BUDGET AMENDMENTS MVAT 2011

VIKRAM D. MEHTA
D.R. MEHTA AND ASSOCIATES CHARTERED ACCOUNTANT

I)

Voluntary Deposit paid for voluntary registration - Sec 16(2) becomes Security Deposit
w.e.f. 1-5-2011 16(2) Voluntary deposit becomes Security Deposit Security deposit not adjustable against tax payable 16 (2A) – Security deposit refundable subject to fulfillment of conditions, restrictions and time limits New Rule 60A inserted for refund of Security deposit 1) certificate cancelled – Refund application within 6 months from the date of cancellation order serviced 2) any other case – Refund application within 36 months from date of registration but before 48 months from the date of effect of registration

a)

Conditions for grant of above refund 1) 2) Application made in time Filed all the returns up to date of application / cancellation of registration Paid taxes as per return 3) Refund within 90 days from receipt of application if conditions satisfied .

therefore only original return can be revised when errors etc… found within 10 months .II) Revised Return Sec 20(4) The section allowed revision of revised return also when errors etc… found within 9 months The amendment now deletes the word revised return now.

a) Discovers any omission or incorrect statement there in b) Discovers as a result of audit report u/s 61 c) Agrees with any observation contained in any intimation received u/s 63 (Form 604) System prevails over law ?  Kisanlal Rajmal v/s state of Maharashtra  Malbar Products v/s CST 45 STC 88 (Bom) 99 STC 546 (Bom) .The amendment thereafter inserts a proviso whereby dealer is allowed to furnish not more than one revised return under each of the three situation listed in Sec 20(4) i.e.

Department was not able to cope with this time period .Hence ordinance promulgated before budget so that the laxity of the government can be undone .Time period for issuing notice when returns not filed in time was 3 yrs .Saving and validation clause .III) Assessment 1) Sec 21 – Deleted .Time limits were prescribed under the section for issue of notice for assessment .

set-off excess.3.08 URD / late registration For any return turnover not disclosed. under assessed etc… - 7 yrs 8 yrs 6 yrs .2) Sec 23 – Time limits for assessment enhanced      Return filed in time Return not filed in time - 3 yrs to 4 yrs 4 yrs to 5 yrs Periods upto 31.

IV) Refund  Sec 51 Sec 51(1) required that department should call for additional information within one month from the receipt of refund application. The clause (3)(a)(iv) granted refund to dealers making inter-state sales. The clause (2) pertained to refund in case of new registered dealer. who could apply only after a year.  . thus one month limit is deleted Sec 51(2) & (3)(a)(iv) have been deleted. Amended section now lays down that on receipt of application department can call for additional information.

. Explanation is added defining who is an exporter entitled to early refund. for such periods and to such authorities as may be prescribed.  Sec 51(3)(b) is substituted as under . Exporters whose exports consists of 50% or more of the total turnover during such period are exporters entitled to early refund. The Commissioner on receipt of the said application may require dealer to furnish such bank guarantee for such amounts from such banks. Prior to this amendment within one month the commissioner was to decide for bank guarantee.

Refund Application Filed On or before 31/3/2011 On of before 31/3/2011 Period of Refund Last date for granting refund 30/09/2011 30/06/2012 Prior to 31/3/2010 2011 – 12 . To overcome delay in granting refund Sec 51(4) inserted as under .

Sec 51(7) allowed 3 yrs to file a refund application section is amended and now from 1/5/2011 18 months are allowed to file refund application. Time period to file refund application curtailed . . . Commissioner’s circular 7T says that “ new time limit applies to all periods for which the time period of 18 months from end of relevant year has not expired as on 31/3/2011…….Controversy whether the amendment applies to all refunds after 1/5/2011 or to prior period also.

Period 2008-09 2009-10 2010-11 Last date for refund application 31/03/2012 30/09/2011 30/09/2012 .The last date for refund application as per Trade Circular will be as under .

V) Powers of appellate authority – sec 26(5)(c)  Sub section 5(c) enabled the appellate authority to confirm or cancel or modify the order levying interest in accordance with the provisions of the Act. . This power is withdrawn.

???. Therefore can we still argue that interest u/s 30(1) & 30(3) can be appealed and adjudicated by appellate authority under residuary power 26(5)(d) in any other case. BIFR . the appellate authority may pass such order in the appeal as it deems just and proper.  The above situation will not arise when whole of the tax is deleted.g. u/s 85(2) non-appealable orders include only Sec 30(2) & 30(4). ) . It will arise only in case of remission of interest for any reason. (e.

Whether every non delivery of goods can be termed as Hawala? Whether circular trading would constitute Hawala     .2 yrs What / who is a “Hawala” Dealer is not defined One who alleges “Hawala” will have to prove the offence.1 yrs and max .VI) Sec 74 (IA) – Prosecution for Hawala Dealers  Production of false tax invoice or issuing false tax invoice – punishment min .

55 ~ Declared goods 4 to 5% from 1/5/2011 C-94(a) ~ Vada pav – taxable @ 5% .VII) Schedule Entries A-45 ~ Sugar and Fabrics .continue to remain exempt C-45.

Corrective spectacles only covered @ 5% Goggles @ 12.D-13 .Notification of composition of Bakery products limit 40 lakh to 50 lakh ~ 4 to 5% .Copyrights of distribution and exhibition of cinematographic films in theatres and cinema halls exempt ~ Rest taxable as usual .Aerated and carbonated non alcoholic drinks @ 20% Whether Appy fizz? Would be covered?? .Live telecasting rights of events performed in Maharashtra taxable @ 5% .5% .

e. 1/5/2011 taxable @ 50% ~ By notification rate reduced taxable @ 25% ~ subject to conditions Vendor Manufacturer Rate of Tax MRP * 25 / 125 Condition Registered Dealer MRP on bill Wholesaler : .OMS / Import purchase EXEMPT MRP * 25 / 125 Registered Dealer MRP on bill .f.Purchase from local RD .LIQUOR w.

Purchase from local RD .OMS / Import 5% of Actual Sale price MRP * 25 / 125 & 5% of Actual Sale price .Vendor Retailers -Purchase from local RD Restaurants 4 star and above: .OMS / Import Rate of Tax EXEMPT Condition Taxes paid previously to Registered Dealer 20% of Actual Sale price MRP * 25 / 125 & 20% of Actual Sales Price Restaurants below 4 star and clubs: .Purchase from local RD .

2 & 3. Thus no set – off to liquor dealers.e.For stock as on 30/04/2011 . 1/5/2011 No Set off on Purchase of liquor covered under entries D-1.Stock statement to be filed by all except manufacturer Rule 54(i) inserted w. .f.

VIII) Mega Units Sec 88(a-1) For certificate of Identification to Mega Units as per Industrial policy regulation. covered under PSI (Power Generation Promotion Policy entitlement holders)  All mega units having Identification certificate to file return in 231 Rule 52A inserted for dealers reselling goods purchased from mega units ( other than declared goods )  .

 Set – off available as under a) Tax paid or payable on Inter-state re-sale of corresponding goods i. local purchase – CST sale. then set off eligible to the extent of tax charged under CST b) Tax paid on purchase of said goods when they are sold locally Declaration as per rule 83-A to be printed on bill by all dealing in goods of mega units .e.

1% of the total sales is sort to be levied on the dealer who knowingly furnished the audit report which is not complete.Penalty for Incomplete Audit report      Section 61(2A) has been newly inserted whereby additional penalty @ 0. . schedules and annexures are filled appropriately and are arithmetically self-consistent. Explanation to Sec 61(1) has been added to give the definition of “Complete Audit Report“ Audit Report shall be deemed to be complete Audit Report only if all the items. tables. The new penalty is over and above the existing penalty for non-filing of report. certifications. The words used are knowingly furnished and therefore mensrea needs to be proved by the department.

– 02223520330 / 02223513758 . MUMBAI – 400034. 9th FLOOR.A) D. EVEREST BUILDING. TARDEO ROAD. R. MEHTA AND ASSOCIATES H2. CONTACT NO.THANK YOU VIKRAM D MEHTA (C.