17 T of 2010 Dated 17th May, 2010
8th floor, Vikrikar Bhavan,
Mazgaon, Mumbai -4000.10..
Sub : 1. Amendment to the Maharashtra Value Added Tax Act, 2002.
2. Amendment to Profession Tax Act, 1975 and
3. Amendment to Luxury Tax Act, 1987.
Ref. : 1. Maharashtra Act No. XII of 2010 dated 29th April 2010.
2. Notification published in the Government Gazette, Extraordinary Part- IV- B No. 66 dated 12th April 2010.
To give effects to the Budget proposals a Bill (Legislative Assembly Bill No. XLV of 2010) to amend the Maharashtra State Tax on Professions, Trades, Callings and Employment Act, 1975, Maharashtra Tax on Luxury Act, 1987 and the Maharashtra Value Added Tax Act, 2002 was introduced in the Legislature. The said Bill has been passed by both the houses of the Legislature The Act is now published in the Maharashtra Government Gazette dated 29th April 2010.
The salient features of the amendments are briefly explained below:
2. Date on which the Act shall come into force:-
(a) The provisions of section 42 shall come into force with effect from 1st April 2010.
(b) All the remaining provisions relating to the Professions Tax Act, 1975, the Luxury Tax Act, 1987 and Maharashtra Value Added Tax Act, 2002 shall come into force with effect from 1st May 2010
3. Gist of the Amendments effected by the Maharashtra Act No. XII of 2010.
(A) Amendments to Maharashtra State Tax on Professions, Trades, Callings and Employment Act, 1975:-
1. The provisions of audit contained in section 22 of the MVAT Act, 2002 shall now apply mutatis mutandis to the P.T. Act. This will enable audit of the establishment of an employer under the PT so far as it relates to the disbursement of Salary, wages etc. Therefore the Audit under PT Act will be earned out on the lines of MVAT Act, 2002.
2. A new section 7A is inserted. This is an enabling section. Earlier, the returns and payment under P.T. Act were made manually. The Sales Tax Department has implemented the scheme of electronic return and electronic payment successfully under the Maharashtra Value Added Tax Act, 2002. The trade and associations has also supported this overwhelmingly. In view of this it has been decided to extend the same to P.T. Act also.
3. Accordingly the provisions under MVAT Rules, 2005 more particularly that of Rule 17(5) will apply to the filing of electronic returns and Rule 45 will apply to the electronic payment.
4. A separate Trade Circular with regards to operational modalities related to the Audit, electronic filing of returns and electronic payment will be issued shortly.
(B) Amendments to Maharshtra Tax on Luxuries Act, 1987:-
(1) Amendment to Section 3:-
(a) The section 3 of the Luxuries Tax Act, 1987 provides for the levy and incidence of the tax. Sub-section (2) prescribes the rate of tax on the turn-over of receipts. By the amendment the clause (a) and clause (b) is substituted. The earlier limit of Rs.200/- per day per accommodation is now raised to Rs. 750/- per day per accommodation.
(b) Due to this the Hotels where charge for luxury (per day per accommodation} is Rs. 750/- or less, the luxury tax shall not be applicable.
(c) Whereas the charge for luxury (per day per accommodation) is more than Rs.750/- but does not exceed Rs.1200/- the tax on the Turnover of receipts shall be 4 per cent (d). There is no change in the rate of tax if the charge for luxury exceeds Rs. 1200/-. It will continue to remain 10 percent.
(2) Insertion of new Section 12A:-
(a) A new section 12A is an enabling provision. This will enable the electronic filing of return and electronic payment of any amount due and payable under Luxury Tax Act on the lines of the provisions contained in rule 17(5) and rule 45 of the Maharashtra Value Added Tax Rules, 2005.
(b) A separate Trade Circular with regards to operational modalities related to electronic filing of returns and electronic payment will be issued shortly.
(C) Amendments to Maharashtra Value Added Tax Act, 2002:-
(1) Amendment of section 18:-
(a) This section deals with information to be furnished by the dealer in respect of changes in business. The amendment provides that the dealer who has effected change in the nature of business or has either opened a new Bank Account or has closed the existing Bank Account shall furnish said information within sixty days from date of change so made. (see rule 15).
(b) The change in the nature of business shall mean that the dealer has shifted from manufacturing to trading or import or vice versa.
(2) Amendment of section 20:-
A technical amendment has been made to section 20(4)(b) requiring the dealer to file revised return within 30 days of submission of audit report under section 61.
(3) Amendment of section 23:-
(a) Section 23 provides for assessment. Sub-section (5) had provided for the transaction-wise assessment only in the cases where proceedings under section 64 have been initiated.
(b) The clause (a) of sub-section (5) is now amended. The amended sub-section now provides for transaction-wise assessment in respect of any proceedings including the proceedings under section 64. The transaction-wise assessments may be undertaken where any dealer or person has evaded tax or has sought evasion of the tax or where the tax liability has not been disclosed correctly.
(c) This broadly means that the transaction-wise assessment in respect of any dealer or person may be undertaken under the circumstances (list is indicative) listed below, -
Where any dealer or person has-
(i) Claimed excess set-off, or
(ii) recorded in an incorrect manner any transaction of sale or purchase, or
(iii) classified in an incorrect manner any transaction of sale or purchase, or
(iv) has paid taxes at lower rate
(v) sales or transfers under CST Act is not supported by declarations or certificates
(d) This amendment enables transaction-wise assessments wherever necessary, instead of full fledged assessments.
(4) Amendment to section 29:-
(a) Amendment to sub-section (6):
Sub-section (6) provides for penalty for contravention of provisions of section 86 i.e. Non-issuance of Tax Invoice or as the case may be Cash memorandum. The minimum penalty for non-issuance of bill or cash memo has been increased to Rs. 1000/-.
(b) Amendment to sub-section (7):
Sub-section (7) provides for the penalty for failure to comply with the notices in, respect of any proceedings under the Act. Earlier the penalty amount was at Rs. 1,000/-. This has been increased to Rs. 5,000/-.
(c) Amendment to sub-section (11):
The section 29(11) is amended so as to increase the time limit for levy of penalty from five years to eight years. This has been done to synchronize with the time period for assessment.
(5) Amendment of Section 42:
(a) Section 42 is amended and sub-section (3A) is inserted in order to provide for a composition scheme for developers.
(b) This provision enables State Government to issue notification providing for Composition Scheme for developers subject to such restrictions and conditions as may prescribed in the notification.
The Scheme will be optional and apply to all the agreements entered into by developers from 1st April 2010 onwards. A notification to this effect will be shortly issued.
(6) Amendment of Section 51:
(a) Section 51 provides for the refund on application in Form-501 filed by the claimant dealer. Many a times it is observed that,-
(i) the claimant dealer has not received the declaration or certificates as required under Central Sales Tax Act, 1956 in support of various claims for concessional rate or NIL rate of tax, or
(ii) tax has not been paid on earlier sales by the vendor.
(b) proviso has been added to sub-section (2) enabling reduction of refund under aforesaid circumstances. The contingencies have been provided by amendment to the rules. This is being done to grant refund at earliest on the claims which are found to be correct.
(c) This Will help for early and speedy grant of refund.
(7) Amendment to section 61:-
(a) Section 61 provides for the audit of the accounts in certain cases.
At present every dealer having turnover of sales or purchases exceeding rupees forty lakh in a year was required to get his accounts audited.
(b) Clause (a) of sub-section (1) is amended. Thus the limit of Rs. 40 Lakh is increased to Rs. 60 Lakh. The amended provision will be applicable in respect of the year 2010-11.
(c) In other words the dealer covered under clause (a) will be required to get his account audit only if the turnover of sales or purchases in respect of year starting on or after 1st April 2010 exceeds Rs. 60 Lakh.
(d) Further, a new clause (c) is added. The dealers covered under Package Scheme of Incentives (PSI) holding Entitlement Certificate either under the BST Act or under VAT Act shall, be required to get their accounts audited. This provision will be applicable to all the PSI dealers irrespective of turnover of sales or purchases exceeding Rs. 60 Lakh or not. Due to the amendment it is now mandatory for all PSI dealers to get their accounts audited and file audit report in Form 704.
(8) Amendment of section 85:-
(a) The section 85 deals with the non-appeallable orders. A new sub clause (b-3) is added. Now the order levying interest passed under the provisions of section 30(2) or 30 (4) shall be non-appeallable
(b) A new clause (b-4) is added. This provides that the intimation issued under section 63(7) shall be non-appealable.
(c) A new clause (d-1) is added. Due to this, orders passed by the Joint Commissioner under sub-section (1) and (2) of section 35 shall be non-appeallable.
Earlier, the dealer had an option to apply to the Commissioner or prefer appeal against such order before the Hon'ble Tribunal. As a result of this amendment, dealer may file an application before Commissioner against the order passed under section 35(1) and 35(2). The order passed by the Commissioner on the said application shall however, be appellable as per provisions of section 35(6).
(9) Amendment of section 86:-
(a) Section 86 provides for tax invoice and memorandum of sales or Purchases. The sub-section (2) clause (b) is amended.
(b) Now it is mandatory for the selling dealer to state the TIN of the purchasing dealer on the Tax Invoice.
(c) If selling dealer fails to state the TIN of the purchasing dealer, the Invoice so issued shall not be treated as a Tax Invoice and the purchasing dealer shall not be entitled to claim set-off in respect or said deficient Tax Invoice as per provisions of section 48(2).
(10) AMENDMENTS TO THE NOTIFICATIONS:-
To give effect to the Budget announcements certain notifications are amended. These amendments have come into force from 1st May 2010.
(A) Addition of HDPE Fabric Vermi Compost Bed:-
(a) The State Government by Notification Finance Department No. VAT.1505/C.R.109/Taxation.-1 dated 1st June 2005 has notified the list of the Agricultural Implements for the purpose of Schedule entry A-4.
(b) Now it will include HDPE Fabric Vermi Compost Bed.
Therefore the applicable rate of tax on this shall be NIL.
(B) Addition of Solar Lantern as Solar energy device:-
(a) The State Government by Notification-Finance Department No. VAT. 1509/C.R.81-B(1)/Taxation.-1 dated 29th June 2009 has notified Solar Energy devices for the purposes of Schedule Entry C-56.
(b) The aforesaid notification is amended and Solar Lanterns are added., Therefore the applicable rate of tax on this shall be NIL.
(C) Addition of Sabudana Chivda, Khandvi and Chana Chur:-
(a) The State Government by Notification-Finance Department No. VAT.1505/C.R.165/Taxation.-1 dated 1st June 2005 has notified varieties of the Farsan for the purposes of Schedule Entry C-94(b).
(b) The aforesaid notification is amended. In entry 25 of the said notification word sabudana is added. After amendment the entry shall read as:
"25. Chivda including that made of potato and sabudana."
(c) Further, after existing entry, new entries are added as:-
30. Channa Chur.
(d) In view of this amendment .the applicable rate on the commodities shall be 5 per cent.
(D) Addition of Blood Transfusion Apparatus:-
(a) The State Government by Notification-Finance Department No. VAT.1505/C.R.233/Taxation.-1 dated 23rd November 2005 has notified certain goods to be medical devices and implants for the purposes of Schedule Entry C-107(8).
(bl The aforesaid notification is amended to include Blood Transfusion Apparatus as covered by excise heading 9018 90 32.
(c) The applicable rate of tax will be 5 per cent.
(11) Amendment of Schedule Entries-
The section 19 to 21 of The Maharashtra Act No. XII of 2010 deals with the amendments to the Schedule entries. The amended tax rate shall be effective from 1st May 2010. The amendments are presented in the table below:-
|Sr No.||Entry No.||Particulars of amended Schedule Entry||Old Tax Rate||New Tax Rate||Remarks|
|Amendment to Schedule A. Addition of new entries|
(c) Husk and bran of cereals and pulses, Sarki pend and de-oiled cakes, but excluding-
(i) oil cakes,
(ii) rice bran;
|(i) This entry is expanded so as to include sarki pend.
(ii) Due to this the tax on the sarki pend shall be NIL.
(iii) Corresponding entry C-30 has been amended.
|2||55||(a) Incense sticks commonly known as, agarbatti, Dhoop, dhupkathi or dhupbatti.||Nil||Nil||(iv) The entry 55 is expanded. New sub-entries (b) and (c) are added to include camphor and Dhoop including loban.
(v) Due to this the applicable rate of tax on Camphor and Dhoop including Loban shall be NIL.
|(c) Dhoop including loban||12.5|
|3||57||Katha (Catechu)||12.5||Nil||(i) A new entry 57 is added.
(ii) Katha (Catechu) was earlier covered by entry C-44. These words are now deleted from the said entry. Accordingly entry C-44 is re-drafted.
(iii) The applicable rate of tax on Katha (Catechu) will be NIL.
|4||58||Handmade Laundry Soap manufactured by the Units certified by the State Khadi and Village board excluding Detergent.||12.5||Nil||(i) A new entry 58 is added.
(ii) As a result of this, Handmade Laundry Soap manufactured by the Units certified by the State Khadi and Village Board, excluding Detergent will be tax free.
(iii) This concessional rate shall be available only in respect of Handmade laundry soaps manufactured by aforesaid units.
|Amendment to Schedule-B. Addition of new entry.|
|5||4||Hairpins, imitation Jewellery, beads of glass, plastic or of any metal other than precious metals and parts components thereof.
|4||1||(i) Entry is expanded to include hairpins. Therefore this will be taxed at 1%.
(ii) The consequential entry C-51 is deleted.
|a. Amendment to Schedule- C Redrafting of Entries.|
|6||30||Edible Oil, edible oil in unrefined form and oil cakes excluding sarki pend.||5||5||(i) This entry is re-drafted so as to exclude sarki pend.
(ii) Due to this the Sarki pend will be excluded from this entry as is now being covered by Schedule entry A-4.
|7||44||Herbs, Gambiar bark, dry plant, dry root, commonly known jari booti and dry flower||5||5||(i) This entry is. re-drafted to exclude Katha, (Catechu), being covered under Schedule entry A-57.
(ii) The remaining items in the said entry will continue to be taxed at 5 per cent.
|8||51||Hair Pins||4||The entry is deleted as a consequence of amended entry B-1.|
|b. Amendment to Schedule- C -Amendment or Addition of New Entries.|
|9||115 .||Vehicles operated on Battery or Solar power||12.5||5||(i) A new entry 115 is added.
(ii) Due to this the vehicles that derive operational power from Battery or Solar energy will be taxed @ 5 %.
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 members of your Association.
Commissioner of Sales Tax
Maharashtra State, Mumbai