mvat registration, interest, penalties and offence
TRANSCRIPT
1 | P a g e
M-VAT Registration, Audit, Penalty and Interest
Index
Sr. No. Particulars Page No.
1. Introduction 2-7
2. Registration 8-11
3. Audit of accounts 12-15
4. Interest, penalties, offences 16-29
5. Illustration 30-31
6. Bibliography 32
2 | P a g e
INTRODUCTION
VAT is a one of the indirect tax in our India. It is simple and transparent system with limited
scope of department control due to the self-assessment made by dealers and less scope for tax
evasion due to strict penal provision. As Per entry 54 in list II (State List) of schedule VII to
constitution of India, state are empowered to levied tax on sale or purchase of goods other than
newspapers. So, that, In India there is different VAT system for each corresponding state.
Therefore, in Maharashtra state, MVAT system is applicable for levying a tax on selling of
goods.
What is the Point of taxation for levied VAT…??
VAT is charged at the time of selling of goods and not on manufacturing of Product. It is a
multi-point tax system which is levied at the time of every sale of goods. VAT is a tax on Value
addition made at each stage and benefit of Setoff will be continued from manufacture up to
retailers, so that ultimate Consumer should bear the tax. There are two conditions required for
levying Vat i.e. passion and use of goods. Ex: – VAT is also charged on rental of machinery
because in that transaction ownership is not transfer but passion and use of goods happens.
What is the definition of goods under MVAT Act…??
Goods means every kind of movable property, the definition of good does not include
newspaper, actionable claims, money, stocks, shares, securities or lottery tickets and includes
livestock’s, growing crops, grass, trees and plants including the produce thereof, including
property in such attached to or forming part of the land which are agreed to be severed before
sale or under the contract of sale.
How does sale price is to be calculated under MVAT Act…??
Sale price means the amount of valuable consideration paid or payable to a dealer for any sales
made including any sum charged for anything done by the seller in respect of goods at the time
of or before delivery thereof, other than the cost of insurance for transit of installation, when
such cost is separately charged.
3 | P a g e
Which dealers are covered under MVAT Act…??
A dealer is liable to pay tax on the basis of turnover of sale within the state. The term dealer
has defined u/s 2(8) of the Act. It includes all person or persons who buys or sells of goods in
the state whether for commission, remuneration or otherwise in the course of their business or
in connection with or incidental to or consequential to engagement in such business. The term
includes broker, commission agent, Auctioneer, PWD, Department of Union government, state
Government Etc. However, an agriculturist, educational institution and transporters shall not
be deemed dealer. The Dealer has threshold Limit for VAT registration is Rs 10 Lac.
What are the rates levied under MVAT Act…??
In MVAT act, there are following rates are charged on selling of goods.
Sr.No Particular Rate Applicable
1) Schedule A Nil Rate Tax-free goods i.e.
necessary goods
2) Schedule B 1% Bullion, Jewellery, precious
stones, diamond Etc
3) Schedule C 2,3,5% IT Product, Declared goods,
Cloth, Drugs and Pharmacy,
Medicines Etc
4) Schedule D 20% to 34% Liquor, Motor Spirit, ATF
Etc
5) Schedule E 12.5% Residuary Entry
Sr.
No.
Category of Dealer Total turnover of sales to
exceed
Turnover of sale or
purchases of taxable
goods
1 Importer: ` 1,00,000/- Not less than ` 10,000/
2 Others (Including
manufacturer, reseller,
liquor dealer, works
contractors, leasing etc.)
` 10,00,000/- (With effect from
01/07/2014 and Rs. 5,00,000 up
to 30/06/2014)
Not less than `
10,000/-
3 Voluntary Registration – NA- – NA-
4 | P a g e
Which form is required for Filing of E-Return in MVAT & CST...??
There are six forms which are applicable to the Different categories of dealer for filing of E
return under MVAT & CST Act and these categories are as follows:
Sr.No Name of Form Applicable
1) Form 231 Regular Dealer
2) Form 232 Composition dealer in second hand motor
vehicles, retailer, works Contract, restaurant,
club, caterers Etc
3) Form 233 Dealer who are in the business of executing
works contract, leasing etc
4) Form 234 Dealer who are PSI units holding Entitlement
Certificate.
5) Form 235 Dealer notified oil companies & also any other
dealer effecting sales of motor spirits.
6) Form III E Dealer who is dealing in interstate sales. (No CST
Return is to be filed if interstate sale is NIL in
period, as per trade Circular 15T of 1981,52T of
2007 & 15T of 2009.)
5 | P a g e
How many Different forms under CST Act ?
There are Ten forms required for claiming the concessional rate, application of Registration
Etc and these are as follows:-
Sr.No Form Description Frequency
1) A Application for registration Once
2) B Certificate of registration Once
3) C Declaration by purchasing registered
dealer to obtain goods at concessional
rate
To be obtained for every
quarter and submitted on
quarterly basis.
4) D Form of certificate for making
government Purchases ( D Form
cannot be issued in case of sale made
to government on or after 1-4-2007)
No Question arise after 01-
04-07
5) E-I /E-II Certificate for sale in transit To be obtained for every
quarter and submitted on
quarterly basis.
6) F Form by branch/ Consignment agent
for goods received on stock transfer
To be obtained for every
quarter and submitted on
quarterly basis.
7) G Indemnity Bond when C Form Lost When required
8) H Certificate of Export To be obtained for every
quarter and submitted on
quarterly basis.
9) I Certificate by SEZ Unit Not Specified in rules (But
should be submitted before
assessment)
10) J Certificate to be issued by foreign
diplomatic Mission or consulate in
India or the UN Agency
Up to the time of
assessment by first
assessing authority.
6 | P a g e
What is the due date for Payment and Return under MVAT & CST…??
According to the periodicity, due date for payment and filing of return under MVAT and CST
Act is depends. So, that following table are helpful for understanding of due dates.
Sr.No
Periodicity Due Date for Payment Due Date for Filing of Return
1) Monthly 21st of the Next Month 31st of the Next Month
2) Quarterly 21st of the Next Month from
End of Quarter.
31st of the Next Month from End
of Quarter.
3) Half yearly 30th of the Next Month from
End of half year.
10th day from the date of
Payment
What are the Penalties under MVAT Act…??
In MVAT Act, there is a penalty levied in the form of late fees for MVAT Return and Interest
is charged for late payment and these are as follow:-
Sr.No Particular Amount
1) Late filing Fees
(Return is not filed within due date)
Rs 1000 if Return is filed within one month
after due date otherwise Rs 5000.
2) Interest u/s 30(2) (Payment is not
made within due date)
Late Payment interest rates slab wise viz for
delay of first month @1.25% P.M, for Next
Two Months @1.5% P.M and thereafter
@2% P.M (As Per Latest Amendment)
7 | P a g e
Dealers liable to pay Tax: – [Sec. 3]
1. The dealers, holding a valid registration certificate under the earlier laws, whose
turnover of either of sales or purchases exceeds the specified limits during the financial
year 2004-05, shall be deemed to be registered dealer under MVAT Act and shall,
therefore be liable to pay tax w.e.f. 1st April, 2005.
2. The dealers, holding a valid registration certificate under the earlier laws, whose
turnover of either of sales or purchases has not exceeded the specified limits during the
financial year 2004-05, but who have opted to continue their registration certificate (by
applying to assessing officer in specified format), shall also be deemed to be registered
dealer under MVAT Act and shall, therefore be liable to pay tax w.e.f. 1st April, 2005.
3. New dealers, whose turnover of sales exceeds the prescribed limits during any year,
commencing on or after 1st April, 2005, are liable to pay tax from the date on which
such limit exceeds.
4. A successor in business of any dealer shall become liable to pay tax on and from the
date of succession.
5. A dealer, applying for voluntary registration, shall be liable to pay tax from the date of
registration.
VAT is charged on value addition made at each stage. The system envisages levy of tax on the
sale at each stage and contemplates allowing of set off of tax paid on purchases. There are five
schedules for levying Taxes. There are six Forms for Filing of return under MVAT & CST Act.
Due Date of Payment and Filing return are explained above in details. Penalties and Interest
are levied if the filing of return and payment are not made within due date.
8 | P a g e
REGISTRATION
Registration [Sec. 16, R 8]
Every dealer, who becomes liable to pay tax under the provisions of MVAT, shall apply
electronically for registration to the prescribed authority, in Form 101, within 30 days from the
date of such liability.
Turnover limits for the purpose of Liability/Registration [Sec. 3(4)]
Category of dealer Total turnover of sales Turnover of taxable goods purchased
or sold
Importer Rs. 1,00,000 Rs. 10,000
Others Rs. 5,00,000 Rs. 10,000
It may be noted that while the total turnover of Rs. 1,00,000/- and Rs. 5,00,000/- is in respect
of Turnover of Sales (which includes all sales whether tax free or taxable), the turnover limit
of Rs. 10,000/- is in respect of taxable goods whether purchased or sold.
Both the conditions have to be satisfied for the purposes of liability/registration under this
category. [Sec. 3(4)]
Documents required for the purposes of Registration
The Commissioner of Sales Tax, Maharashtra, has issued a circular dated 4th May, 2005,
whereby a dealer is required to submit following documents along with the application for
registration in Form 101: –
Documents to be submitted along with the application for registration:
(Note: Copies of documents must be self-attested and are subject to verification from the
original)
9 | P a g e
A. IN CASE OF FRESH REGISTRATION
1. Proof of constitution of business (as appropriate)
2. Proof of permanent residential address* (please provide at least 2 documents out of
the following documents):
i. Copy of passport.
ii. Copy of driving licence.
iii. Copy of election photo identity card.
iv. Copy of property card or latest receipt of property tax of Municipal
Corporation/Council/Gram Panchayat as the case may be.
v. Copy of latest paid electricity bill in the name of the applicant.
3. Proof of place of business
i. In case of owner: Proof of ownership of premises; viz., copy of property card or
ownership deed or agreement with the builder or any other relevant documents.
ii. In case of tenant/sub-tenant: Proof of tenancy/sub-tenancy like copy of tenancy
agreement or rent receipt or leave and licence or consent letter, etc.
iii. Copy of Electricity Bill
4. Two latest passport size photographs of the applicant **
5. Copy of Income Tax PAN Card (in case of Proprietary business: PAN of Proprietor;
in case of partnership business: PAN of partnership firm and of all partners; and in case
of registered company: PAN of the company; in case of HUF: PAN of HUF and Karta
etc.).
i. In case of proprietary firm: No proof required.
ii. In case of partnership firm:
(Registered or unregistered)
Copy of partnership deed.
iii. In case of company: Copy of Memorandum of Association and
Articles of Association.
iv. In case of other constitution: Copy of relevant documents.
10 | P a g e
6. Challan in original showing payment of registration fee. (As per new procedure,
the amount of fees is payable through a bank draft to be deposited with the registering
authority along with the application. The bank draft shall be prepared, for applicant in
Mumbai, in the name of "Bank of Maharashtra A/c. MVAT", and in case of other places
in the name of "State Bank of India A/c. MVAT).
B. REGISTRATION IN CASE OF CHANGE IN CONSTITUTION OF THE
DEALER
1. Proof of change in constitution (e.g., if proprietary dealer converted to partnership firm
then copy of Partnership deed, etc.).
2. Copy of latest return-cum-challan.
3. Pay order for payment of fees.
4. PAN of new firm.
5. Proof of permanent residential address.
C. REGISTRATION IN CASE OF TRANSFER OF BUSINESS
1. All documents from 1 to 6 given in 'A'.
2. Copy of transfer deed.
3. Copy of latest return-cum-challan of the original dealer.
* In case of partnership firm, proof of residence has to be provided for all the partners, in case
of body corporate, proof of residence of applicant.
**In case of partnership firm, photographs of only applicant partner need to be submitted. In
case of corporate bodies, the details of place of residence and PAN, etc. shall be required to be
furnished only for the signatory to the application.
Further, in case of Voluntary Registration, it is necessary that the applicant dealer is having a
current bank account and such dealer has to be introduced either by a registered dealer or by
an advocate, chartered accountant or sales tax practitioner. (The fees payable for voluntary
registration is Rs. 5,000/- while for others it is Rs. 500/- only).
In addition to payment of fees, as mentioned above, a dealer seeking Voluntary Registration,
on or after 16th August 2007, has to be make an advance payment of Rs. 25,000/-. This
advance may be adjusted by the dealer against tax, interest or penalty, if any, payable during
11 | P a g e
the year of registration or in the immediate succeeding year. Any amount remaining unadjusted
after the end of the 2nd year shall be refunded
[For the time being, the amount of fees as well as the amount of advance payment has to be
made by way of bank draft to be deposited with the registering authority along with the
application for registration]
Tax payable by a dealer: – [Sec. 4]
A dealer is liable to pay tax on the turnover of sales of goods, within the State, as per the rates
specified in the schedules. The tax so payable for any tax period shall be reduced by the amount
of input tax credit (set off) for which the dealer is eligible during the same tax period.
Tax Period
Tax Period in relation to a dealer may be a calendar month, quarter (a period of three months;
i.e., Apr. to June, July to Sep., Oct. to Dec. and Jan. to Mar.) or six months (prescribed period
of six months; i.e., April to September and October to March).
12 | P a g e
AUDIT OF ACCOUNTS
Section 61 of MVAT Act requires certain dealers/persons to get their accounts audited by an
accountant, within the prescribed period from the end of the year. The report of such audit is
required to be furnished in a prescribed format. The provisions contained in the Act and Rules
in this regard are reproduced below for the attention of members.
"61(1) every dealer liable to pay tax shall;
a. If his turnover of sales or, as the case may be, of purchases, exceed or exceeds rupees
forty lakhs (sixty lakhs w.e.f. 1/5/2010) in any year, or
b. If he is a dealer or person who holds licence in: -
i. Form P.L.L. under the Maharashtra Distillation of Spirit and Manufacture of Potable
Liquor Rules, 1966, or
ii. Form B-RL under the Maharashtra Manufacture of Beer and Wine Rules, 1966, or
iii. Form E under the Special Permits and Licence Rules, 1952, or
iv. Forms FL-I, FL-II, FL-III, FL-IV under the Bombay Foreign Liquor Rules, 1953, or
v. Forms CL-I, CL-II, CL-III, CL/FL/TOD III under the Maharashtra Country Liquor
Rules, 1973,
vi. PSI unit holding certificate of entitlement (from 1-5-2010)
Get his accounts in respect of such year audited by an Accountant, within the prescribed period
from the end of that year, and furnish within that period the report of such audit, in the
prescribed form, duly signed and verified by such accountant and setting forth such particulars
and certificates as may be prescribed.
Explanation: For the purposes of this section, "Accountant" means a Chartered Accountant
within the meaning of the Chartered Accountants Act, 1949 or (w.e.f. 15-8-2007) a Cost
Accountant within the meaning of Cost & Works Accountants Act, 1959).
(2) If any dealer liable to get his accounts audited under sub-section (1) fails to furnish a copy
of such report within the time as aforesaid, the Commissioner may, after giving the dealer a
reasonable opportunity of being heard, impose on him, in addition to any tax payable, a sum
by way of penalty equal to one-tenth per cent of the total sales.
13 | P a g e
Provided that the dealer fails to furnish a copy of such report within the aforesaid period but
files it within one month of the end of the said period and the dealer proves to the satisfaction
of the Commissioner that the delay was on account of factors beyond his control, then the
Commissioner may condone the delay.
(3) Nothing in sub-section (1) and (2) shall apply to Departments of Union Government, any
department of any State Government, local authorities, the railway administration as defined
under the Indian Railways Act, 1989, the Konkan Railway Corporation Limited and the
Maharashtra State Road Transport Corporation constituted under the Road Transport
Corporation Act, 1950."
"Rule 65. The report of audit under section 61 shall be in Form 704." The auditor is required
to download latest version of Form 704 from the website.
"Rule 66. The report of the audit under section 61 shall be submitted electronically within ten
months of the end of the year to which the report relates." The due date for filing audit report,
in Form 704, for the financial year 2009-10 shall be 31st January 2011.
Submission of Form 704
i. The dealer is required to submit "Statement of submission of Audit Report in Form
704" along with the statement of submission of Audit Report in Form 704 (in the format
enclosed with this Trade Circular on or before 10th February, 2010 extended to 15th
May, 2010 by Trade Circular No. 16T of 2010, dated 10-5-2010. The dealers are also
required to submit the following documents
a. A copy duly signed by VAT auditor as well as dealer, of an acknowledgment generated
after uploading of Form 704.
b. Balance Sheet and Profit & Loss Account/Income and Expenditure account along with
the Statutory Audit Report.
c. In case the dealer is having multi-state activities, the Trial Balance for the business
activities in Maharashtra.
d. Part I of the Audit Report along with certification duly signed by the Auditor.
ii. The aforesaid documents shall be submitted
a. to the concerned LTU officer, if the dealer is Large Tax Payer;
14 | P a g e
b. to the "Desk Audit Cell" in the Office of the Joint Commissioner of Sales Tax (Business
Audit) in Mumbai if the dealer is not Large Tax Payer.
c. in the rest of the State to the concerned LTU officer, if the dealer is Large Tax Payer,
and in any other case to the Joint Commissioner of Sales Tax, VAT (ADM).
(Please refer Trade Circular No. 27T of 2009, dated 1-10-2009.)
In order to ascertain whether any person or dealer is required to get his books of account audited
under the MVAT Act, the followings will have to be examined/determined: –
I. For clause (1)(a): –
1. Whether the person is a dealer within the meanings of section 2(8) of MVAT Act.
2. If a dealer, then whether he is liable to pay tax under the provisions of MVAT Act. A
useful reference may be made to section 3 of MVAT Act in this regard.
3. If the dealer is covered by the provisions of section 2(8) as well as section 3, then it is
immaterial whether the dealer has taken registration or not. Thus, even an unregistered
dealer may also be liable to get his books of account audited. The only criteria to be
checked are whether the turnover either of sales or purchases exceeds the limit of Rs.
40 lakhs (Rs. 60 lakhs w.e.f. 1/5/2010) during a financial year.
If all the three criteria discussed above are fulfilled, then such a dealer shall get his books of
account audited as per the provisions of section 61 and shall submit the report of audit
accordingly. It may be noted that for the purposes of section 61 the term 'Turnover of Sales’
and 'Turnover of Purchases' have to be examined carefully. The same are defined u/s. 2(33)
and 2(32) respectively. A useful reference may also be made to the definition of 'Sale' ‘Sale
Price’ and ‘Purchase Price’ as given u/ss. 2(24), 2(25) and 2(20) respectively.
It may also be noted that for the purposes of section 61 ‘Turnover of Purchases’ will include
all purchases of Goods within the State of Maharashtra whether it is trading goods, raw
material, packing material, fuel, consumables, capital assets and/or purchase of goods in any
other form say by way of expenses debited to Profit and Loss A/c. such as Printing &
Stationery, Repairs and Maintenance, etc. Likewise 'Turnover of Sales' shall also include, apart
from normal sales, any sale or disposal of capital assets, scraps etc.
II. Clause (1)(b) of section 61 requires every person, whether a dealer or not, holding
Liquor Licence of any of the categories as described in (i) to (v) above and PSI unit
15 | P a g e
holding certificate of entitlement to get his books of account audited. Thus all those
persons, irrespective of the amount of turnover of purchase or sales during a year, will
be required to get their books of account audited and submit the report of audit
accordingly.
III. Clause (1)(c) has been inserted, w.e.f. 1st May 2010, providing for compulsory audit
of accounts of all those dealers who are holding Entitlement Certificate in respect of
any Package Scheme of Incentives of the Government of Maharashtra, irrespective of
their turnover of sales or purchase during a financial year. (This clause is applicable for
audit of accounts for financial year 2010-11 and onwards.)
16 | P a g e
INTEREST, PENALTIES, OFFENCES UNDER MVAT ACT 2002
Section 29. Imposition of penalty in certain instances: -
1. While or after passing any order in respect of any dealer under any provisions of this
Act, it appears to the Commissioner that, the dealer has failed to apply for registration
as required under this Act or has carried on business as a dealer without being registered
in contravention of the provisions of this Act, then the Commissioner may, after giving
the dealer a reasonable opportunity of being heard, impose upon him, by way of penalty,
a sum equal to the amount of tax payable by the dealer for the period during which he
has carried on business as a dealer without being registered in contravention of the
provisions of this Act.]
2. While or after passing any order] under this Act, in respect of any person or dealer, the
Commissioner, on noticing or being brought to his notice, that such person or dealer
has concealed the particulars or has knowingly furnished inaccurate particulars of any
transaction liable to tax or has concealed or has knowingly mis-classified any
transaction liable to tax or has knowingly claimed set-off in excess of what is due to
him, the Commissioner may, after giving the person or dealer a reasonable opportunity
of being heard, by order in writing, impose upon him, in addition to any tax due from
him, a penalty equal to the amount of tax found due as a result of any of the aforesaid
acts of commission or omission.
3. Where any person or dealer has knowingly issued or produced any document including
a false bill, cash memorandum, voucher, declaration or certificate by reason of which
any transaction of sale or purchase effected by him or any other person or dealer is not
liable to be taxed or is liable to be taxed at a reduced rate or incorrect set-off is liable to
be claimed on such transaction, the Commissioner may, after giving, the person or
dealer a reasonable opportunity of being heard, by order in writing, impose on him in
addition to any tax payable by him, a penalty equal to the amount of tax found due as a
result of any of the aforesaid acts of commission or omission.
4. Where a dealer has sold any goods and the sale is exempt, fully or partly, from payment
of tax by virtue of any provision contained in sub-section (3), (3A), (3B) or (5) of
section 8, and the purchaser fails to comply with the conditions or restrictions subject
to which the exemption is granted, then the Commissioner may, after giving the said
17 | P a g e
purchaser a reasonable opportunity of being heard, impose penalty on him equal to one
and a half times the tax which would have become payable on the sale if the said
exemption was not available on the said sale.]
5. Where, any person or dealer contravenes the provision of section 86, so as to have the
quantum of tax payable by him to be under-assessed, the Commissioner may, after
giving the person or dealer a reasonable opportunity of being heard, by order in writing,
impose on him, in addition to any tax payable by him a penalty equal to half the amount
of tax which would have been under-assessed or 4[one thousand rupees], whichever is
more.
6. Where, any person or dealer has failed without reasonable cause to comply with any
notice in respect of any proceedings, the Commissioner may, after giving the person or
dealer a reasonable opportunity of being heard, by order in writing, impose on him, in
addition to any tax payable by him, a penalty equal to 5[five thousand rupees].
7. Where a dealer has filed a return 8[***] and such return is found to be not 9[complete
and self-consistent], then the Commissioner may, after giving the dealer a reasonable
opportunity of being heard, impose on him, by order in writing, a penalty of rupees one
thousand. The levy of penalty shall be without prejudice to any other penalty which
may be imposed under this Act.
8. Where a person or dealer has collected any sum by way of tax in contravention of the
provisions of section 60
1. he shall be liable to pay a penalty not exceeding two thousand rupees, and
2. in addition, any sum collected by the person or dealer in contravention of section
60 shall be forfeited to the State Government.
If the Commissioner, in the course of any proceeding under this Act or otherwise, has reasons
to believe that any person has become liable to a penalty or forfeiture or both penalty and
forfeiture of any sum under this sub-section, he may serve on such person a notice in the
prescribed form requiring him on a date and at a place specified in the notice to attend and
show cause why a penalty or forfeiture or both penalty and forfeiture of any sum as provided
in this sub-section should not be imposed on him. The Commissioner shall thereupon hold an
inquiry and shall make such order as he thinks fit. When any order of forfeiture is made, the
18 | P a g e
Commissioner shall publish or cause to be published a notice thereof for the information of the
persons concerned giving such details and in such manner as may be prescribed.]
9. No order levying penalty under the foregoing provisions of this section shall be passed
in respect of any period after 12[eight years] from the end of the year containing the
said period.]
10. No order imposing a penalty under any of the foregoing sub-sections shall be made, -
1. by a Sales Tax Officer or an Assistant Commissioner where the penalty exceeds
rupees 13[five lakhs except with the prior approval of the Deputy
Commissioner;
2. by a Deputy Commissioner 14[or a Senior Deputy Commissioner], where the
penalty exceeds rupees 15[ten lakhs except with the prior approval of the Joint
Commissioner:
Provided that, nothing in this sub-section shall apply to any penalty which may be imposed by
an appellate authority.
11. For the purposes of this section, Commissioner includes any appellate authority
appointed or constituted under this Act.
Section 30. Interest payable by a dealer or person: -
1. A dealer who is liable to pay tax in respect of any year, and who has failed to apply for
registration or has failed to apply for registration within the time as required by or under
this Act, shall be liable to pay by way of simple interest, in respect of each of such
years, in addition to the amount of tax payable in respect of such year, a sum calculated
at the prescribed rate on the amount of such tax for each month or part thereof for the
period commencing on the 1st April of the respective year to the date of the payment
of tax. The amount of such interest shall be calculated by taking into consideration the
amount of, and the date of, such payment, when the payment is made on different dates
or in parts or is not made. When, as a result of any order passed under this Act, the said
amount of tax is reduced, the interest shall be reduced accordingly and where the said
amount is enhanced, 1[the interest on the enhanced amount shall be calculated mutatis-
mutandis up to the date of such order]:
19 | P a g e
2. Provided that, in respect of any of such years, 2[the amount of interest payable] under
this sub-section shall not exceed the amount of tax found payable for the respective
year.
3. A registered dealer who has failed to pay the tax within the time specified by or under
this Act, shall be liable to pay by way of simple interest, in addition to the amount of
such tax, a sum calculated at the prescribed rate on the amount of such tax for each
month or paid thereof after the last date by which he should have paid such tax:
Provided that, in relation to the tax payable according to 3[the return, fresh return or as
the case may be], 4[fresh return or revised return], the said dealer shall, notwithstanding
anything contained in any other provision of this Act, be deemed not to have paid the
amount of such tax within the time he is required by or under the provisions of this Act
to pay it if he has not paid the full amount of such tax on or before the last date
prescribed for furnishing of such return and accordingly, if he has not paid the full
amount of such tax or has paid only the part of the amount of such tax by such date, he
shall be liable under this clause for payment of interest after such date on the full or
part, as the case may be, of the amount of tax which has not been paid by such date and
where a dealer has furnished a 4[fresh return or revised return] and the amount of tax
payable as per the 4[fresh return or revised return] exceeds the amount of tax payable
as per the original return, then for the purposes of this sub-section, the dealer shall be
deemed to have been required to pay the excess amount of tax at the time he was
required to pay the tax as per the original return and accordingly he shall be liable to
pay interest under this sub-section on the said excess amount of tax.
4. In the case of a registered dealer, in whose case, any tax other than the tax on which
interest is leviable under sub-section (2) has remained unpaid up to one month after the
end of the period of assessment, such dealer shall be liable to pay by way of simple
interest, 5[a sum calculated at the prescribed rate on the amount of such tax] for each
month or part thereof from the date next following the last date of the period covered
by an order of assessment till the date of the order of assessment and where any payment
of such unpaid tax whether in full or part is made on or before the date of the order of
assessment, the amount of such interest shall be calculated by taking into consideration
the amount and the date of such payment. If, as a result of any order passed under this
Act, the said amount of tax is reduced, then the interest shall be reduced accordingly
20 | P a g e
and where the said amount is enhanced, then interest on the enhanced amount shall be
calculated mutatis mutandis up to the date of such order from the said date next.
5. If, -
▪ after the commencement of, -
▪ audit of the business of the dealer in respect of any period, or
▪ Inspection of the accounts, registers and documents pertaining to any
period, kept at any place of business of the dealer, or
▪ entry and search of any place of business or any other place where the
dealer has kept his accounts, registers, documents pertaining to any
period or stock of goods,
▪ in consequence of any intimation issued under sub-section (7) of section 63,
the dealer files one or more returns or, as the case may be, revised returns in respect of the said
period, then he shall be liable to pay by way of interest, in addition to the amount of tax, if any,
payable as per the return or, as the case may be, revised return, a sum equal to 25 per cent. of
the additional tax payable as per the return or, as the case may be, revised return.]
Section 61. Accounts to be audited in certain cases:-
1. If any dealer liable to get his accounts audited under sub-section (1) fails to furnish a
copy of such report within the time as aforesaid, the Commissioner may, after giving
the dealer a reasonable opportunity of’ being heard, impose on him, in addition to any
tax payable, a sum by way of penalty equal to one tenth per cent. of the total sales
[Provided that, if the dealer fails to furnish a copy of such report within the period
prescribed under sub-section (2), but files it within one month of the end of the said
period, and the dealer proves to the satisfaction of the Commissioner that the delay was
on account of factors beyond his control, then no penalty under this sub-section shall
be imposed on him.]
2. Where a dealer liable to file audit report under this section has knowingly furnished the
audit report which is not complete, then the Commissioner may, after giving a
reasonable opportunity of being heard, impose on him, in addition to any tax payable
or any other penalty leviable under this section or any other section, a sum by way of
penalty equal to one tenth per cent., of the total sales.]
21 | P a g e
Section 74. Offences and penalty: -
1. Whoever knowingly,
1. not being a registered dealer under this Act, represents that he is or was a
registered dealer at the time when he sells or buys goods, or
2. furnishes a false return, or
3. produces before the Commissioner or the Tribunal, a false bill, cash
memorandum, voucher, declaration, certificate or other document referred to in
sub-section (4) of section 29, or
4. keeps false account of the value of goods bought or sold by him in contravention
of sub-section (1) of section 63, or
5. produces false accounts, registers or documents or knowingly furnishes false
information, or
6. issues to any person any certificate or declaration, under the Act, rules or
notifications, or a bill, cash memorandum, voucher, delivery challan, lorry
receipt or other document which he knows or has reason to believe to be false,
or
7. falsely represents that he is authorized under section 82 to appear before any
authority in any proceeding,
shall, on conviction, be punished with rigorous imprisonment for a term which shall not be less
than one month but which may extend to one year and with fine.
▪ Whoever knowingly with the intention to defraud revenue, issues or produces a
false tax invoice and thereby makes a false claim in respect of the set-off or the
refund, or claims any other deduction that results into reduced tax liability or
enhances the amount of refund, or
▪ abets any of the aforesaid offences,
shall, on conviction, be punished with rigorous imprisonment for a term which shall not be less
than one year but which may extend to two years and with fine.]
Whoever wilfully attempts in any manner whatsoever to evade any tax leviable under this Act
or payment of any tax, penalty or interest under this Act, shall, on conviction, be punished with
22 | P a g e
rigorous imprisonment which shall not be less than three months but which may extend to one
year and with fine.
Whoever,
0. fails, without sufficient cause, to comply with the requirements of sub-section
(3) of section 14, or
1. is engaged in business as a dealer without being registered under section 16, or
2. fails, without sufficient cause, to obtain, in lieu of the existing certificate of
registration, a fresh certificate of registration when required to do so as provided
in sub-section (1) of section 17, or
3. fails, without sufficient cause, to furnish any information required by section
18, or
4. fails, without sufficient cause to furnish a declaration or, as the case may be, a
revised declaration as provided in sub-section (1) of section 19 or fails without
sufficient cause to communicate the permanent account number obtained under
the Income Tax Act, 1961 (43 of 1961) or, as the case may be, fails to state
whether he has applied for the same and fails without sufficient cause to provide
the details of the application as provided in sub-section (2) of section 19, or
5. fails, without sufficient cause, to furnish any return or, as the case may be, a
complete and self-consistent return as required by section 20 by the date and in
the manner prescribed, or
6. fails, without sufficient cause, to pay the tax deductible at source or to deduct at
source such tax, or fails without sufficient cause to obtain the sales tax deduction
account number or fails without sufficient cause to file a return as required under
the provisions of section 31, or
7. fails, without sufficient cause, to comply with the requirements of the notice
issued under sub-section (1) of section 33, or
8. fails, without sufficient cause, to comply with the requirements of any order
issued under sub-section (1) of section 35, or
23 | P a g e
9. fails, without sufficient cause, to comply with the requirements of any order
issued under sub-section (3) of section 38, or
10. fails, without sufficient cause, to comply with the requirements of section 42,
or
11. without reasonable cause, contravenes any of the provisions of section 60, or
12. fails, without sufficient cause, to get his accounts audited or furnish the report
of the audit, as required under section 61, or
13. fails, without sufficient cause, to comply with the requirements of section 63,
or
14. fails, without sufficient cause, to comply with the requirements of section 64,
or
15. fails, without sufficient cause, to comply with the requirements of section 65,
or
16. fails, without sufficient cause, to furnish any information or return required by
section 70 by the date and in the manner prescribed or wilfully furnishes any
information or return which he knows to be incorrect or false, or
17. fails, without sufficient cause, to issue a tax invoice, bill or cash memorandum
as required under section 86, or
18. contravenes, without reasonable cause, any of the conditions, subject to which
the Certificate of Entitlement is granted, or
19. fails, without sufficient cause, to comply with any notice in respect of any
proceedings,
shall, on conviction, be punished with simple imprisonment for a term which may extend to
six months and with fine.
Whoever aids or abets or induces any person in commission of any act specified in sub-section
(1) or (2) shall, on conviction, be punished with simple imprisonment which shall not be less
than one month but which may extend to one year and with fine and, whoever, aids, abets or
induces any person in commission of any act specified in sub-section (3) shall, on conviction,
be punished with simple imprisonment which may extend to one month and with fine.
24 | P a g e
Whoever commits any of the acts specified in sub-sections (1) to (4) and the offence is a
continuing one under any of the provisions of these sub-sections, shall, on conviction, be
punished with daily fine not less than rupees one hundred during the period of the continuance
of the offence, in addition to the punishments provided under this section.
Where a dealer is accused of an offence specified in sub-section (1), (2) or (3), the person
deemed to be the manager of the business of such dealer under section 19 shall also be deemed
to be guilty of such offence, unless he proves that the offence was committed without his
knowledge or that he exercised all due diligence to prevent the commission thereof.
In any prosecution for an offence under this section, which requires a culpable mental state on
the part of the accused, the court shall presume the existence of such mental state, but it shall
be a defence for the accused to prove the fact that he had no such mental state with respect to
the act charged as an offence in that prosecution.
Explanation: Culpable mental state includes intention, motive or knowledge of a fact or belief
in or reason to believe, a fact and a fact is said to be proved only when the court believes it to
exist beyond reasonable doubt and not merely when its existence is established by a
preponderance of probability.]
Section 20(6)
Where a person or a dealer fails to file any return within the prescribed time, as provided under
this section, then the said person or dealer shall, before filing of the said return, pay, by way of
late fee, an amount equal to rupees five thousand. This amount shall be in addition to any other
amount payable, if any, as per return.]
Section 12. Action against any authority for vexatious order or wilful under-assessment
etc.: -
The Commissioner may, -
▪ on receipt of any complaint in the prescribed form from any dealer or person liable to
pay tax under this Act or from any authority appointed under section 10, that any
particular authority has made in the proceedings of such dealer or person a false or
vexatious order or has taken any action under this Act vindictively or has vindictively
not acted within a reasonable time upon any application provided for by or under this
Act, or
25 | P a g e
▪ on receipt of a report from the Tribunal that, a particular authority has knowingly or
wilfully under-assessed any dealer or person or has passed a false or vexatious order or
has taken any action under this Act vindictively, or has vindictively not acted in any
reasonable time upon any application provided for, by or under this Act, or
▪ on his own motion, if he has reason to believe that any authority has passed such order
or taken such action or has made such under-assessment, or has not so acted upon any
application.
Section 51. Grant of refunds: -
1. Where a registered dealer has in any return, fresh return or revised return shown any
amount to be refundable and has not undertaken to adjust such amount against the
amount due as per any 2[***] return in accordance with section 50, the Commissioner
shall, on an application made by the dealer and subject to rules, and the other provisions
of this Act, grant refund of such amount to the said dealer.
3[Provided that, the Commissioner may, subject to such conditions and restrictions as
may be prescribed, reduce the refund and grant only part of the refund claimed in such
application].
2. The registered dealer may, after the end of the year to which the return, fresh return or
revised return relates, make an application in the prescribed form for grant of refund of
the amount claimed refundable as aforesaid. The Commissioner may, 5[on receipt of
the application] call for such additional information from the dealer, as he may think
necessary. The refunds relating to all the periods contained in one year may be granted
by a single order.]
3. Provided that, the said dealer may apply in the prescribed form to the Commissioner at
any time after the end of the year to which the refund relates for grant of the said refund
and the Commissioner may subject to rules including rules relating to bank guarantees
grant such refund:
4. Notwithstanding anything contained in sub-section (2), if a dealer is,
▪ an exporter within the meaning of sub-section (1) or sub-section (3) of section
5 of the Central Sales Tax Act, 1956; or
26 | P a g e
▪ a unit specified in the Explanation to sub-section (3) of section 8 ; or
▪ a holder of a Certificate of Entitlement under any Package Scheme of Incentives
except the New Package Scheme of Incentives for 8[Tourism Projects 1999;
or],
▪ (v) the Canteen Stores Department or the Indian Naval Canteen Services,]
then he may apply in the prescribed form to the Commissioner after filing the return for grant
of refund relating to the period covered by a return, fresh return or revised return.
Explanation: For the purposes of sub-clause (i), the expression? exporter? shall means a
registered dealer whose turnover of exports during such period as may be prescribed, is not less
than such percentage of the total turnover of his sales as may be prescribed in this behalf.]
The Commissioner, on receipt of the said application, may require the dealer to furnish such
bank guarantee for such amounts from such banks, for such periods and to such authorities as
may be prescribed.]
Save as otherwise provided in this section, the Commissioner shall grant the refund under this
section within eighteen months from the end of the month containing the date of the receipt of
the application for refund:
Provided that, where a dealer has filed an application for refund under this section on or before
the 31st March 2011, then, notwithstanding anything contained in sub-section (4) as it existed
prior to the date of commencement of the Maharashtra Tax Laws (Levy, Amendment and
Validation) Act, 2011, the commissioner shall,-
▪ in respect of the periods ending on or before the 31st March 2010, grant the
refund to such dealer on or before the 30th September 2011, and
▪ in respect of the periods beginning with the 1st April 2010 and ending on the
31st March 2011, grant the refund to such dealer on or before the 30th June
2012.]
Notwithstanding anything contained in this section, if the dealer has furnished a bank guarantee
for such amount, from such bank, for such period and to such authority as may be prescribed,
the Commissioner shall grant the refund due under sub-section (2) or (3), within one month of
the furnishing of the bank guarantee, irrespective of whether the additional information has
been furnished or not.]
27 | P a g e
If before the grant of refund under this section, a notice for assessment covering the period to
which the return relates is issued or if any proceedings under sub-section (3) or sub-section (4)
of section 64 are initiated in respect of the period to which the return relates, then?
▪ if the dealer has not furnished a bank guarantee then no refund under
this section shall be granted; and
▪ if the dealer has furnished a bank guarantee then an amount equal to the
guaranteed amount shall be refunded.
▪ If it is found as a result of any order passed under this Act that the refund granted
under this section is in excess of the refund, if any, determined as per the said
order, then the excess amount shall be recovered as if it is an amount of tax due
from the dealer and the dealer shall be liable to pay simple interest at the
prescribed rate per month or part thereof from the date of the grant of refund.
No refund under this section shall be granted unless an application as provided is made and no
application under this section shall be entertained unless it is made within 15[eighteen months]
from the end of the year containing the period to which the return relates.]
Section 52. Interest on amount of refund: -
Where, 1[***], refund of any tax becomes due to a registered dealer, he shall, subject to rules,
if any, be entitled to receive, in addition to the refund, simple interest at the prescribed rate on
the amount of refund for the period commencing on the date next following the 2[last date at
the period to which the refund relates and ending on the date of the order sanctioning the
refund] or for a period of twenty four months, whichever is less. The interest shall be calculated
on the amount of refund due to the registered dealer in respect of the said period after deducting
therefrom the amount of penalty, sum forfeited and interest, if any, charged in respect of the
said period and also the amount of refund, if any, 3[adjusted towards any recovery under this
Act, any earlier law], or as the case may be, under the Central Sales Tax Act, 1956 (74 of 1956).
If, as a result of any order passed under this Act, the amount of such refund is enhanced or
reduced, as the case may be, such interest shall be enhanced or reduced accordingly. If the
interest is reduced, then the amount granted in excess shall be recovered as if it is an amount
payable under this Act.
4[Provided that, interest under this section shall not be granted towards any 5[***] refund
granted under section 51]
28 | P a g e
Explanation: For the purposes of this section, where the refund of tax, whether in full or in
part, includes any amount of refund on any payment of tax made after the date prescribed for
making the last payment in respect of the said period, then the interest, in so far as it relates to
the refund arising from such payment, shall be calculated from the date of such payment to the
date of such order.
Section 53. Interest on delayed refund: -
▪ Where an amount required to be refunded by the Commissioner to any person, by virtue
of the provisions contained in section 51 or by virtue of an order passed under any other
provision of this Act, is not so refunded to him within ninety days of the end of the
respective period provided in section 51 or, as the case may be, of the date of the said
order, the Commissioner shall pay such person simple interest at the prescribed rate on
the said amount from the date immediately following the expiry of the period of ninety
days to the date of the refund:
Provided that, where the amount becomes refundable by virtue of an order of the
Tribunal or the High Court or the Supreme Court, the interest under the provisions of
this section shall be payable from the date immediately following the expiry of period
of ninety days from the date of receipt of the order of the Tribunal, the High Court or
the Supreme Court, by the officer whose order forms the subject of the proceedings
before the Tribunal, the High Court or the Supreme Court, to the date of refund. The
applicant dealer or person may supply to the said officer a certified copy of such order
and if the copy is so furnished, interest shall become payable after the expiry of period
of ninety days from the date of such supply.
Explanation: - If the delay in granting the refund within the period of ninety days
aforesaid is attributable to the said person, whether wholly or in part, the period of the
delay attributable to him shall be excluded from the period for which interest is payable.
▪ Where any question arises as to the period to be excluded for the purposes of calculation
of interest under the provisions of this section, such question shall be determined by the
Commissioner, whose decision shall be final.
29 | P a g e
Rule 88. Rates of interest.
1. The rates of interest for the purposes of sub-sections (1), (2) and (3) of section 30 shall
be one and a quarter per cent. of the amount of such tax, for each month or for part
thereof,
2. The rate of interest for the purposes of section 52 shall be half per-cent. of the amount
of such tax for each month or for part thereof.
3. The rate of interest for the purposes of the sub-section (1) of section 53 shall be half per
cent. of the amount of such refund for each month or for part thereof.
4. The rate of interest for the purposes of clause (b) of sub-section (6) of section 51 shall
be one and a quarter per cent of the amount of excess refund which is to be recovered,
for each month or part thereof]
Rule90. Penalty: -
A breach of any of these rules shall be punishable with fine which may extend to two thousand
rupees and when the offence is a continuing one, with a daily fine not exceeding one hundred
rupees during the continuance of the offence. After considering the entire provisions of interest,
penalties & offences from the bare MVAT Act 2002. Let us, focus on its implementation. The
sales tax authorities are inclined to apply the various provisions as above as an automatic effect
of a particular offence done by the dealer. However, the tribunal and the High Court have
worded those provisions with practical approach. Those authorities have taken lenient view
and dealer has been saved by reduction or cancellation of interest and penalty together with
immunity from the offences. We quote certain citations here under which will help the dealer
to solve his case at the judicial level. However, it is pertinent to note that the advice and
guidance of the counsel is must before sailing any judicial boat of litigation.
30 | P a g e
ILLUSTRATION
Illustration: (Importer)
Calculate tax payable under MVAT Act, from the following details for June 2016
Particulars ₹
Local Purchase
Purchases from Gujarat
Purchase from URD
Sale Price of goods
10,00,000
3,00,000
1,00,000
9,00,000
Solution:
Tax Calculation:
Particulars Gross Rate Tax ₹
Tax on Sales
Less: Tax paid on RD Purchases
Net amount (Refund) receivable
9,00,000
10,00,000
12.5%
12.5%
1,12,500
(1,25,000)
(12,500)
Notes: 1) In absence of details, general rate of 12.5% applied
(2) Central Sales Tax will be charged by seller on OMS purchases from Gujarat. CST is not
elegible for VAT set-off [S.48]
Illustration: (Exporter)
Calculate tax payable under MVAT Act, from the following details for June 2016
Particulars ₹
Purchases Price of Inputs
Sale Price of Goods, Manufactured & Exported
10,00,000
15,00,000
Solution:
Tax Calculation:
Particulars Gross Rate Tax ₹
Tax on Exports Sales
Less: Tax paid on Purchases
Net Refund Receivable
15,00,000
10,00,000
-
12.5%
-
(1,25,000)
(1,25,000)
Notes: 1) General rate of 12.5% applies, in absence of details.
(2) Export are not subject to MVAT.
31 | P a g e
Illustration:
A dealer purchases the following Goods in Maharashtra during December ,2016:
Particulars Total
₹
Input Tax
₹
Net Purchases
₹
4% VAT Goods
12.5% VAT Goods
Tax-free Goods
7,87,500
15,75,000
1,50,000
37,500
1,75,000
NIL
7,50,000
14,00,000
1,50,000
Additional Information:
1) VAT payable on sales made during the month is ₹ 3,27,500.
2) During December 2016, the dealer utilized 4% VAT Goods costing ₹ 150000 as input for
manufacturing Tax-free Goods.
3) On 1st December, 2016 there was an opening balance of ₹ 10,000 in Receivable/set off
Account.
4) The dealer has received a refund of ₹ 2,500 out of VAT Credit Receivable Account.
Prepare a statement of computation of tax to be paid under the provisions of Maharashtra
Value Added Tax Act, 2002.
Solution:
Statement of Computation of Tax
Particulars ₹ ₹
Tax Payable
Less: Tax Credit
On 5% Vat Goods
On 12.5% Vat Goods
Less: Reduction in set-off for Tax-Free Goods
(1,50,000 * 2% U/R 53)
ADD: Opening Balance (Vat Receivable/sett-off b/f)
Less: Refund Received
Total Tax
30,000
1,75,000
2,05,000
(3,000)
2,02,000
10,000
2,12,000
(2,500)
3,27,500
2,09,500
1,18,000
32 | P a g e
BIBLIOGRAPHY
➢ https://www.bcasonline.org/files/SubTop/attachedfiles/MVATAct.htm
➢ http://taxguru.in/goods-and-service-tax/introduction-mvat.html
➢ http://www.sbboobassociates.com/blog_details.php?id=36
➢ http://www.knowledgebible.com/forum/showthread.php/2349-Meaning-of-Penalty-
And-Interest-in-Maharashtra-Value-Added-Tax-(Maharashtra-VAT)