MVAT Notes Rectified

MVAT Act 2002
The Institute of Professional Studies (TIPS)
THE MAHARASHTRA VALUE

ADDED TAX 2002
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Value Added Tax is an indirect tax. In many countries it covers all indirect taxes. In
India, VAT has been introduced from 1st April, 2OO5. At present Value Added Tax is
nothing but simplified multipoint Sales Tax. It is very much simplified as far as Levy of
Tax is concerned. However, the States have complicated the administration of the Value Added Tax for reasons best
known to them and excessive penal provisions have been incorporated in the Value Added Tax Acts of many States.
INTRODUCTION
Value Added Tax Scheme

Value Added Tax Scheme introduced in India including Maharashtra is very simple. Each dealer gets credit of tax
paid by him and pays tax on his selling price. For example a dealer purchases Tiles from the manufacturer for Rs.
100. Tiles are taxable at 12.5%. He pays the purchase price of Rs. 100 and Value Added Tax of Rs. 12.50. He sells the
tiles at Rs.120. He will charge Rs.15 i.e. 120 x 12.5% as Tax to the sub-dealer. The difference of Rs.20 includes freight
charges, transit insurance, godown insurance, Octroi etc. paid by the dealer and his administrative charges and
profit margin. He will take credit of Rs. 12.5 paid by him and pay Rs.15. In effect the dealer pays Rs. 2.50 i.e. 15 12.5, to the Government. Sub-dealer sells these tiles to the consumer for Rs. 140. He will collect Rs.140 as price and
Rs. 17.50 (140 x 12.5%) as tax from the buyer. However he will pay Rs. 2.50 i.e. 17.50 - 15.00 to the Government as
Tax. In this case the Government has collected Rs. 17.50 i.e. 12.50 + 2.50 + 2.50 as Tax.
(1) Transparent System
Compared to Sales Tax it is more transparent. We will be able to know the total tax incidence
when we buy goods under Value Added Tax regime.
(2) Lower Tax Rate
Under Value Added Tax System every dealer pays the tax on his selling price and takes credit
of tax paid by him. As tax is paid on the final selling price, the tax rate will be Lower compared to First Point Sales
Tax System.
(3) Tax Credit
In the Value added Tax, every dealer gets the credit of tax paid by him. In other words, he pays tax on his selling price
and gets credit of tax paid by him. It helps to avoid cascading effect of tax. In simple terms, cascading effect means
pays tax on tax.
(4) Uniform Rate
In India sales tax charged for particular goods varied from 0% to 30% depending upon the State. Now under the
Value Added Tax regime all the States will be charging the same Rate of Tax. Now because of varying Tax Rates
business will not shift from one State to another State to take advantages of lower Tax Rates. However, we have to
take note of the fact that even now Tax Rates are different for certain commodities in different States. Even
Empowered Committee of State Finance Ministers has allowed levy to the States to have different rates for 10
commodities.
(5) No frequent Changes of Tax Rates
Before introduction of Value Added tax States used to increase the Tax Rates frequently. Now all States have agreed
to have near uniform Rates and there will not be frequent changes in the rates.
(6) No Exemption
In order to attract Industries State Governments used to give competitive Exemption Schemes. Unfortunately these
schemes have not helped industrialization of the States and various studies showed that State Governments have
lost disproportionately compared to the benefits like employment generation obtained, Now due to the understanding
between Finance Ministers of States, States are not granting any exemption on the basis of Backward Area etc. from
1-4-2001. However, in many States whatever exemptions granted before 1-4-2001, and the projects in the pipeline as
on that continues to enjoy the exemption.
(7) No Forms
Under the New Regime all the Forms are abolished. All the buyers have to pay tax and if eligible they have to claim
refund and get it. For Consulates have to pay the tax on the purchases and claim refund of the tax paid on the
strength of the Tax Invoices.
(8) No Surcharge etc.
Under the Value Added Tax regime Surcharge, Turnover Tax, Additional Tax etc. are merged in one tax rate. It will
help to have clear understanding of the prevailing tax rates.
(9) Simple Classification
Under Sales Tax regime there used to be number of rates even in a State. For example, some States used to have
more than 30 different rates. It used to create classification disputes. Now under Value Added Tax regime only 5
different rate structures are provided. They are:
Schedule A - Goods which carry 0% Rate. Schedule A contains mostly Agricultural products, necessities etc.
MERITS OF
VALUE
ADDED TAX
D.T.L. Paper IV (80 marks)
MVAT Act 2002
Schedule B - Precious metals and it carries 1% Rate.

Schedule C - Mostly Declared Goods, Industrial Raw Materials, I.T. Products, etc. and it carries 4% Rate.
Schedule D - Liquor and Petroleum products are covered under this Schedule and Rate of Tax varies from 10% to
34%. It also carries a specific duty of Rs. 1 per liter in certain cases.
Schedule E - It includes all goods not include in Schedules A to D and carries 12.5% Tax Rate.
(10) Difficult to Evade Tax
Due to availability of Input Tax credit temptation to evade tax is minimum. Moreover, use of Information Technology
to cross-check the purchases etc. will reduce the tax evasion.
(11) Self Assessment
Under VAT law Government will rely on the honesty and integrity of the dealers. Normally, the Department will rely
on Returns filed by the dealers and there will be no assessment by the Department on Self Assessment by the Dealers
and Audit by Chartered Accountants. In rare cases they will resort to Business Audit by the Department.
(1) More Dealers
As stated earlier Value Added Tax is a multipoint Sales Tax. Under the Sales Tax regime mostly
First Point Sale in a State is taxed. Now each sale in the State will be taxed. Hence lot of dealers
will be involved in collecting and paying the tax to the Government. It will unnecessarily
increase the work load of the dealers. Now the Sales Tax authorities can harass more dealers.
Moreover, many of them will be small traders and if the States are not going to take appropriate safeguards, the
traders are going to experience lot of harassment from Sales Tax Authorities.
(2) Record Keeping
Under the Value Added Tax regime all the dealers are eligible for Input Tax Credit. For this purpose they shall
maintain proper accounts and records such as Tax Invoice etc. The small traders may find it difficult to maintain
necessary records etc.
(3) Uniforms Rates
Under Value Added Tax regime the Tax Rates are uniform and it will be very convenient for businesses. However
revenue requirements of various States vary depending upon the requirement of the State. Now there is no flexibility
is available to the States to increase or decrease the Tax Rates as per their requirements.
(4) Draconian Law
As stated earlier, Levy of Value Added Tax is very simple, However States have enacted very cumbersome law to
administer the Value Added Tax with several penal provisions including imprisonment. The Sales tax authorities are
going to harass the small traders maximum.
(5) Refund Mechanism
In many cases the dealer has to pay tax and claim refund of tax paid as in the case of Exempted Units, Deferral etc. It
is feared that cost involved in getting refund will be very high and the Department may not release refunds in time as
per time frame provided in the Act and Rules. It will increase the Working Capital requirements of the concerned
dealers and in turn will increase interest cost.
(6) Tax Audit
Most of the VAT laws provides Audit by chartered accountants. In the case of companies they undergo two audits i.e.
Audit under Companies Act and Tax under Income Tax Act. Now they are required arrange for one more audit under
VAT Act. The companies are required to spent time and energy and money to arrange for this audit.
(7) Business Audit
The Commissioner has power to order for Business Audit of the Assesses business by the Departmental persons and
it may lead to harassment of assesses.
DEMERITS
OF VALUE
ADDED TAX
DEFINITIONS
U/s 2
seedlings or plants.
Agriculture (Sub-section 1)
It includes floriculture, horticulture, the raising of crops, grass or garden produce, and also
grazing; but does not include dairy farming, poultry farming, stock breeding, the mere
cutting of wood or grass, gathering of fruit, raising of man-made forests or rearing of
Agriculturist (Sub-section 2)
Means a person who cultivates land personally for the purpose of agriculture.
Appointed Day (Subsection 3) It means the 1st day of April, 2005
Business (Sub-section 4)
A person carrying on a business would be liable to tax under this Act whether he carries on such business with or
without profit motive. This definition includes transactions in connection with or incidental or ancillary to trade,
commerce, business etc. The terms trade, commerce, manufacture etc are not defined in the act. These words will
have their natural meaning. Thousands of decided cases will through light on the meaning of these words.
Trade
In State of Punjab v. Bajaj Electrical Ltd' 1'970 (25) STC 82 (SC) the Apex Court explained the term 'Trade' as given
below:
"'Trade' in its primary meaning is the exchanging of goods for goods or goods for money; in its secondary meaning it is
repeated activity in the nature of business carried on with a profit motive, the activity being manual or mercantile, as
distinguished from the liberal arts or learned profession or agriculture. The question whether trade is carried on by a
person at a given place must be determined on a consideration of all circumstances. No test or set of tests which is or
are decisive for all cases can be evolved for determining whether a person carries on trade at a particular place. The
MVAT Act 2002
question, though one of mixed law and fact, must in each case be determined on a consideration of the nature of the
trade, the various steps taken for carrying on the trade and other relevant facts".
Commerce
Shorter Oxford Dictionary defines as under: "Commerce" is exchange between men of the products of nature and art,
buying and selling together; exchange of merchandise, especially on a large scale between different countries or
districts. In simple words commerce means large scale trade.
Manufacture
The Basic tests of manufacturing are:
(i) There must be some process on the goods.
(ii) The original goods, subjected to process, must transform into different goods with change in its substance.
(iii) The change must result into the new commercial product.
Brand Name
Sub-section 3(a) has been introduced with effect from 20th June 2006. This sub-section defines 'Brand Name'. This
definition includes registered and unregistered brand name. Brand name means a name or a mark such as a symbol,
monogram, label, signature or inverted words or anything which is used in relation to a product for the purpose of
indicating a connection in the course of trade between the product and some person using the name or mark with or
without any indication of the identity of the person. This definition will be applicable wherever Brand Name' is
referred in the Schedules.
Capital Assets (Sub-section 5)
Capital asset shall have the same meaning as assigned it in the Income Tax Act, 1961. This expression shall include
jewellery held for personal use or property not connected with the business. Capital asset is defined under subsection 14 of Section 2 of the Income Tax Act as given below:
"Capital asset means property of any kind held by an assessee, whether or not connected with his business or
profession, but does not include:
(i) any stock-in-trade, consumable stores or raw materials held for the purpose of his business or profession;
(ii) personal effects, that is to say, moveable property (including wearing apparel and furniture, but excluding
jewellery), held for personal use by the assessee or any member of his family dependent on him.
Explanation.- For the purpose of this sub-clause,
"jewellery" includes(a) ornaments made of gold, silver platinum or any other precious metal or any alloy containing one or more of
such precious metals, whether or not containing any precious or semi-precious stone, and whether or not
worked or sewn into any wearing apparel;
(b) precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or
sewn into any wearing apparel:
(iii) agricultural land in India, not being land situate; (a) in any area which is comprised within the jurisdiction of a
municipality (whether known as a municipality, municipal corporation, notified area committee, town committee,
or by any other name or a cantonment board and which has a population of not less than ten thousand
according to the last preceding census of which the relevant figures have been published before the first day of
the previous year: or (b) in any area within such distance, not being more than eight kilometers, from the local
limits of any municipality or cantonment referred to in item (a), as the Central Government may, having regard to
the extent of, and scope for, urbanization of that area and other relevant considerations, specify in this behalf by
notification in the Official Gazette,'
(iv) 6% per cent Gold Bonds, 1977, or 7 per cent Gold Bonds, 1980, or National Defense Gold Bond, 1980, issued by
the Central Government;
(v) Special Bearer Bonds, 1991 issued by the Central Government;
(vi) Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 notified by the Central Government".
As per the definition in the Act any asset to be qualified as capital asset the asset should be connected with the
business and the definition specifically excludes jewellery held for person use. From the combined reading of the
definition in the Act and Income Tax Act it may be observed that the capital asset (excluding the above six) may
include property of every description, movable or immovable, fixed or circulating, tangible or intangible, corporeal or
non-corporeal provided they are connected with the business. Corporeal means physical things like land, building,
jewellery, shares, cars etc. Non-corporeal means assets like leasehold rights, copyrights, manufacturing license, rout
permits for buses, tenancy rights etc.
Definition of Capital Asset is very important as there is separate provision for availing Credit on tax paid on Capital
Goods.
Dealer (Sub-section 8)
'Dealer' means any person who buys or sells goods in the State in connection with his business. It includes:
(i) A factor, broker, commission agent, del credere agent or any mercantile agent, who buys or sells in connection
with business on behalf of any principal or principals whether disclosed or not.
(ii) An auctioneer who sells or auctions goods whether acting as an agent or otherwise or who organises the sale of
goods or conducts the auction of goods whether or not he has the authority to sell the goods' In this definition
every a person who organises any auction is treated as dealer.
(iii) A nonresident dealer or his agent residing in the State who buys or sells goods in the State.
(iv) Any society, club or other association of persons which buys goods from or sells goods to its members.
The following persons who sell any goods whether by auction or otherwise shall be deemed to be dealer:
(i)
Customs Department of the Government of India administering the Customs Act, 1962'
(ii)
Department of Union Government and any Department of any State Government.
MVAT Act 2002
(iii)
(iv)
Incorporated or unincorporated societies, clubs or other associations of Persons.

Insurance and Financial Corporations, institutions or companies and Banks included in the Second
schedule to the Reserve Bank of India Act.
(v)
Local Authorities.
(vi)
Port Trusts.
(vii) Trusts, both private and public.
(viii) Railway Administration.
(ix)
Shipping and Construction companies, air transport companies, airlines and advertising agencies'
(x)
Any other corporation, company, body or authority owned or constituted by, or subject to administrative
control, of the Central Government, any State Government, or any local authority.
This sub-section has provided three exceptions to the general definition of 'Dealer.
(i) An agriculturist who sells exclusively agricultural produce grown on land cultivated by him personally.
(ii) An education institution carrying on the activity of manufacturing, buying or selling goods in the
performance of its functions for achieving its objectives.
(iii) A transporter holding permit for transport vehicles granted under the Motor Vehicles Act, 1988'
Goods (Sub-section 12)
It means every kind of moveable property, not being news papers, actionable claims,' money, stocks, shares,
securities or lottery tickets. It includes live stocks, growing crop, Grass and trees and plants including the produce
thereof and including property in such goods attached to or forming part of the-land which are agreed to be served
before sale or under the contract of sale. Goods includes all movable property. It includes the following:
a. Electricity
b. Animals and Birds in captivity
c. Steam
d. Standing Trees agreed to be severed. Supreme Court held that Standing trees and bamboos when agreed to
be severed constitute 'Goods' liable to tax under the Sales tax Act. The legislature has, therefore, power to tax
them' Transfer of property takes place only on severance and checking. Purchase tax cannot be levied at the
Point of contract'
e. Lottery Tickets- With effect from 28th April, 2006 only Lottery Tickets will be treated not as goods for all
practical purposes'
f. Newspapers -The Definition itself excludes newspapers from goods'.
g. Old Newspapers - The Supreme Court held that old newspapers are newspapers as they still have news
element.
h. SIM Card - Kerala High Court held that SIM card is a goods and when it is sold by the cellular telephone
company to subscriber is liable to sale tax. Recently in BSNL case Supreme Court held that whether SIM
Card is goods or not is to be decided by the Assessing Authorities according to the facts of the case.
i. Computer Software - The decision of the Supreme Court in the case Tata Consultancy Services v. State of
Andhra Pradesh 271 ITR 401 (SC) is a land mark judgment on the definition of the 'Goods' and it was held
by the Apex Court that canned Software are goods.
Manufacture (Sub-section 15)
It includes producing, making, extracting, altering, ornamenting, finishing or otherwise processing, treating or
adapting any goods. The definition of manufacture is inclusive and not exhaustive one. Courts held that manufacture
takes place only when the process results in a commercially different article. Manufacture implies change but
certainly each and every change does not result into manufacturing.
Motor Spirit
The Maharastra Tax Laws (Levy, Amendment & Validation) Act 2012 has inserted clause (15A) to section 2. It defines
motor spirit as:
a. High speed diesel oil;
b. Aviation Turbine Fuel (Duty Paid);
c. Aviation Turbine Fuel (Bonded);
d. Aviation Gasoline (Duty Paid);
e. Aviation Gasoline (Bonded);
f. Petrol.
The state Government can notify any other product as motor spirit.
Newly added clause (17A) defines petroleum products as;
a. Superior Kerosene Oil (SKO);
b. Liquefied Petroleum Gas (LPG);
c. Furnace Oil (FO);
d. Light Diesel Oil (LDO);
e. Raw Naptha or Naptha;
f. Low Sulpher Heavy Stock.
The state Government can notify any other product as petroleum products.
Non-Resident Dealer (Sub-Section 16)
The definition of Non-resident Dealer has been amended. After the amendment 'Non-resident Dealer' means a person,
who does not have any place of business in Maharashtra, will be treated as 'Non-resident' dealer even if he has
residence in Maharashtra.
MVAT Act 2002
Person (Sub-section 17)

It is inclusive definition. It includes an individual, any State Government, the Central Government, any company or
society or club or association or body of individuals whether incorporated or not, a Hindu Undivided Family, a firm, a
local authority and every artificial person not falling within any of the above descriptions. 'Every artificial juridical
person' has been included in order to include the Trust, Wakf Board etc. in the definition of person.
Place of Business (Sub-section 18)
This inclusive definition includes a warehouse, godown or other place where a dealer stores his goods and any place
where the dealer keeps his books of accounts. Even if the dealer has not declared the place where he carries business
activities, it will be treated as Place of Business. The department can carry out the search as per the provisions only
in the place of business not in other places.
Purchase Price (Sub-section 20)
It means the amount of valuable consideration paid or payable by a person for any purchase made including any
sum charged for anything done by the seller in respect of goods at the time of or before delivery thereof.
Cost of Insurance for Transit and Cost of Installation - However the purchase price does not includes the cost of
insurance for transit or cost of installation when these charges are charged separately.
Purchase Price in the Case of works Contract Explanation I deals with works contract. Where the purchase is
effected by way of transfer of property in goods involved in the execution of works contract, purchase price shall mean
the total consideration for the works contract.
However for the purpose of levy of tax, purchase price shall be taken to mean the price as may be determined in
accordance with the rules prescribed.
Taxes Payable
Explanation I makes it clear that duties levied or leviable on the goods under Central Excise Act, 1944, the Customs
Act, 1962 and the Bombay Prohibition Act, 1949 shall be deemed to be part of the purchase price of such goods. It is
not going to make any difference whether the duties are paid by the seller or buyer or any other person.
Value Added Tax Payable
Explanation II makes it clear that purchase price shall not include tax paid or payable under this Act.
Deposit
Explanation III states that purchase price shall include the amount paid by the purchaser by way of deposit. It is not
going to make any difference whether the deposit is refundable or not. Like the deposit might have been paid under
the sale agreement or under any other agreement. [however to include the deposit in the purchase price, it should
have been made in connection with or incidental or ancillary to the purchase of goods.
Resale (Sub-section 22)
It means a sale of purchased goods:
(i) in the same form in which they were purchased, or
(ii) without doing anything to them which amounts to or results in a manufacture.
The definition of manufacture given in this Act very important. Under Section 5(3) Central Sales Tax Act the
penultimate sale, i.e. sale preceding the sale occasioning export is also deemed to be in the course of export provided
certain conditions are fulfilled and it will be exempt from tax. One of the conditions is that the same goods purchased
must be exported. In Sterling Foods v. State of Karnataka (1936) 63 STC 239 (SC), Supreme Court held that by
cutting heads and tails, cleaning, deveing and pealing and freezing prawns, they do not cease to be prawns. i.e. they
do not become different commodity and there is no manufacturing and exemption as export available.
Sale (Sub-section 24)
The definition of sale is very important as the VAT is applicable on Sale only. Section, 2(23) defines Sale as 'Sale'
means a sale of goods made within the State for cash or deferred payment or other valuable consideration, and
includes any supply by a society or club or an association to its members on payment of a price or fees or
subscription, but does not include a mortgage, hypothecation, charge or pledge; and the word 'sell" 'buy' "and
purchase, with all their grammatical variations and cognate expressions, shall be construed accordingly.
Explanation- For the purposes of this clause,(a) a sale within the State includes a sale determined to be inside the State in accordance with the principles
formulated in section 4 of the Central Sales Tax Act' 1956.
(b)
(i) The transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment,
or other valuable consideration;
(ii) the transfer of property in goods (whether as goods or in some other form) involved in the execution of a
works contract;
(iii) a delivery of goods on hire-purchase or any system of Payment by installments;
(iv) the transfer of the right to use any goods for any purpose (whether or not for a specified period for cash,
deferred payment or other valuable consideration;
(v) the supply of goods by any association or body of persons incorporated or not to a member thereof for cash,
deferred payment or other valuable consideration;
(vi) the supply, by way of or as part of any service or in any other manner whatsoever of goods' being food or any
other article for human consumption or any drink (whether or not intoxicating)' where such supply or service
is made or given for cash, deferred payment or other valuable consideration;
MVAT Act 2002
(vii) every disposal of goods referred to in the Explanation to clause (8) for cash or deferred payment or other
valuable consideration'"
The important ingredients of sale are:
(i) Two Parties - There are two parties. For example a partnership firm when distributes the goods in specie at the
time of dissolution of the firm is not sale. The firm and partners are treated as one person in law and one person
cannot sell the goods to himself. On the other hand if the goods are distributed in specie at the time of
dissolution of Company, the transfer will be treated as sale because in law the company and members different
entities. Likewise supply of food etc. by the Association or Club to its members is not sale, as the Association
and member are one entity in law. In order to tax these transaction these are treated as deemed sale.
(ii) Goods - There shall be moveable goods which are subject matter of sale. The sale of immovable properties is not
covered under Sale of Goods Act and VAT is not leviable on the sale of immovable properties.
(iii) Transfer of Ownership - There shall be transfer of ownership of goods from one person to other person.
(iv) Consideration - Such transfer shall be for consideration whether paid or payable in cash, deferred payment or
other valuable consideration. If a person gives the old machinery and gets new machinery without any payment,
it is barter and not sale and VAT is not leviable. On the other hand if he pays some amount, then the extra
amount paid will be taxable under VAT.
(v) Delivery - Actual delivery of goods is also important to complete the transaction.
Requirements of a Valid Contract
All other ingredients such as Offer, Acceptance etc. which are required to form a valid contract should be present. In
the Case of Gannon Dunkerley & Co. (9 STC 353) the Supreme Court held that 'Sale' should have the same meaning
as it has under the Sale of Goods Act, 1930. In other words if any transaction is to be treated as 'sale', all the above
mentioned ingredients should be present. Because of this judgment State Governments could levy Sales Tax on
Works Contract, Supply of Food in a hotel, Lease Contract etc. In order to enable the States to tax these types of
transaction, Constitution of India was amended in 1983 providing for the concept of deemed sale and this
amendment was called as 46th Amendment.
The explanation in the Section 2(23) enumerates the Deemed Sale. They are in simple words are:
(i) Compulsory acquisition of goods.
(ii) Works Contract.
(iii) Hire Purchase.
(iv) Lease Contract.
(v) Supply of goods by an association to its members.
(vi) Supply of food, drinks etc. in a Restaurant.
The explanation makes it clear that above mentioned deemed sales will cover whether it is for cash, deferred payment
or other valuable consideration.
Compulsory Acquisition of Goods
In this case there is no offer and acceptance as the goods is acquired compulsorily and it is treated as Deemed Sale.
Works Contract
The Act which was repealed by this act was called as "The Maharashtra Sales Tax on the Transfer of Property in
Goods Involved in the Execution of Works Contract Act,1989'. The name itself suggest 'sale' in works contract. Works
Contract definition has been introduced by the Ordinance dated 20th june 2006. Works Contract namely, an
agreement for carrying out for cash, deferred payment or other valuable consideration, such as fabrication, erection,
installation, fitting out, improvement, modification, repair or commissioning of any, movable or immovable property.
The definition of 'works contract' has been amended with effect from 20th June, 2006. The word 'namely' has been
replaced with 'including'. This amendment will widen the scope of the definition. This definition would cover all work
contract as decided by the courts and also contacts enumerated in the section.
In the case of Works Contract Sale can be defined as transfer of property in goods, whether as goods or in some other
form, involved in execution of a works contract in the state. There are three important components of a sale in works
contract:
(i) There should be works contract.
(ii) It should be executed in the State of Maharashtra and
(iii) There should be transfer of property in goods involved in execution of a works contact.
Indivisible contracts
Ordinarily all types of indivisible contract for supply of material and application of labour is "a works contract.
However it is difficult to decide whether a particular transfer comes under sale or works contract.
Hire Purchase
Hire purchase and Installment sales are treated as Deemed Sales. If the ownership is transferred as soon as the
contract is entered, irrespective of the fact that the price will be paid in installments, it is installment sale. On the
other hand in the case of Hire Purchase, normally, the property in the goods passes to the buyer only when the last
installment is paid. In Jay Bharat Credit and Investment Co. Itd. CST 120 STC 1 (SC) it was held that the term 'sale'
would include transfer of goods on hire purchase and the term sale price would include the whole hire charges in
case of hire purchase, there is a transfer of goods. In the case of transfer of goods on hire purchase, whatever amount
paid/payable would be included within the meaning of the expression 'Sale Price'. The hire charges as provided for in
the Hire Purchase Agreements would be part of the turnover of the dealer.
Lease Contract
The Act which was repealed by the Act was called 'The Maharashtra Sales Tax on the Transfer of the Right to Use Any
Goods for Any Purpose Act, 1985'. Sale in the case of Lease is defined as the transfer of the right to use any goods for
any purpose, whether or not for a specified period, for cash, deferred payment or other valuable consideration in the
State of Maharashtra.
Supply of goods by any association to its members
MVAT Act 2002
In this case, as already explained, the seller and the buyer are one and the same party. However it is included in
Deemed Sale.
Supply of food, drinks etc. in a Restaurant.
When a person orders a lunch or dinner, he is not buying the food for a price. Actually he is availing the services of
the Restaurant and it is not simple sale. However it is included in Deemed Sale.
Sale price (Sub-section 25)
Sale Price means the amount of valuable paid or payable for any sale made. It includes any sum charged for anything
done by the seller in respect of the goods at the time of or before delivery thereof.
Cost of Transit Insurance and Installation Charges However the cost of insurance for transit and installation are
excluded from sale price, if charged separately.
Sale price in works Contract - In the case of Works Contract sale price means the total consideration for the works
contract. However for the purpose of levy of tax sale price shall be determined in accordance with the rules. This is
because as per the constitutional provisions only the value of goods transferred to the contractee in execution of
works contract is liable to Value Added Tax.
Taxes Payable
This section makes it very clear that duties levied or liable on goods under the Central Excise Act, 1962 or the
Bombay Prohibition Act, 1949, shall be part of the sale price, whether such duties are paid or payable by or on behalf
of the seller or the purchaser or any other person.
Value Added Taxes Payable
Value Added Taxes payable under this Act will not form part of the sale price.
Deposit
Explanation III to this sub-section state that sale price shall include the amount received by the seller by way of
deposit. Even if the deposit is refundable then also it is includible in the price. The deposit might be made by way of
separate agreement or part of sale contract, in connection with or incidental or ancillary to the sale of goods.
Taxable Goods
Taxable Goods means goods on which no tax is payable under Section 5 and tax free goods mean all other goods.
Turnover of Purchases (Sub-section 32)
It means the total of the amount of purchase price paid or payable and from this we have to deduct any refund of
purchase price for return of goods and refund of deposit made during the period. As we have seen, under purchase
Price any deposit taken shall be included in the purchase price and will be deducted from the turnover when
refunded.
Explanation. I states that in the case of Hire purchase the amount paid or payable during the period only will be
added to the turnover.
Turnover of Sale (Sub-section 33)
It means the total of the amount of sale price received or receivable and from this we have to deduct any refund of
sale price for return of goods and refund of deposit made during the period. Any deposit taken shall be included in
the sale price and will be deducted from the turnover when the deposit is refunded.
Explanation. I states that in the case of Hire purchase the amount received or receivable during the period only will
be added to the turnover.
LEVY
OF TAX
Dealers have to pay tax as per this Act when they sell goods. Goods are classified into Schedules.
Charging Section- Section 4 is the charging Section of this Act' No tax can be Levied or collected in
India except under the authority of law. This section gives such authority for charging of Value
Added Tax in accordance with this Act and Rules.
Rates of Tax
Exempted Goods
Section 5 deals with exempted goods. Schedule A contains all exempted goods. It contains 51 entries. Some of the
items are: Agricultural implements manually operated or animal driven, Aids and implements used by handicapped
persons, Betel Leaves, Books, Periodicals and Journals, Charcoal, Condoms and contraceptives, Fresh Vegetables
and Fruits, Glass Bangles, Meat, Fish, Prawn, and other aquatic products when not cured or frozen, Eggs and Live
stock and Animal hair, unprocessed and unbranded salt, Water other than (i) aerated, mineral, distilled, medicinal,
ionic, de-mineralised water, and (ii) water sold in sealed container.
Tax Rates
Section 6 deals with Rates of Tax under this Act. This section provides rate of tax on different goods. In the case
commodity tax classification of goods is important. Customs Tariff Act and Central Excise Tariff Act provide
classification of goods for levying Customs duty and central Excise Duty. For the purpose of levying tax under this
Act five Schedules are given in the Act. As stated in the previous paragraph Schedule A contains exempted goods.
The Schedules B, C, D, E are explained below:
Sr.
Schedule
Particulars
No.
1.
B
List of goods for which the Rate of Tax 1%
2.
C
With effect from 1-4-2010, Declared Goods are liable to tax at 4%
With effect from 1-4-2O10, Other than declared Goods liable to tax at 5%
3.
D
List of goods for which the Rate of Tax 20% or above
MVAT Act 2002
4.
E
List of Goods not covered elsewhere for which the Rate of Tax 12.5%
Part B includes 3 items which are in the nature of valuable items and Tax Rate is 1%. This Part includes Gold, Silver
and precious metals, Articles of Gold, Silver etc., Precious Stones, Semi Precious Stones and Pearls of all types. The
tax rate has been kept low so that the trade of these items will not be shifted to other states.
Schedule C contains goods attracting tax at 4% and 5% with effect from 1st April, 2010. It is to be noted that all
declared goods are liable to tax at 5%.
Examples of items liable to tax at 4% are:
axles (Iron and Steel), Banarasi Rai oil seeds, bearing plate bars, bearing plates, bolducs, brown oil seeds, cast iron,
cast iron scrap, Castor oil seeds, Coal, Coconut oil seeds, coke, Cotton, Cotton seed
Examples of items liable to tax at 5% are:
abrasive powder, account books, Acetals, Acetylene, acid oils from refining, Acrylic polymers, bromine, Buckets Bulk
drugs, bung covers, bunker oil, Buttons of plastics, C.I. Pipes, cabalt powders, cocoa pod, Coffee beans, coffee seeds,
coir.
Schedule D includes 10 items and Tax Rate is 20% in the case of Foreign Liquor, Country Liquor and Imported
Liquor. It also includes Petroleum products and divided into 7 categories and the Tax Rate is 10 to 34% and in some
cases such as High Speed Diesel Oil one Rupee per liter also is leviable.
Schedule E includes all goods not covered in other Schedules and rate of tax is 12.5%
Rate of Tax of Packing Materials
When the goods sold are packed in any materials, the tax shall be Leviable on the sales or purchases of such packing
material at the same rate of tax at which rate tax is leviable on the goods so packed. This rule is applicable whether
such packing materials are charged separately or included in the price of the goods sold. If the goods are not taxable,
then there will be no tax on the packing material used.
No Purchase Tax
Under this Act no purchase tax is payable. .
Sales and Purchases not to be Liable to tax
Inter-State Sale and Import and Export
Sub-section (1) excludes all sales which are Inter State Trade, Sale outside the State, Sale in the course of Import' and
Exports from the purview of this Act. As per the Constitutional provisions and provisions of Central Sales Tax Act,
1956 the State Government has no power to tax the above mentioned sales.
This section states that this Act will not be applicable where sale or purchase takes place,
(a) (i) outside the State; or
(ii) in the course of the import out of such territory of India or the export of the goods out of such territory; or
(b) in the course of inter-State trade or commerce.
Further it states that for the purpose of this section, whether a sale or purchase takes place:
(a) (i) outside the State; or
(ii) in the course of the import out of such territory of India or the export of the goods out of such territory; or
(b) in the course of inter-State trade or commerce,
shall be determined in accordance with the provisions of section 3, 4 and 5 of the Central Sales Tax Act.
Sale of Fuel and Lubricant to a Foreign Aircraft
Sale of fuel and lubricant to foreign aircraft is exempt under sub-section (2) of Section 8 provided the following
conditions are satisfied:
(i) Exemption is in accordance with the notification issued by the Central Government in exercise of its power under
Section 3 of the Foreign Aircraft (Exemption from Taxes and Duties on Fuel Act, 2002.
(ii) The aircraft is not registered in India.
(iii) The fuel and lubricants are filled into receptacles forming part of aircraft.
(iv) The country in which the aircraft is registered is a party to the Convention of International and Civil Aviation ,
1944 and it has entered into an Aircraft agreement with India and the aircraft is operating on a scheduled or
non-scheduled service to or from India.
Sale by Special Economic Zone Developer or Unit or Export Oriented Unit
Sub-section 3 provides exemption from tax on goods supplied by Special Economic Zone Developer or Unit, 100%
Export Oriented Unit, any unit in the Software Technology Park, or any unit in the Electronic Hardware Technology
Park. It provides that the Government may exempt by order tax on the sales of goods made by any of these units
exempt from tax. It is subject to terms and conditions specified by the State Government. A developer of the Special
Economic Zone means a developer undertaking development, repairs, maintenance and improvement of the Special
Economic Zone and the developer has been certified by the Commissioner. The Special Economic Unit includes an
establishment situated within the Special Economic Zone.
Exemption from Tax for goods specified in the Import and Export Policy
Sub-section 3A empowers the State Government to exempt from payment of tax any class or classes of sales of goods
made by registered dear to any class of dealers specified in the Import and Export Policy of the Government of India.
Now Export and Import Policy has been renamed as Foreign Trade Policy. This exemption notification has to be
notified in the Official Gazette. The State Government may impose conditions and restriction to allow exemption from
payment of tax.
MVAT Act 2002
Exemption from Payment of Tax - Sale to/by Canteen Stores

Sub-section 38 empowers the State Government to exempt from payment of tax sales of goods made by:
(i)
Any registered dealer to the Canteen Stores Department of the Indian Naval Canteen Services.
(ii)
The Canteen Stores Department or the Indian Naval Canteen Services to the unit run canteens or members of
the armed forces.
(iii)
The unit run canteens to the members of the armed forces.
This exemption notification has to be notified in the Official Gazette. The State Government may impose conditions
and restriction to allow exemption from payment of tax.
Exempted Units
Sub-section 4 provides that the State Government may by order published in the Official Gazette provide exemption
from payment of the whole of tax in respect of sales affected by a unit holding a Certificate of Entitlement to whom
incentives are granted under Package Scheme of Incentives.
Exemption from Payment of Tax - Sale to State Government, etc.
Sub-section 5 empowers the State Government to exempt from payment of tax any class or classes of sales of goods
made by registered dear to the following:
(i) The State Government.
(ii) The Central Government.
(iii) A Generating Company as defined in the Electricity Act, 2003 for use in generation of electricity.
(iv) A Registered dealer holding a License for transmission of electricity under the Electricity Act, 2003 for use in
transmission of electricity
(v) A Registered dealer holding a license for distribution of electricity under the Electricity Act, 2003 for use in
distribution of electricity.
(vi) The Mahanagar Telephone Nigam Ltd.
(vii) The Bharat Sanchar Nigam Ltd.
(viii) Any telephone service provider holding a license granted under the Indian Telegraph Act, 1885 and the Indian
Wireless Telegraphy Act, 1933, to establish, maintain and operate telephone service up to subscribe terminal
connection.
Exemption to Certain Textile Goods
The Government is empowered to give exemption from payment of tax the transfer of property in goods involved in
the processing of textiles described in column (3) of the First Schedule to the Additional Duties of Excise (Goods of
Special Importance) Act, 1957.
Penalty for Non-compliance
Exemption is available from payment of tax under Subsections (3), (3A), (3B) or (5) of Section 8. If the purchaser fails
to comply with the conditions or restrictions subject to which the exemption is given, the authority may impose
penalty on the purchasing dealer. The penalty may be equal to one and a half times the tax which would have
become payable on the purchase if the exemption was not available on the purchase. The authority has to the
purchaser a reasonable opportunity of being heard before imposing the penalty.
Tax collected at Source AUCTION of Right to Excavation of Sand & Delivery of Certain Goods
The Maharashtra Tax Laws (Levy, Amendment & Validation) Act 2012 has introduced new section 31A. this section
comes into effect from 1st May2012. It deals with the tax collected at source on the auction of the right to excavate
sand and other specified goods.
Persons auctioning:
a. Any person;
b. Local bodies;
c. Local authorities;
d. Agencies under the central government;
e. Agencies under the state government;
What is covered?
The person who auctions the rights for excavation of sand within their jurisdiction has to collect the tax at source
towards the liability of sales tax to be incurred on sale of sand by the auction purchase.
Persons delivering specified goods
Clause (b) of Sub section (1) provided that any person who has temporary possession or control over the goods as
may be notified, pending clearance of the goods by the purchaser has to collect the tax at source towards the liability
of sales tax to be incurred by the purchasing dealer on the goods.
Rate of Tax collected at Source
The tax to be collected at source in both the cases is at the rate to be notified by the government.
Payment to the government
The amount collected at source shall be paid into the government Treasury by the persons who collected the tax in
the manner to be prescribed by the government.
MVAT Act 2002
Credit for the Tax Collected at Source

The amount of tax collected at source and remitted to the government shall be deemed to have been paid on behalf of
the auction purchaser or dealer and it shall be adjusted towards their tax liability.
It is expected that the department shall issue a detailed circular regarding the Tax Collected at Source.
Tax to be collected from 15th Februay2013
By the notification No. VAT 1512/CR-149/Taxation-1 dated 2-2-2013, the tax collection at source provision is
implemented w.e.f. 15th February2012. The authorities who has collected the tax at source and rate of tax to be
collected given in the table:
Authorities who are responsible for collection of tax at source
Rate
a. District collector
b. Cantonment Boards
10% of the Auction amount
c. Any other authority under the State Government or Central Government
SALES TAX
AUTHORITIES
AND
TRIBUNALS
Section 10. Sales Tax Authorities.(1) For carrying out the purposes of this Act, the State Government shall appoint an
officer to be called the Commissioner of Sales Tax.
(2) Likewise, the State Government may appoint such number of additional
Commissioners of Sales Tax, and such number of (a) Joint Commissioners,
(b) Senior Deputy Commissioners,
(c) Deputy Commissioners,
(d) Assistant Commissioners,
(e) Sales Tax Officers, and
(f) Other Officers and persons,
and give them such designations, as the Government deems necessary.
(3) The Commissioner shall have jurisdiction over the whole of the State. All other officers shall have jurisdiction
over the whole of the State or over such local areas as the Commissioner may, by notification in the Official
Gazette, specify.
(4) The Commissioner shall have and exercise all the powers and perform all the duties, conferred or imposed on the
Commissioner by or under this Act, and the Additional Commissioner or Additional Commissioners of Sales Tax,
if any be appointed, shall, save as otherwise directed by the Commissioner] by notification in the Official Gazette,
have and exercise, within his or their jurisdiction, all the powers and perform all the duties, conferred or imposed
on the Commissioner, by or under this Act.
(5) A Joint Commissioner shall, save as otherwise directed by the Commissioner by notification in the Official
Gazette, have and exercise, in the area within his jurisdiction, all the powers, and perform all the duties,
conferred or imposed on the Commissioner, by or under this Act.
(6) Senior Deputy Commissioners, Deputy Commissioners, Assistant Commissioners, Sales Tax Officers, other
officers and persons shall, exercise such of the powers and perform such of the duties of the Commissioner
under this Act, as the Commissioner may, subject to such conditions and restrictions as he may, by general or
special order impose, delegate to them either generally, or as respects any particular matter or class of matters by
an order notified in the Official Gazette.
(7) The State Government may, subject to such restrictions and conditions, if any, as it may impose, by notification
in the Official Gazette, delegate to the Commissioner the powers (not being powers of the appointment of
Additional Commissioner or Joint Commissioner) conferred on the Govt. by sub-section (2).
(8) No person shall be entitled to call in question in any proceeding, any exercise of power including the territorial
jurisdiction of any officer or person appointed under sub-section (2), after the expiry of the period of thirty days
from the date of receipt by such person of any communication, intimation, order or notice under this Act or
under any earlier law, issued by such officer or person. If within the period aforesaid, a separate application in
writing in the prescribed form raising an objection as to such exercise of power by or the jurisdiction of any such
officer or person is made to such officer or person, he shall refer the question to the Commissioner, who shall,
after giving the person raising the objection, a reasonable opportunity of being heard, make an order determining
the question. The order made by the Commissioner shall be final.
(9) All officers and persons appointed under sub-section (2) shall be subordinate to the Commissioner; and the
subordination of officers other than the Commissioner, and of persons, amongst themselves shall be such as
may be-prescribed.
(10) The Commissioner may, from time to time, issue such instructions and directions as he may deem fit to the
authorities subordinate to him for carrying out the purposes of the Act, and such authorities and officers shall
observe and follow such instructions and directions of the Commissioner:
Provided that, no such instructions or directions shall be issued,(i) so as to require any authority to pass a particular order or to dispose of a particular case in a particular manner;
or
(ii) so as to interfere with the discretion of the appellate authorities in any particular case:
Provided further that, if the Commissioner is of the opinion that it is necessary in the public interest so to do, he may
cause such instructions and directions to be published and circulated for general information.
Section 11. Tribunal.-
10
MVAT Act 2002
(1) There shall be a Tribunal to be called "the Maharashtra Sales Tax Tribunal". The Tribunal shall consist of such
number of members appointed by the State Government as the Government may, from time to time, consider
necessary for the proper discharge of the functions conferred on the Tribunal by or under this Act.
(2) The State Government shall appoint one of the members of the Tribunal to be the President thereof on the basis
of his seniority in the Judicial Service.
(3) The qualifications and the term of office of the members of the Tribunal shall be such as may be prescribed, and
a member shall hold office for such period as may be prescribed or as the State Government may, by special
order in his case, specify.
(4) Any vacancy of the member of the Tribunal shall be filled up by the State Government as soon as practicable.
(5) The functions of the Tribunal may be discharged by any of the members sitting either singly, or in Benches of two
or more members, as may be determined by the President.
(6) If the members of a Bench are divided, the decision shall be the decision of the majority, if there be a majority;
but if the members are equally divided, they shall state the point or points on which they differ, and the case
shall be referred by the President of the Tribunal for hearing on such point or points to one or more of the other
members of the Tribunal; and such point or points shall be decided according to the majority of the members of
the Tribunal who heard the case including those who first heard it.
(7) During the course of any proceedings, if a Bench is of the opinion that any earlier decision of any Bench on any
point or issue requires reconsideration, or where such Bench is inclined to take a decision on any point or issue
different to the decision earlier taken by any Bench, then such Bench shall refer the point or the issue to the
President for formation of a Larger Bench. The President shall thereupon form a Larger Bench of such members
of the Tribunal as he may determine. Such Larger Bench shall as far as practicable be presided over by the
President. The point or the issue shall be decided according to the decision of the majority of the members
constituting such Larger Bench. Where any member including the President is sitting singly he may in similar
circumstances refer the matter to the President for formation of a Larger Bench.
(8) The Tribunal shall have power to award costs after affording the dealer or person, as the case may be, a
reasonable opportunity of being heard, and the amount of such costs shall be recoverable from the person
ordered to pay the same in the manner provided in the Act for recovery of arrears of tax.
(9) The Tribunal shall, with the previous sanction of the State Government, for the purpose of regulating its
procedure including the place or places at which the Tribunal, the Benches or the members thereof shall sit and
dispose of its business, make regulations consistent with the provisions of this Act, rules and notifications.
(10) The regulations made under sub-section (9) shall be published in the Official Gazette.
Section 12. Action against any authority for vexatious order or willful underassessment, etc.(1) The Commissioner may,(i) 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 reasonable time upon any application provided for by or under this Act, or
(ii) on receipt of a report from the Tribunal that, a particular authority has knowingly or willfully 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 within reasonable time upon any application provided for, by or under
this Act, or
(iii) 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,
initiate appropriate enquiry or action in the matter, and if in his opinion prima facie case against such authority
exists, he may proceed against such authority under the Maharashtra Civil Services (Conduct) Rules, 1979 or the
Maharashtra Civil Services (Discipline and Appeal) Rules, 1979 or any other relevant rules for the time being in force.
The Commissioner shall within one year of the receipt of the complaint referred to in clause (i) or report referred to in
clause (ii), send an intimation to the person or dealer making the said complaint or to the Tribunal, stating therein
whether he has decided to initiate or has initiated any action against the concerned authority or officer.
(2) The Commissioner may, on finding that any complaint made by any dealer or person is false or mischievous or
has been made with a view to defeating the application or purposes of this Act, within one year of the receipt of
the complaint, after giving the person or the dealer a reasonable opportunity of being heard, impose on him such
fine not exceeding five thousand rupees as he deems fit and the fine so levied may be recovered in the manner
provided in this Act for recovery of arrears of tax.
Section 13. Persons appointed under Section 10 and Members of Tribunal to be public servants.The Commissioner and all officers and persons appointed under section 10 and all the members of the Tribunal shall
be deemed to be public servants within the meaning of section 21 of the Indian Penal Code (45 of 1860).
Section 14. Powers of Tribunal and Commissioner.(1) In discharging the functions by or under this Act, the Tribunal and the Commissioner shall have all the powers
of a Civil Court for the purpose of.(a) proof of facts by affidavit;
(b) summoning and enforcing the attendance of any person, and examining him on oath or affirmation;
(c) compelling the production of documents; and
(d) issuing commissions for the examination of witnesses.
(2) In the case of any affidavit to be made for the purposes of this Act, any officer appointed by the Tribunal or the
Commissioner may administer the oath to the deponent.
11
MVAT Act 2002
(3) Without prejudice to the provisions of any other law for the time being in force, where a person, to whom a
summons is issued by the Tribunal or the Commissioner either to attend to give evidence or produce books of
accounts, registers or other documents at a certain place and time, intentionally omits to attend or produce the
books of accounts, registers or documents at the place and time, the Tribunal or, as the case may be, the
Commissioner may impose on him such fine not exceeding five thousand rupees as it or he thinks fit; and the
fine so levied may be recovered in the manner provided in this Act for recovery of arrears of tax :
Provided that, before imposing any such fine, the person concerned shall be given a reasonable opportunity
of being heard.
(4) When any documents are produced by a person or dealer on whom a summons was issued by the
Commissioner, and the Commissioner is of the opinion that such dealer or any other dealer has evaded or is
attempting to evade the payment of any tax due from him and the documents produced by such dealer or person
are necessary for establishing the case against such dealer, the Commissioner may, for reasons to be recorded in
writing, impound the documents and shall grant a receipt for the same, and shall retain the same for so long as
may be necessary in connection with the proceedings under this Act [or for a prosecution]
Provided that, if the original documents are required by any statutory authority for any official purpose, then
said documents shall be made available to such authority for such purpose for such duration as may be
required.
Section 15. Indemnity.No suit, prosecution or other legal proceedings shall lie against any servant of the Government for anything which is
in good faith done or intended to be done under this Act or the rules or notifications.
Every dealer who exceeds certain specified limit if turnover, purchase and sales to get him
registered with the Sales Tax Department. If the dealers wants to get registered himself
even before getting the turnover etc. he may apply for Voluntary Registration
Who has to apply for Registration?
Every dealer, who was a dealer under :
(i) The Bombay Sales Tax Act,
(ii) The Bombay Sales of Motor Sprit Taxation Act, 1958,
(iii) The Maharashtra Sales Tax on the Transfer of the Right to use any goods for any purpose Act, 1985, and
(iv) The Maharashtra Sales Tax on the Transfer of property in Goods involved in the Execution of Works Contract
(Re-enacted) Act, 1989,
and holds a certificate of registration under any one of the above Acts immediately before the appointed day is liable
to pay the tax till the certificate is cancelled provided his turnover of sales or purchases has exceeded Rs. 5 lakh or if
he is an importer in the said year and his turnover of sales purchases in earlier year exceeded Rs. 1 lakh, shall be
liable to pay tax in accordance with the provisions of this Act till his certificate is duly cancelled under this Act.
A dealer who is not a registered dealer under the above Acts and whose turnover first exceeds the prescribed
limit in a year, is liable to pay tax from the 1st day of April of the said year. For example the dealer's turnover exceeds
prescribed limit on 1-10-2005 and he has to pay tax from 1-4-2005. However, the dealer need not pay tax on the
exempted turnover. The dealer has to get registration when the turnover exceeds Rs. 100000 in the case of dealer,
who is an importer and the value of taxable goods sold or purchased by him during the year is not less than Rs.
10000 and Rs.500000 in any other case wherever the taxable goods sold or purchased by him during the year is not
less than Rs.10000 and he achieves the turnover on 1-10-2005. Whatever turnover he has over and above the
exempted limit only is taxable.
Once registered under this Act, the dealer is liable to pay the tax till his registration is cancelled. For
example, the dealer is a registered dealer and his turnover has gone below the prescribed limit and he has to continue
to pay the tax and if he wants to avoid paying the tax, he has to get his registration cancelled.
REGISTRATION
Turnover Requirement for Registration

The limits of turnover for registration and liability for tax are as under:
1
An Importer.
Turnover of Sales Rs. 1,00,000 and the value of taxable goods sold or purchased by him
during the year is not less than Rs. 10,000.
2
Any other Dealer.
Turnover of Sales Rs. 5,00,000 and the value of taxable goods sold or purchased by him
during the year is not less than Rs. 10,000.
If only the Turnover of Sales condition and sale or purchase of taxable goods condition are satisfied, then only he has
to get himself registered under the act as the conditions are cumulative.
For the purpose of calculating turnover of sales, the turnover of all sales shall be taken and such sales or purchases
shall include sale or purchase of taxable goods and non taxable goods. The sale or purchase shall include the sales or
purchases made by the dealer on his own account and also on behalf of his principal. In the case of auctioneer, goods
auctioned also will be taken into consideration even if sale proceeds are received by his principal. In the case of an
agent of a non-resident dealer the turnover shall also include the sales or purchases of the non-resident dealer
effected in the State. Notwithstanding anything contained any contract or any law for the time in force, the factor,
broker etc,, an auctioneer, agent of a non-resident dealer shall be liable to pay under this act, whether or not the
principal is a dealer and whether or not such principal is liable to pay tax under this Act. However if the principal has
paid the tax, then it will not be demanded from the Broker etc.
If a person succeeds a dealer, he is liable to pay the tax from the date of such succession.
If a person has obtained Voluntary Registration, he is liable to pay tax on the turnover of taxable goods even if he has
not reached the required turnover as stated above.
12
MVAT Act 2002
Application for Registration

(a) Time Limit for Registration
A dealer who becomes liable to pay tax under Section 3 has to apply for registration:
(i) Within 30 days from the appointed day, i.e. before 30th April, 2005, if he holds a certificate of registration under
any repealed acts before 1st April 2005 and he is not holding a certificate of registration under the Bombay Sales
Tax Act, 1959;
(ii) Within 30 days from the date of achieving the stipulated turnover either of all sales or of all purchases;
(iii) In the case of succession, he has to apply within 30 days from the date of succession.
After the introduction of TIN, the dealers who have changed their place of business to a different local area with
different Pin Code need not cancel the existing registration with effect from 20th June 2006 and they need not new
registration. They have to inform the new address to the authorities.
(b) Application FORM for registration
The dealer has to apply in FORM 101. FORM 101 is to be used even for Voluntary registration.
(c) Registration for more than one place
If the dealer has more than one place of business in the State, he has make one application for registration for all
places and he has to declare one place as principal place business and the application is to be made to the registering
authority within whose jurisdiction principal place business is situated.
Now need not go for separate registration for any place for which he has obtained a Certificate of entitlement under
Package Schemes of Incentives' He has to go for one registration only.
The dealer can not apply for separate registration for different places of business' However he can file separate
returns for different places of business with the prior approval of the Commissioner'
(d) Signing the Application FORM 101
Every application has to be signed as given below:
Dealer
Signing Authority
An Individual, Proprietorship firm'
Individual/ Proprietor or by a person having due authority to act on
behalf of the proprietor.
A Firm.
Partner
A Hindu Undivided Family.
Karta or an adult member.
A Body Corporate (Including a Company, A
Director, Manager, Secretary or the Principal officer or a person duly
Co-operative Society' or A Corporation or authorized to act on its behalf.
Local Authority)
An Association of Individuals.
The Principal Officer or Person Managing the Business.
Any Department of the Union Government Any person duly Authorised to act on its behalf.
or Any State Government.
(e) Partners
In the case of a Firm all the partners shall furnish the declaration as Provided in FORM 1.
(f) Capacity of the person signing
The person signing and verifying an application has to specify the capacity in which he is do so.
(g) Photograph
Every person signing an application shall furnish a copy of his recent passport photograph. This is not applicable to
Director, Manager, Secretary or Principal Officer.
(h) Signature
The person who has provided his recent photograph shall attend before the registering authority and sign before him
on the photograph when required by the official.
(i) Permanent Account Number
The dealer has to provide the Permanent Account Number and address as given below:
Individual or Proprietorship. PAN & Address of Individual or Proprietor.
Firm
PAN and Address of Partners
HUF
PAN and Address of Karta and members of the family.
Association
PAN and Address of the members of the Managing Committee
It is required to submit proof of Permanent Account Number with the application for registration. This rule is
applicable to registration required as per the provisions of this Act and Voluntary Registration.
(j) Classes of Goods and Nature of Business
Every application for registration shall give in general terms the classes of goods in which the applicant deals. Nature
of the business also shall be stated in the application.
(k) Voluntary Registration
In the case of Voluntary Registration the dealer should have Current Account and he has to produce the proof of the
same. A person voluntarily applying for registration has to be introduced by any one of the following persons:
13

(i)
(ii)
(iii)
(iv)
(v)
MVAT Act 2002
a registered dealer whose registration certificate is in force on the date of introduction and who is
registered for five continuous years immediately preceding the year in which application is made;
a Sales Tax practitioner;
a Chartered Accountant;
a Cost Accountant;
an Advocate.
(l) Registration Fee

Rs. 500 in the case of registration required as per Act and Rs. 5000 in the case of Voluntary Registration. Moreover in
the case of Voluntary registration Rs. 25000 has to be deposited. With effect from 1-1-2009 the payments of fees and
deposits has to be by way of Demand draft drawn on any nationalized bank.
The Maharashtra Tax Laws (Levy, Amendment & Validation) Act 2011 has made amendment that if a person applies
for Voluntary registration, he has to make Non-Adjustable Security Deposit of Rs. 25,000/-. This proviso makes it
clear that amount so deposited shall not be adjusted against the tax payable as per any return or towards any other
liability under this act.
Subsection 2(A) has been inserted to section 16 to the effect that refund of this security deposit shall be made on
fulfillment of certain conditions. This sub section reads as under:
the security deposited under the proviso to sub section 2 shall be refundable on such conditions, restrictions and
within such time as may be prescribed. The security deposit shall be forfeited, if there is no compliance of such
conditions, restrictions & the time limit. These changes are effective from 1st May2011.
Grant of Certificate of Registration
(i) FORM of Certificate - The Certificate of registration will be issued in FORM 102.
(ii) The Certificate will be issued in the name of Firm, Family, Body Corporate, Association or Government, as the
case may be.
(iii) Certificate of Registration will be issued as given below:
No.
Particulars
Effective Date
I
Applied within 30 days from the Effective from the appointed day.
appointed day.
II
When the dealer first achieved It shall effect from the time on which the dealer's turnover first
minimum
prescribed
limit
for exceeded the relevant limit provided the application is made within
registration
the specified time.
III Application made due to succession It shall be effective from the date of succession provided the
and the succession is due to death of application is made within 60 days from the date of succession.
the owner.
IV Application made due succession and It shall be effective from the date of succession provided the
the succession is due transfer, disposal application is made within 30 days from the date of succession.
etc.
V
If application is made due to change of It shall be effective from the date of change of address.
address of business to a different local
area
VI In the case of Voluntary Registration
It will be effective from the date of the application or the date of
payment of the required fee whichever is earlier, provided two
conditions laid under Rule 16 are fulfilled.
(iv) More than one Place of Business - When the dealer is having more than one place of business, the registration
Authority has to issue the dealer one copy of the certificate of registration for each additional place of business
specified in the application. For a Warehouse extra copy of registration will not be issued.
Exhibition of Certificate of Registration
(a) Exhibition of Certificate of Registration - Every registered dealer shall display conspicuously at each of his
business the certificate of registration or a copy thereof. It is applicable for Warehouse.
(b) Display of Hologram - The registering authority shall issue to the dealers one hologram for each place of his
business identifying the dealer as a registered dealer after the notified date and the dealers have to securely affix
and display the hologram at a prominent place near the entrance of his each place of business.
Cancellation of Certificate of Registration
(i) When the business is discontinued, transferred or disposed, or change of place takes place the dealer has to
apply for cancellation of the Registration Certificate within 30 days from the date of happening of the above. He
has to apply in FORM 103.
(ii) If the application in order, the concerned authority has to cancel his registration and he has to serve the order on
the dealer.
(iii) The cancellation is effective from the date of discontinuance or disposal or transfer or change of place of business.
If the cancellation is due to the fact the turnover has gone below the turnover prescribed for registration, the
cancellation shall be effective not Later than the first day of the month next following the date of passing of the
order of cancellation.
(iv) If the Commissioner is satisfied that the registered dealer has discontinued or disposed or the place of business
has been changed to a different local area, he can cancel the registration under the first proviso to Section 16.
14
MVAT Act 2002
Before cancelling he has to give a reasonable opportunity of being heard. The cancellation shall be effective from
the date fixed by the Commissioner as the date of happening the disposal etc. A copy of the order shall be served
on the dealer.
(v) If the registration is cancelled, the dealer has to surrender the Registration Certificate.
Voluntary Registration and Cancellation
If a person who has obtained voluntary registration has not commenced business within six months from the date of
registration, the Department may cancel the registration certificate with effect from the date as may be fixed in
accordance with the rules.
Additional Copies of Certificate of Registration
(i) Additional Copies - When the registered dealer opens a new place of business, the authority shall issue
additional copy of the certificate registration at request of the dealer.
(ii) Duplicate Copy of the Registration Certificate - If the registration certificate or additional copy of the registration
certificate is lost, destroyed or defaced, the dealer can apply for duplicate of the same.
Production of Certificate of Registration - When the Commissioner requires in writing to the dealer to produce the
Certificate of Registration, he has to produce the same within 10 days.
Information under Section 18 and changes in FORMs of Certificate of Registration
If any change such as transfer of business, discontinuance of business etc. as enumerated under Section 18 takes
place, the dealer shall inform the authority within 60 days from the date of occurrence of change etc. When he gives
the information, he has to deliver the certificate to the authority.
If any change takes place in Registration Certificate FORM 102 the dealer has to submit the certificate and copies
thereof to the authority within 60 days from the date when the change occur. The authority has to return the
certificate and copies thereof with necessary amendment or issue a new registration certificate.
The Maharashtra Tax Laws (Levy and Amendment) Act,2010 has amended 18 Section to the effect that the dealer has
to inform the following changes also to the prescribed authority:
(i) the dealer undertakes any change in the nature of business, or
(ii) the dealers effects any changes in the Bank account.
This amendment is effective from the 1st May, 2010.
Declaration under Section 19
(i) Declaration regarding Manager - Every dealer has to declare the name of the Manager and for this purpose he
has to use FORM 105. Time limit for filing this declaration first time is the same as prescribed for Registration.
When the declaration has to be revised, it shall be made in FORM and has to be submitted within 30 days from
the date on which the manager has changed.
(ii) Declaration of Permanent Account Number - Every dealer shall communicate to the Department the Permanent
Account Number. However as per Rule 8(12) a person applying for registration shall submit his Permanent
Account Number to the registering authority at the time of making the application. This rule is applicable to
Voluntary Registration also.
The State Government got power under Section 17 to require the dealers to obtain New
Registration Certificate in lieu of the existing Certificate of Registration.
Content of Section 17
The Commissioner may require every dealer who holds a valid registration certificate
on a specified date notified by him in the Official Gazette to obtain in lieu of the existing
Certificate of Registration a new Certificate of Registration. Every dealer, who is required to obtain a new certificate
shall apply in the prescribed form within the stipulated period to the concerned authority and the application should
be accompanied by the existing Certificate of Registration together with all additional copies, if any, issued to him. On
issue of new Certificate of Registration, ' that will be treated as Certificate of Registration as required under Section
16.
The Commissioner may notify in the Official Gazette a date for cancelling the existing Certificates of Registration and
from that date all the existing Registration Certificates will be treated as cancelled. The Commissioner has power to
require a class of dealers to surrender the existing Certificate of Registration and obtain new Certificate of Registration
and also cancel the Certificate of Registration of a class of dealers by notification in the Official Gazette.
TAX
IDENTIFICATION
NUMBER
What is TIN
The Empowered Committee of State Finance Ministers has proposed a uniform format for registration certificate
numbers for the local VAT Act as well as Central Sales Tax Act. This format for unique registration certificate number
is called as Taxpayer Identification Number. Many States have already switched over to the TIN, Maharashtra will be
adopting this system from 1-4-2006.
The TIN will be a 12-character alphanumeric code. The first 11 characters will be in numeral format and the 12th
character will be an alphabet. The first two digits of TIN will be the census code of the State. In case of Maharashtra
this will be '27'. The next two digits would be "check digits" and will be generated by the computer program me. The
purpose of the check digits is to establish the validity of a particular TIZN. The next 7 digits would be running serial
numbers, which will start from 0000001 and may go up to 9999999.
15
MVAT Act 2002
Who has to apply?

All dealers having Registration under The Maharashtra Value Added Tax Act and Central Sales Tax Act have to apply
for Tax Payers Identification Number.
Application Form
Application has to be made in Form No. 108.
Application for allotment of Fresh registration certificate and TIN.
Cost of Form Rs. 100.
Electronically filled Form
The dealer who has to file the Application for New Registration Certificate and Tax Payer Number can apply in
Electronically filled Form. In that case he has to follow the following procedure:
(i) the application form has to be downloaded from the website www.vat.maharashtra.gov.in
(ii) Only Aerial' font of size "11" should be used.
(iii) The print out of the Application should be in Black ink only.
(iv) The form should be printed on good quality A4 size paper on one side only.
(v) The format of the form must not be changed.
(vi) It must carry the serial number of the form obtained from the Sales Tax Department on payment of Rs.100.
(vii) Both the computer generated form and the blank form 108 obtained from the Sales Tax Department must be
duly signed by the authorised signatory and submitted together duly fastened.
To whom to apply
The registered dealers (under BST Act and CST Act) have to apply to their Assessing Officers' In case of the dealers
who have not been assigned any Assessing Officer, the application should be made to the concerned Divisional joint
Commissioner (Adm'). All dealers who have obtained registration under the MVAT Act should apply to the concerned
registering authority.
Unique TIN
In case the dealer is holding more than one Registration Certificates, he has to apply for the TIN to the officer in
charge of principal place of business. The dealer will be issued a unique TIN for all places of business in Maharashtra.
Surrender of Registration Certificate
The dealer has to surrender the Registration Certificate with the Form 108. In case the dealer is holding more than
one R.C. then for his all place of business. He must submit all the original Registration Certificate including
Registration Certificates for additional place of business to that officer.
Surrender of Form C, E1, E2, F and H
The dealers registered under the Central Sales Tax Act must surrender all the statutory forms (C Form, F Form, E1 &
E2 Form, Form H) unused as on date of application. The dealer also have to submit a statement of utilisation of last
issued forms. Unutilised forms, which are not surrendered, will not be valid for purchases made on or after 1-1-2005.
Not to surrender Certificate of Entitlement
Dealers having certificate of Entitlement under Exemption or Deferral should not surrender the Certificate of
Entitlement along with the application for TIN' However he should *mention all his entitlement certificate numbers in
the application.
When TIN will be issued?
The TIN will be issued on or before 15-3-2006.
Consequences of failure to apply
If a dealer fails to apply within the prescribed period, his existing Registration certificate would be automatically
invalid with effect from 1st January 2006' In other words he will become unregistered dealer from 1st January, 2006'
The circular makes clear that no administrative relief would be granted to such dealers.
INVOICE
Under VAT system Invoice plays very important role. Without invoice the buying dealer cannot take
credit of the tax paid by him on purchases. 5.2. Tax Invoice and memorandum of Sales (Section 86)
Issue of Tax Invoice

When a registered dealer sells any taxable goods to another registered dealer, he shall issue to the purchaser a tax
invoice containing the details required under sub-section 2 of this section. The dealer has to keep the copy of the tax
invoice three years from the end of the year in which the sale took place. (Sub-section 1)
The tax invoice should contain the following particulars:
(i) The words "tax invoice" in bold letters at the top or at any prominent place.
(ii) The name, address and registration certificate number of the selling dealer as well as the name and address of
the purchasing dealer.
(iii) An individual serialised number and the date on which the tax invoice is issued.
(iv) Description of the goods, the quantity or as the case may be, number and price of the goods sold and the amount
of tax charged thereon indicated separately.
16
MVAT Act 2002
(v) Signed by the selling dealer, or authorised person. (Sub-section 2)

Issue of Cash Memo
If the registered dealer sells any goods, he may issue at his option a bill or cash memorandum serially numbered,
signed and dated by the dealer or his authorised agent. The other particulars to be given in the bill or cash
memorandum can be prescribed. The duplicate copy of the bill or cash memorandum to be preserved for a period of
three years from the end of the year in which the sale took place. If he issues a cash memo or bill, he shall not collect
separately on such sale. (Sub-section 3)
Issue of Tax Invoice not applicable to Composition Cases
Provisions of Sub-section 1 or 2 shall not apply to a dealer who is paying tax by way of composition under Subsection
(1) or (2) of Section 42. (Sub-section 4)' However dealers carrying out works contract and opting for composition
scheme can issue Tax Invoice.
Tax Invoice or Cash Memo/ Bill Compulsory if value is more than Rs.50
A registered dealer shall in respect of every sale made by him issue either a tax invoice or bill or cash memo as
provided above. (Sub-Section 6). Section 86 has been amended to the effect that if the value of goods is Rs. 50 or Less
the dealer need not issue Invoice or Bill. It is provided that the counterfoil or duplicate of bill or cash memorandum
has to be signed and dated and have to be preserved it for a period of three years from the end of the year in which
the sale took place.
Requirements of Invoice
Every dealer who has to issue a bill or cash memorandum in respect of goods sold or supplied shall specify the
following in the bill or cash memorandum:
(vii) The full name
(viii) Style of his Business.
(ix) Address of his place of business.
(x) The E-Mail address if any.
(xi) The number of his certificate of registration.
(xii) The Particulars of the goods sold.
(xiii) The Sale Price.
In the case of Tax Invoice, it has to clearly state at the top of the invoice the words 'TAX INVOICE'. The Maharashtra
Tax Laws (Levy and Amendment) Act,2010 has amended clause (b) of Sub-section 2 to the effect that the invoice
should have the Registered Number of the purchasing dealer over and above the name and address of the purchasing
dealer. It is to be noted that if the invoices issued after 1st May,2010 does not contain the purchasing dealer's
registration number, then he cannot claim the input credit. This amendment is effective from the 1st May, 2010.
Declaration - Tax Invoice
If it is a Tax Invoice, the following certificate shall be given in the invoice:
"I/We hereby certify that my/our registration certificate under the Maharashtra Value Added Tax Act, 2002 is in force on
the date on which the sale of the goods. Specified in this tax invoice is made by me/us and that the transaction of the
sale covered by this invoice has been effected by me/us".
Declaration - Invoice of Unit having exemption
Every dealer who is enjoying exemption from paying tax has to comply with all the requirements given above and he
has to give the below mentioned certificate:
"I/We hereby declare that sale of goods evidenced by this invoice is exempt from the whole of sale tax in my/our hands
on account of the Certificate of Entitlement bearing No. ______ duly granted to us and as such the purchaser shall not be
entitled to claim any set-off in respect of this transaction under provision of Maharashtra Value Added Tax Act, 2002 or
the rules framed hereunder".
Declaration Cash Memo
If the dealer liable to pay tax under this Act sells any goods to any person other than registered dealer, he has to issue
a bill or cash memorandum. It should be serially numbered, signed and dated and it should contain the following
details:
(i) The full name and style of his business.
(ii) The address of the place of business.
(iii) The number of his Certificate of Registration.
(iv) The particulars of the goods sold.
(v) The sale price.
It should carry the following declaration:
"I/We hereby certify that my/our registration certification under the Maharashtra Value Added Tax Act, 2002 is in force
on the date on which sale of goods specified in this tax invoice is made by me/us and that the transaction of
sale covered by this bill/cash memorandum has been effected by me and it shall be accounted for in the turnover of
sales filing my return."
Invoice issued by SEZ Units
The invoices to be issued by SEZ Units, EOUs, STP Units, EHTP Units and BTP Units should contain the following
declaration:
17
MVAT Act 2002
The Government Order, Finance Department, No. VAT-1505/CR-122/Taxation-1, dated 1st April, 2005 deal with sale
between SEZ Units, EOUs, STPs etc. Where the tax invoice or as the case may be, bill or cash memorandum is issued
in respect of resale of goods which are manufactured by a dealer, whose sales are exempted from payment of tax, the
tax invoice or as the case may be, bill or cash memorandum shall, in addition to the certificate referred to in sub-rule
(1) or, as the case may be, sub-rule (3), contain a declaration as given below:
"I/We hereby declare that the first sale of the goods sold under this tax invoice/bill cash memorandum is exempted
from whole of tax in the hands of the manufacturer under entry (1) or entry (2) of the Schedule appended to the
Government Order, Finance Department No. VAT-1505/CRl22/Taxation-1, dated 1st April 2005".
Preservation of Invoices etc. in electronic Form
Dealer may apply to the Commissioner to permit him to maintain the records of the bills or cash memorandum on
such electronic system as may be approved by him. If such permission is granted, the dealer shall be exempted from
keeping counterfoils or duplicates of the bills or cash memorandum and signing the bills or cash memorandum.
More than 2.5 lakh Invoices
Trade Circular No. 23T of 2007 dated 12th March, 2007 has stipulated that dealers, who have issued invoices, bills
or cash memoranda in the immediately preceding year exceeding 10 lakh, are eligible to apply for permission to
preserve the invoices, bill etc. in Electronic Form. Trade Circular No. 11-T of 2008 dated 4th April, 2008 allows the
dealer who have issued invoices, bills or cash memoranda in the immediately preceding year exceeding 2.5 lakh, to
apply for permission to preserve the invoices etc. in Electronic Form.
Conditions for Preservation of Invoices in Electronic Form
The Department has issued Circular No. 23-T dated 12-3-2007 prescribing conditions to be fulfilled by the dealers to
get approval under Section 86(5) for maintaining the invoices in electronic form. The conditions are:
(i) The approval will be granted in only those cases wherein the number of bills or cash memoranda issued by the
selling dealer in the immediately preceding year has exceeded Rs. 10 lakh.
(ii) The selling dealer will furnish a monthly abstract in a prescribed format to the authority specified at the time of
grant of approval.
(iii) The selling dealer will undertake to preserve the bills or memoranda in electronic format for 3 years from the end
of the year to which they relate.
Imprisonment for Issue of False Invoice etc.
The Maharashtra Tax Laws (Levy, Amendment & Validation) Act 2011 has inserted sub-section 1A to section 74. It
provides punishment of rigorous imprisonment for a term which shall not be less than one year but which may
extend to two years and with fine in the following cases:
(i) Issue of invoice or production of false invoice knowingly with the intention of defraud revenue and thereby
making a false claims any other deduction that result into reduced tax liability or enhances the amount of
refund;
(ii) Abetting any of the aforesaid offences.
Preservation of Invoices, Cash Memos & Bills
The Maharashtra Tax Laws (Levy, Amendment & Validation) Act 2012 has amended the section 86. This is effective
from 1st May2012. According to the amendment, copy of invoices, bills and Cash memo has to be maintained for
eight years.
Set-Off or Credit of tax paid on the goods purchased is the main ingredient of Value Added Tax
System. Set Off rules under this Act are very liberal compared to the Bombay Sales Tax Act. In
the case of most of the other States there were no Set Off mechanism under their sales tax laws
and Set Off has been introduced under the Vat Laws of various States.
SET- OFF
Set-Off in Respect of Purchases made in the Periods Commencing on or After 1st April 2005:
Rules 52 and 53 are the most important Rules under this Act. The important points are:
(i) Only Registered Dealers are eligible for Set Off. The dealer should be a registered dealer at the time of purchase or
entry of goods. This condition has been changed with effect from 8th September, 2006. According to this
amended condition, the dealer is eligible to claim Set-Off of tax paid on purchase of goods effected from registered
dealer even during the period when he was unregistered dealer. The conditions in this respect are the goods are
purchased or entry is effected on or after the 1st April of the year in which the dealer has obtained registration
and, (a) the goods are treated as capital assets by the dealer and have not been sold before the date of effect of
registration, or
(b) the goods are not treated as capital assets and have not been sold before the date of effect of registration, or
(c) the goods are not treated as capital assets and have been used or consumed in manufacture and the
manufactured goods have not been sold before the date of effect of registration, or
(d) the dealer was a registered dealer at the time of such purchase or entry.
(ii) The aggregate of the following sums are eligible for Set off:
a) Tax paid separately paid by the dealer on purchase of the capital goods and other goods debited to profit and
loss account, trading goods, raw materials, parts, components, spares, packing materials and fuel.
b) Entry tax paid on the entry of motor vehicles under the Maharashtra Tax on the Entry of Motor Vehicles into
Local Areas Act.
c) Entry tax paid on entry of goods under the Maharashtra Tax on the Entry of Goods into Local Areas Act,
18
MVAT Act 2002
(iii) Set Off is not available if Set Off is availed under Rule 31 i.e. Set Off on goods held in stock as on 31st March
2005.
(iv) We have to note that Tax Invoice is must to claim the Set Off and it can be claimed as soon as goods and Tax
Invoices are received and it can be utilised to pay the tax to the Government.
'Sales Tax' has been replaced with 'tax' retrospectively with effect from 1st April, 2005 in Rule 52. Due to this
retrospective amendment, if the works contractor has charged composition tax, the employer i.e.' contractee can avail
Set Off if otherwise eligible.
Reduction of Set Off
In certain cases full Set Off is not available and the dealer has to forgo certain percentage of purchase price according
to Rule 53. Rule 53 has been amended with effect from 1st April, 2007.
With effect from 1st April, 2OO7 lax payable under Central Sales Tax Act against Form C has been reduced to 3% by
the amendment carried out by the Finance Act, 2007. In order to align with the rate of reduction in the case of
Branch Transfer etc., with the tax payable in the case of Inter State sale against Form C, this amendment has been
made.
With effect from 1-6-2008, the rate applicable in the case of Inter State sale against Form C has been reduced to 2%.
By Notification dated 23rd October, 2008, the Maharashtra Government has amended the Rule 53 to align with the
reduced rate of. 2o/o in the case Branch Transfer etc. Moreover any reduction in the rate of CST under Section 8(1)
will be automatically reduce the retention rate in the case of Branch Transfer etc. without any amendment to
Maharashtra Value Added Tax Rules.
(i) Fuel - In the case of fuel 3% of the purchase price is not available for Set Off.
(ii) Manufacture of Tax Free Goods - If the dealer manufactures any tax free goods, then 3% of the purchase price of
the goods used for manufacturing tax free goods is not available for Set Off. This 3% has been reduced to 2%
w.e.f. 1-6-2008.
Sugar and Fabrics: Sugar and fabrics to which Entry 46 of Schedule A applies will not be treated tax free
goods for the purpose of this rule provided these goods are sold in the course of export out of the territory of India
and the export is covered by Section 5 of the Central Sales Tax Act, 1956. This Rule has been amended to the
above effect retrospectively and it is effective from 1st April, 2005.
By Notification dated 23rd October, 2008, this rule has been amended. As per the amended rules
manufacturers of all tax free goods specified in Schedule A, who export the goods out of India will be able to claim
full set off without any reduction as stated above [Rule 53(2)].
Packing Materials used by Re-seller of Tax Free Goods: A re-seller of tax free goods using taxable packing
material will forgo 2% with effect from 1-6-2008.
(iii) Branch Transfer
The Maharashtra Value Added Tax (Second Amendment) Rules 2012 (issued on 31-03-2012) has amended Rule
53 w.e.f. 1st April2012, in case of transfer of goods by way of Branch Transfer or Stock transfer, the dealer has to
forgo 4% i.e. it has been increased from 2% to 4%. It is also applicable in the case of transfer of tax free goods
packed in taxable materials with regard to packing materials.
In the case of Branch Transfer i.e. Stock Transfer of goods, 3% of the purchase price of the corresponding Taxable
goods used in manufacturing goods transferred to Branch shall not be eligible for Set Off. With effect from 1-62008, only 2% is not eligible for set off. Branch transfer means transfer of goods to Depot' Branch, Head Office,
Consignment Agent, other Manufacturing Units of the dealer situated outside the State of Maharashtra. However
if goods are transferred to Branch situated outside India, this rule is not applicable' In the case of capital goods
used for manufacturing goods which are transferred, the dealer need not forgo 1% of purchase price of capital
goods' In other words in the case of capital goods full Set Off is available even if it is used for manufacturing goods
which are transferred to Branch, Depot etc' situated outside the State.
Schedule B Goods: In the case of Branch transfer of Schedule B goods, the dealer has to forgo 1% of the
purchase price of the corresponding taxable goods' Schedule B covers precious metals such as gold, silver etc. if
gold articles are branch transferred , then the dealer has to forgo 1% of the purchase price of gold used in
manufacturing the gold articles' This Rule has been amended to the above effect retrospectively and it is effective
from 1st April, 2005.
(iv) Works Contract Composition Scheme - In the case of goods (whether as goods or in some other form) utilised in
Works Contract and the dealer opts for Composition Scheme, he is entitled for Set Off al 64%o of the tax paid on
goods utilised in the works contract. Section a2$) of the Act refers to the Composition Scheme. In this
Composition Scheme the dealer can pay 8% composition tax on the contract value. The works contractor is
eligible for normal set off on capital goods and goods in which property is not transferred to the contractee e.g.
consumables.
By Notification dated 23rd October, 2008 an Explanation to Rule 53(4) has been added. According to this
Explanation if the principal works contractor has opted for composition of tax, the sub-contractor's set off in
respect of the concerned contract will also be calculated as explained above. The Commissioner has in his
circular stated this amendment is clarificatory. Effective from 21st June, 2006 contracts are divided in to two
category i.e. construction contracts and other contracts. In the case of construction contracts, the composition
rate is 5% and in other cases it is 8%. If the works contractor opts for payment composition tax in the case of
construction contract, he has to forgo 4% of the purchase price of the goods in which property is transferred to
the contractee. As stated above he need not forgo in the case of capital goods and goods in which property is not
transferred to the contractee e.g. consumables. As far as other contracts are concerned, the dealer who has opted
for composition scheme has to pay 8% tax on the contract value and he is eligible for Set Off at 64% of the tax
paid on goods utilised as stated above.
19
MVAT Act 2002
(v) Discontinuance of Business - If the business in which the dealer is engaged is discontinued, then, Set Off on
purchases of goods held in stock at the time of discontinuance of the business shall be disallowed. In other word
the Set Off availed has to be reversed. This rule is not applicable to capital goods. If the business is transferred or
disposed of and is continued by any other person, then, this rule is not applicable.
(vi) Reversal of Set off - The dealer shall deduct the amount to be reversed under this rule from the amount of Set Off
available in respect of the period in which the contingencies specified in this rule occur and claim only the
balance amount as Set Off. If the amount so required to be deducted exceeds the Set Off available in respect of
the period, he shall pay an amount equal to the excess at the time when he is required to pay the tax in respect of
the period.
(vii) Receipts on account of sales less than 50% of total receipts - Rule 53(6) has been amended by the notification
dated 23rd October, 2008. This amendment effective from 8th September, 2006. This sub-rule deals with dealers
having receipts on account of sale less than 50% of total receipts into hotel or restaurant and others.
Hotel or Restaurants
This rule is applicable only if the hotel or restaurant is not covered under composition scheme. The dealer can
claim set off only:
(i) on the purchases corresponding to the food and drinks (whether alcoholic or not) which are served, supplied
or sold or resold, and
(ii) on the purchases of capital assets and consumables pertaining to the kitchens and sale, service or supply of
the food and drinks.
Others
Other dealers shall be entitled to claim set off only on those purchases effected in that year the corresponding
goods are sold or resold within six months of the date of purchase. It includes inter-State sale also. It specifically
excludes stock transfer i.e. transfer to branch or consignment agent situated outside the State. This rule is
applicable to packing materials used to pack the material sold or transferred also. These dealers are entitled to
claim set off on plant and machinery which are treated as capital assets and parts, components and accessories
of the capital goods and consumables, stores and packing materials in respect of three years starting from the
end of the year containing the date of effect of the certificate of registration, However this is not available to a
dealer principally engaged in doing job work or labour work.
In simple terms 'receipts' includes all receipts pertaining to all activities including business activities carried out
in the State but excluding ,Branch transfer. It includes inter-State sale also.
(viii) Office Equipments and Set Off - Dealers, who are not in the business of leasing of office equipment. furniture and
fixtures, are entitled to Set Off on office equipments, furniture and fixtures if they have treated these items as
capital goods. However they have to forgo 3% of the purchase price of these items when claiming Set Off. This is
effective from 1-4-2007.
(ix) Goods used in the Distribution or Transmission of Electricity - The dealers holding a license for transmission or
distribution of the Electricity under the Electricity Act, 2003 are entitled for Set Off for the tax paid in respect of
goods used (including the goods treated as capital goods) in the distribution or transmission of electricity.
However they have to forgo 3% of the purchase price with effect from 1-4-2008.
With effect from 1-6-2008, the retention rate has been reduced to 2%. Electricity generating companies also
eligible to avail this benefit with effect from 1-4-2005.
(x) Corresponding Goods - By notification dated 23rd October, 2008, Sub-rule [2)(a) has been added. It provides that
for the purpose of sub-rule (1) i.e. fuel, sub-rule (z)(a) i.e. tax free goods and sub-rule 3 i.e. Branch transfer, the
reference to corresponding goods on the purchase of which the set off is to be reduced, shall not include
consumables, stores or goods treated as capital assets, parts, components and accessories of capital assets and
goods used as fuel. It further provides that the expression corresponding goods' will include goods which are resold or branch transferred or are used in relation to the manufacture of goods sold or dispatched which are
contained in the concerned goods, so sold, resold or dispatched. It also provides that the packing material used
along with the goods so sold, resold; or dispatched is also included in the expression corresponding goods.
(xi) Calculation of Ratio - Sub-rule 9(b) has been added by the notification dated 23rd October, 2008. It provides the
method of working out the proportionate ratio for the purpose of rule 53(2) i.e. Tax free goods, if it is not possible
to ascertain the purchase price of the corresponding taxable goods. According to this sub-rule, the ratio of Sale
Price of the taxable goods and the tax free goods should be adopted. Where there is no sale price, the ratio should
be value of taxable goods and tax free goods. It also provides that for the purpose of Sub-rule (3) i.e. Branch
Transfer, the value of the goods should include any excise duty as it appears in the books of account of the goods
dispatched to the branch.
Non-admissibility of Set Off
This Rule has been revamped by the amendment carried out by the Notification No.STR.1506/CR-38/Taxation -1
dated 8th September 2006. The amended provisions are given below. Set Off is not available in the following cases:
(i) Motor Vehicles - Purchases of Motor vehicles (being passenger vehicles) which are treated by the claimant dealer
as capital assets and parts, components and accessories of the motor vehicles. The expression 'Motor Vehicles'
and 'Goods Vehicles' shall have meaning as given in the Motor Vehicles Act, 1988. However Set Off is available on
Motor Vehicles to the dealers in Motor Vehicles or the dealer who gives motor vehicles on lease.
(ii) Motor Sprits - Tax paid on purchases of motor sprits as notified for the purposes of Section 41(4) is not eligible for
Set Off. However tax paid on purchases of motor sprits resold or sold in the course of inter-State trade or in the
course of export or are sent to branch, deport or consignment agent is eligible for Set Off.
(iii) Crude Oil - Purchases of crude oil by an oil refinery if such crude oil is used for refining is not eligible for Set Off.
20
MVAT Act 2002
(iv) Purchases by certain dealer - Purchases by the Shipping Companies are not eligible for Set Off.
(v) Manufacture of Scrap only - Purchases of consumables or capital assets made by a dealer who principally
engaged in doing job work or labour work and is not engaged in the business of manufacturing of goods for sale
by him and only waste goods or scrap goods obtained as incidental to job work and sold is not eligible for Set Off.
(vi) Entitlement Certificate Holders- Any purchases made by dealer who is holding Entitlement Certificate to claim
incentives by way of exemption or deferment and being purchases of raw materials as defined in Rule 58 are not
eligible for Set off.
(vii) Purchase of Intangible Assets - Any purchases of goods of incorporeal or intangible nature are not eligible for Set
Off. However purchases of the following intangible assets are eligible for Set off:
a) import license, export permit or license or quota, credit of duty entitlement pass book, SIM cards and Duty
Free Replenishment Certificate;
b) software in the hands of a dealer who is trading in software;
c) Copyright which is resold within twelve months of the date of purchase.
(viii) Works contract resulting immovable property - Purchases effected by way of works contract where the works
contract results in immovable property other than plant and machinery.
(ix) Purchases of any goods - Purchases of any goods by a dealer, the property in which is not transferred [whether as
goods or in some other form) to any other person, which are used in the erection of immovable property other
than plant and machinery.
(x) Purchases by Mandap Keeper who opted for Composition Scheme - Purchases made of mandap, tarpaulin,
pandal, shamiana, decoration of such mandap, pandal or shamiana, and furniture, fixtures, lights and light
fittings, floor coverings, utensils and other articles ordinarily used along with a mandap, pandal or shamiana if
the purchasing dealer has opted for Composition Scheme.
(xi) Purchases of Capital goods by Hotels - Purchases made on or after 1st April 2005 by a hotelier, which are treated
by him as capital assets and which do not pertain to the supply by way of or as part of service or in any other
manner whatsoever of goods, being food or any other article for human consumption or any drink [whether or not
intoxicating].
Requirements to avail Set Off
Conditions to avail Set Off - With effect from 8th September 2006 i.e.' after the amendment of the Rules goods
purchased or entered Maharashtra after 1st April of the year in which the dealer has got registered and used after
obtaining registration alone eligible for Set Off. As stated earlier this rule has been changed with effect from 8th
September, 2006. According to this amended condition, the dealer is eligible to claim Set-Off of tax paid on purchase
of goods effected from registered dealer even during the period when he was unregistered dealer. The conditions in
this respect are the goods are purchased or entry is effected on or after the 1st April of the year in which the dealer has
obtained registration and, a) the goods are treated as capital assets by the dealer and have not been sold before the date of effect of
registration, or
b) the goods are not treated as capital assets and have not been sold before the date of effect of registration, or
c) the goods are not treated as capital assets and have been used or consumed in manufacture and the
manufactured goods have not been sold before the date of effect of registration, or
d) the dealer was a registered dealer at the time of such purchase or entry.
To avail Set Off the following conditions are to be satisfied:
(i) The dealer shall be registered dealer under the Act or registered dealer under any earlier law.
(ii) The dealer has to maintain record of purchases in chronological order showing the following particulars:
(a) The date of purchase.
(b) Name of the selling dealer and his registration number.
(c) The number of the Invoice.
(d) Purchase price of the goods.
(e) Amount of Purchase Tax, if any, paid or payable by him in respect of the goods purchased.
(f) Amount of sales tax recovered from him by the selling dealer.
Production of Invoice etc.
The claimant dealer should produce invoice etc. if required by the Commissioner to claim Set Off on the taxes paid on
the goods held in stock.
Provisions after the Rule 55 is amended by the Notification No.STR,1506/CR-38/Taxation -1 dated
8th September 2006 is explained below:
Where a dealer has filed any return contained in a year can adjust in aggregate of :
(i) any payment made in respect of the said period before filing of the said return,
(ii) the total value of the tax deduction certificates received by him in that Period, and
(iii) the amount adjustable by way of refund adjustment order issued in respect of that period.
(A) against the tax payable according to the said return, or
(B) against the tax payable according to the return for the said period filed by him under the Central
Sales Tax Act, 1956, or
(C) against the tax payable according to the return which may be due or may become due under the
Maharashtra Tax on Entry of Goods into Local Areas Act, 2003.
After adjusting as given above, if any excess is there, he can carry forward for the purpose of adjusting in future
returns of the year for paying VAT, CST or Entry Tax' He can also claim refund of the same instead of adjusting it.
REFUND
21
MVAT Act 2002
Demand Notice and Refund

If any notice of demand is issued against the dealer under this Act or earlier law and he is eligible for refund under
this Act or earlier law, the Commissioner shall first apply the amount of refund due towards the recovery of the
amount in respect of which demand notice has been issued.
After adjusting if any balance is left, then, that amount shall be claimed as refunded by the dealer. If any notice of
demand is issued, the dealer cannot adjust the eligible refund amount against the tax payable for that period as long
as any amount in respect of which a notice has been issued remains unpaid.
First in First out Method
Where the Claimant dealer is unable to identify the goods purchased with the goods sold, or goods used in
manufacture or in packing, it shall be presumed that the goods were sold or used following First in First out Method.
Entry Tax
Entry Tax paid under the Maharashtra Tax on Entry of Motor Vehicles into the Local Areas Act or the Maharashtra
Tax on Entry of Goods into the Local Areas Act is eligible for Set Off and it will be granted as if such tax is a tax Levied
under this Act. All rules relating to Set Off including those relating to reduction in Set Off and non admissibility of Set
Off shall mutatis mutandis apply.
Reimbursement in Respect of Declared Goods Purchased (Reimbursement of TAX paid on Declared Goods)
(i) The dealer is eligible to claim reimbursement of tax under this Act if the following conditions are satisfied:
(ii) The dealer has purchased the declared goods by paying local tax under the Act.
(iii) The purchases were after the appointed day. He has resold the goods in the inter-State Trade.
(iv) He has paid sales tax under the Central Sales Thx Act, 1956.
RETURN &
PAYMENT OF TAX
department.
Under any taxing statute filing of returns and payment of tax is very important aspect.
Value Added tax system heavily depends on Self Assessment by the dealers. Under
Assessment Scheme filing of correct return is very crucial as payment of tax depends
on the return filed and in many cases they are not going to be assessed by the
Submission of Returns
Form
By Notification dated 3rd April, 2006 the Rule 17 has been amended and the amendment is effective from 1st
April2006. The table gives the Form Number and the persons who have to file these returns.
Sr.
Form
Who has to use?
No.
No.
1
231
All dealers other than dealers covered in 2 to 5.
Dealers not to use 231
(i) Dealers opted for Composition Schemes.
(ii) Dealers executing Works Contract.
(iii) Dealers engaged in leasing.
(iv) Dealers under the package Scheme of Incentives.
(v) Notified Companies.
2
232
All dealers who have opted for composition schemes except
(i) Works Contractors opting for Composition and
(ii) Dealers opting for composition for part of the business.
3
233
(i) Dealers executing Works Contracts. If a dealer executing Works Contract whether opted for
Composition or not and whether he got other business also have to file Form 233 only.
(ii) Dealers leasing goods. if a dealer engaged in leasing, he has file Form 233 only even if he has
other businesses also.
(iii) Dealers having part of the business is under Composition.
4
234
All Dealers under the package Scheme of Incentives
5
235
Notified Companies
Dealers executing works contract and filing returns in Form 234 or 235 shall in addition to the Return in Form 234 or
Form 225, file a return in Form 233. These Return Forms have to be used all returns filed after 1st April, 2006 i.e.
even for the period pertaining prior to 31st March, 2006.
Rule 2(b) provides that where no tax including penalty or interest is due and payable according to the return, then,
return is to be filed with the authority specified in this rule.
Revised Return (only one revised return can be filed as per amendment made in 2011)
The dealer who discovers any omission or incorrect statement in the return filed, may furnish a revised return at any
time before a notice for assessment is served on him or before the expiry of ten months from the end of the year
containing the period to which the return relates, whichever is earlier.
When the revised return is filed, the original return must be taken as withdrawn and substituted by the revised
return. If the assessee files application for correcting a return already filed or making amends, it will not be treated
that he has filed a revised return and if any correction is to be made in the return, revised return shall be filed.
Frequency of Filing Returns
22
MVAT Act 2002
By the Government Notification dated 31-10-2007 the Rule regarding frequency of filing the returns have been
changed. It is effective from 1-4-2008. The returns are to be filed as given below:
Sr.
Tax Liability during the year
Period of
Due Date
No.
Return
1
Rs.1 lakh or less and also had no entitlement for refund, or Entitlement 6 monthly
30 days end of
for refund during the previous Year was Rs.10 lakhs or less.
period
2
More than Rs.1 lakh but not more than Rs.10 lakhs or Entitlement for Quarterly
21 days from end
refund during previous year exceeding Rs. 10 lakhs but not more than
of quarter
Rs.10 crore
3
More than Rs.10 lakhs or Entitlement for refund for during the previous Monthly
21 days from end
Year exceeded Rs. 10 Crore.
of month
4
Retailer opting for composition scheme
6 monthly
30 days end of
period
5
Dealers registered during the year
3 monthly
21 days from end
of the period
Tax liability for the purpose of determining the periodicity of return would mean total of all taxes payable by a-dealer
in respect of all places of business in the State under the CST Act and MVAT Act after adjustment of set-off or refund
in the previous Year.
'Entitlement for Refund' means the net refund payable in respect of all places of business in the State under CST Act
and MVAT Act after adjustment of the amount of set off claimed against taxes payable under CST Act and MVAT Act.
Six monthly returns are to be file up to 30th September and 31st March.
When a dealer has to file quarterly returns in respect of his place of business for which the has obtained a Certificate
of Entitlement and has also obtained a permission to file separate returns in respect of other place of business, then
he shall file quarterly separate returns.
Filing of Return by Deemed Dealers etc
By 6th Amendment Rules 2011, dated 5-12-20111, the following amendments are carried out and these amendments
are effective from 1st April2012.
1. Deemed dealers, Customs Department, Department of Union government, Insurance & Financial Corporations,
Institutions, Banks etc. are required to file returns half yearly within 30 days from the end of half year,
2. Dealers opting for composition under section 42(1) and deemed dealers have to furnish the details of sale and
purchase for the entire year in Annexure J-1 and J-2 and other details in Annexure C and D along with second
6 monthly return within 90 days from the end of the financial year,
3. Dealers covered by (b), (c) & (d) of Rule 17, who is not required to file an Audit Report, due to turnover not
exceeding Rs. 60 lakhs will have to furnish and upload the details of sales and purchases for the entire year in
Annexure J-1 and J-2 along with the other details prescribed in Annexure G, H, I along with the last monthly ,
quarterly or six monthly returns within 90 days from the end of the financial year,
4. The provisions about uploading J-1 & J-2 and the annexure for the non-filers of the Audit Report will not apply
to the dealers covered by the composition schemes for the retailers, composition for the restaurants, caterers,
bakeries, dealers of second hand motor vehicles, vendors selling IMFL and country liquor as described in
section 42(2) and the dealers covered by the composition schemes for construction of flat, dwelling buildings,
etc.. the dealers covered by the composition scheme under the Works Contract covered by section 42(3) have to
file and upload J-1 & J-2 and other details in G, H & I
5. Dealers who are filing First or Last Return, the dealer under PSI schemes is also required to upload the details
in sales and purchases in the entire year in J-1 & J-2 along with the other details in Annexure G, H & I along
with the last quarterly return of the financial year within 90 days of the end of the financial year to which
return relates.
6. Composition dealers (excluding works contract covered by 5% or 8% scheme) who are not liable to submit
Audit Report in form No. 704 shall not be required to submit Annexure.
Late Fee
The Maharashtra Tax Laws (Levy, Amendment & Validation) Act 2012 has inserted sub-section (6) to section 20.
According to the new sub-section, if the dealer has not filed the return within prescribed time, then the dealer shall
pay by way of Late fee before filing the return Rs. 5,000. This late fee shall be in addition to any other amount payable
as per return. This is effective from the date of notified by the government.
Section 29(8) has been deleted by the above mentioned amendment act. From the date to be notified, no penalty is
leviable for late filing of returns.
Complete and Self Consistent Return
Any return shall be treated to be complete and self consistent only if the following particulars are given correctly in the
return:
ii) Turnover of Sales and purchases.
iii) Claim of Set-Off.
iv) Amount of Set Off carried forward.
v) Amount of Set-Off claimed as refund.
vi) Calculation of Tax.
vii) The cumulative quantum of benefits, amount payment of deferred, monetary ceiling, period of incentives and
refunds wherever necessary.
23
MVAT Act 2002
The name, address, registration number, period of return and the Entitlement Certificate Number etc. should be filled
in correctly
This Rule has been amended to the effect that to treat any return as complete and self-consistent, if the period for
which the return has been filed is as per Rule 17 or Rule 18 over and above the conditions already prescribed in the
Rule
Issue of Defect Memo
The Assessing Officer may examine the return filed to ascertain whether it is correct and complete. If it is not correct
or complete, the Assessing Officer may serve on the dealer a Defect Memo in writing. He has to do it within four
months of the receipt of the return.
The registered dealer who has received the Defect Memo has to rectify the deficiency and file a new correct and
complete return within ,one month from the date of the service of the Defect Memo.
If the dealer has not submitted the corrected return within one month, he shall be deemed to have not submitted the
return.
Penalty Provisions with reference to Return
Failure to File Return
Section 20 deals with filing of Return. If any person failed to file the return as required under Section 20, the
Commissioner may impose a penalty of rupees ten thousand.
However if the return is filed before the initiation of the proceedings for levy of penalty, the penalty shall be rupees five
thousand.
The Commissioner has to give the person opportunity reasonable of being heard and the order has to be in writing
(Sub-section 8 of Section 29)
Section 29(8) was amended with effect from 1-7-2009 to the effect that the penalty for failing to file the return within
the prescribed time has been reduced to Rs. 5000.
Time for payment
1. As given in Rule 17 the registered dealer has to file the return monthly, quarterly or half yearly. He shall file the
return on or-before the date prescribed for submission of return, pay tax due from him for the period covered by
the return and interest, if any, payable by him under Section 30. Section 30 deals with interest payable by a
dealer.
2. If any sum determined by way of composition of an offence under section 78 shall be paid within the time limit
prescribed in the order determining such composition.
3. The person liable to pay fine under Subsection 3 of Section 14 shall pay the same before the date specified in the
notice by the Commissioner or the Tribunal.
Method of Payment
(i) Every payment of tax, interest or penalty (payable as per return) shall be accompanied by a return cum challan.
(ii) Every payment of tax, interest and penalty not mentioned above, amount forfeited, composition money and fine
imposed shall be accompanied by a Challan.
(iii) The FORM accompanying the payment should be duly filled in, signed and verified by the payer. The amount
paid should be stated both in words and in figures.
(iv) The payment should be made in the Government Treasury and it will return the portion of the Challan marked
for the payer to the payer duly receipted and it will send the portion marked for the assessing authority to him.
(v) No payment shall be made in cash to any officer or authority appointed by or under the Act.
(vi) The installment granted under one order shall be for a period not exceeding one year. The periodicity of payment
shall not be more than one month and the instalment has to be granted inclusive of interest.
Payment of Interest on Delayed Payment of Tax
Interest at 1.25% per month or part thereof on the tax paid after the prescribed date is payable (section 30(2)and
Rule 8B). The dealers can pay in the return/challan itself the interest along with the tax paid after the due date. This
will save the dealers from botheration of making separate interest payment.
Penalty under Section 29(8) is attracted for non-filing or late filing of returns. However, no penalty under this Section
will be levied in the cases where full interest is paid suo-motto along with the tax in the late return.
Notice for Payment of tax not paid According to Return
The dealer has to pay the tax, interest or penalty as per the return or revised return. If he has not paid the amount
due as per the return or revised return, the assessing authority may serve notice on the dealer requiring him to pay
the amount due by him according to the return or the revised return.
Rounding off Tax
Any amount payable under the Act, the amount of set-off or refund due under the Act shall be rounded off to the
nearest rupee and where the amount contains a part of a rupee, it should be increased to one rupee if such part is
fifty paise or more and otherwise it shall be ignored. This section shall not apply for the purpose of collection by a
dealer of any amount by way of tax under this Act.
Adjustment of any Payment
Any amount paid by a dealer or person shall be appropriate in the order as given below:
(i) Interest.
(ii) Penalty
24
MVAT Act 2002
(iii) Sum forfeited.

(iv) Fine.
(v) Tax payable.
Exemption and Refund
The State Government has power, if satisfied that it is necessary in the public interest, to grant refund of any tax
levied and collected. Ii has to exercise the power by notification in the Official Gazette and it can impose such terms
and conditions as may be specified in the notification. The specified dealers or persons have to apply for the refund to
the Commissioner. The notification may be issued so as to have retrospective effect.
Refund of excess payment
If any dealer has paid tax, interest, penalty etc in excess, the excess amount is to be refunded to him. The refund may
be by way of deduction from the amount payable by the dealer in respect of any other period or by cash payment.
Amount to be Applied to Recover the Dues
However the Commissioner shall first apply such excess towards the recovery of any amount due in respect of which
a notice under Sub-section 4 of Section 32 has been issued, or any amount which is due as per any return or revised
return but not paid and refund the balance'
Dealer can adjust the Refund Amount against tax payable in the Subsequent Months
If any refund is due to any dealer according to the return or revised return furnished by him for any period, then it
can be adjusted by the dealer against the tax due and payable as per the returns or revised return furnished under
Section 20 for any subsequent period. However this can be done only after deducting all dues from the dealer on the
date of such adjustment.
Excess Refund and Recovery
If due to any order passed under this Act, it is found that the provisional refund is in excess of the refund due, then
the excess shall be recovered as if it is a tax due from the dealer on the excess amount interest shall be leviable at the
rate of 1.25% per month or part thereof from the date of grant of the provisional refund till the date of the order for
recovery.
VAT is a multi point Sales Tax. Due to this basic character of VAT all persons involved in
distribution chain have to collect tax and pay to the Government after availing Input Tax
Credit. Number of dealers involved shall be unmanageable. Moreover small traders also
have to maintain accounts etc. and pay tax and it will be difficult for the department also
deal with lakhs of dealers who pay very small amount. The Department would like to concentrate on the dealers who
contribute substantial amount to the exchequer. Keeping these important aspects in mind Initial exemption and
Composition Scheme have been introduced under VAT Scheme.
The Finance Minister when presenting the Budget for 2005-06 said the following regarding Composition Scheme:
"looking to the nature of their business, it is necessary to provide relief to certain categories of dealers from too much
of paper work accordingly there will be new composition scheme for retailers . . . Simple composition schemes will
also be made available to restaurants, bakeries and. Works contractors."
COMPOSITION
SCHEME
Exemption
Retailers having Turnover of Rs. 5 lakhs are exempt from Registration and other requirements of the Act. Dealers who
had less than Rs. 5 lakh turnover for the year ended 31-3-2005 are not required to register. They are out of the
provisions of this Act. However if a dealer imports goods from other States or other Countries then the exempted
turnover is Rs. 1 lakh only.
Provisions governing Composition Schemes
Composition Schemes are governed by Section 42, Rule 85 and Notification No. VAT-1505/CR-105/Taxation 1 dated
1st April, 2005.
Composition Scheme for Retailers
Section 42 of the Act and Rule 85 deal with Composition Schemes.
It provides that:
(i) The State Government may provide for a scheme of composition of tax payable by the dealers who are engaged in
the business of reselling at retail of any goods or merchandise.
(ii) The Government by a notification in the Official Gazette has to provide the scheme subject to conditions and
restrictions.
(iii) For the purpose of this section, a dealer shall be considered to be engaged in the business of selling at retail if
9/10th (i.e. 90%) of his turnover of sales consists of sales made to persons who are not dealers.
(iv) If any question arises as to whether any dealer is a retailer or not, it is to be referred to the Joint Commissioner
and he has to decide the matter after hearing the dealer and his decision shall be final.
(v) Dealers availing Composition Scheme are not eligible for issue of Tax invoice except in the case of Works
Contract.
(vi) They are not entitled for Input Credit.
Turnover Limit
25
MVAT Act 2002
Retailers who had a turnover up to Rs' 50 Lakh in the previous year or retailers not required to be registered in the
previous year under BST Act or MVAT Act are eligible for Composition Scheme. The composition scheme will be
available up to Rs. 50 Lakh and when turnover exceeds, he has to pay normal tax.
Here turnover includes sale of taxable goods and tax free goods but excludes sale of liquor, drugs and motor spirit.
Who is Retailer
A dealer shall be considered as retailer if 9/10th i.e. 90% of his turnover of sales made to persons who are not dealers.
Likewise packing materials can be purchased from unregistered dealers.
Not Eligible
Composition scheme is not applicable to the following dealers:
(i) Manufacturer.
(ii) Importer i.e. persons buying under Inter-State Trade or importing from other countries.
(iii) Taxable goods are purchased from Unregistered Dealers. If the dealer buys tax free goods only from a
unregistered dealers, he is eligible for set-off.
(iv) Retailer of liquor including liquor imported from out of India, Indian made foreign liquor or country Liquor
(v) Resellers of Drugs covered by the Entry 29 of the schedule C
(vi) Resellers of Motor Sprits notified by the state Government under Section 41(4) of the Act.
Composition Tax Rate
5% on the difference of the total of all sales and of all purchases during the six month period provided the turnover of
sales of the dealer consists of schedule A and goods taxable goods at the rate of 4% is more than 50% of the total
turnover of the sales. In other cases, the composition tax will be 8%. In other words, the retailers dealing in goods
with tax rate of 12.5% only or having more than 50% turnover of goods having rate of 12.5% have to pay 8%
composition tax.
Turnover of purchases includes tax paid by the dealer on purchases. Turnover of Purchases and Sales also includes
tax free goods. However any credit received by the dealer from his vendor is to be deducted from the purchase
turnover.
The turnover of the following goods is to be excluded in Turnover of Purchases and Sales:
(i) Foreign Liquor [Rule 3(6)(1) of the Bombay Foreign Liquor Rules, 1953].
(ii) Country Liquor[As defined in Maharashtra Country Liquor Rules, 1973].
(iii) Liquor imported from any place outside the territory of India. [Rule 3(a) of the Maharashtra Foreign Liquor
(Import and Export) Rules, 1963].
(iv) Drugs covered by the Entry 29 of the Schedule C of the Act.
(v) Motor Sprits notified by the State Government under Sub-section (4) of Section 41 of the Act.
Conditions
(a) The dealer should not collect tax separately on sales.
(b) The dealer is not eligible for Set-Off i.e. Input Tax Credit.
Option to be exercised
If the dealer wants to avail Composition Scheme, he has to apply in Form 4. The application is to be made before 1st
July or at the time of application for Certificate of Registration in the case of new dealers. Once option is exercised, it
cannot be changed during the year and it can be changed in the next financial year only.
No tax invoice
The dealer cannot issue Tax Invoice. As stated earlier he cannot collect the tax separately but he has to issue cash
memo or bill.
Issue of Cash Memo or Bill
The dealer has to issue Bill or Cash Memorandum with the following particulars and declaration:
(a) Should be serially numbered.
(b) Signed and dated.
(c) Give full name and style of business.
(d) Address of place of business.
(e) Number of the dealer's Certificate of Registration.
(f) Particulars of goods sold i.e. quantity/number etc., and sale price.
(g) The Cash Memo/Bill should carry the following declaration:
I/we hereby certify that my/our registration certificate under the Maharashtra Value Added Tax Act, 2002 is in force
on the date on which sale of goods specified in this bill/cash memorandum is made by we/us, and that the transaction
of sale covered by this bill/cash memorandum has been effected by me and it shall be accounted for in the turnover of
sales while filing my returns.
Returns
Under 17(4) every retail dealer who has opted for composition shall file six monthly returns in Form 232 within 25
days from the end of the period of six months to which return relates.
Special Composition Scheme for Eating Houses etc.
The State Government may also provide for a scheme of composition of tax payable by dealers who are running any-
26
MVAT Act 2002
(i) eating house,

(ii) restaurant,
(iii) hotel,
(iv) refreshment room, or
(v) boarding establishment which is generally accessible to the members of the public at large,
(vi) caterers who serve food and non-alcoholic drinks,
(vii) bakeries,
(viii) dealers in second-hand motor vehicles (Sub-section (2) of Section 42).
Restaurants, Caters etc.
Who is eligible
Restaurants, Clubs, Hotels, Eating House, Refreshment Room, Boarding Establishment, Factory Canteen, and
caterers are eligible to avail Composition Scheme.
Who is not eligible
Hotels or part of them having gradation of "Four Star" and above are not eligible for Composition Scheme.
What is covered
Aggregate of sales of food and non-alcoholic drinks, served for consumption at or in the vicinity of any restaurant,
hotel, eating house, refreshment room or boarding establishment, factory canteen or in any club.
Restaurants, eating house' refreshment, room, boarding establishment, factory canteen' Clubs' Hotels and Caterers
who are registered are liable to pay composition tax at 8%. In the case of unregistered dealers' composition rate
continues to be 10%.
Conditions
(a) The dealer should not collect tax separately on sales.
(b) The dealer is not eligible for Set-Off i.e.' Input Tax Credit'
If the dealer wants to avail Composition Scheme' he has to apply in Form l and in the case of caterer he has to apply
in Form 2. The application is to be made before 15th July 2005 or at the time of application for Certificate of
Registration' If the option is once exercised it cannot be changed during the financial year' It can be changed in the
next financial Year only'
Restaurant v. Caterer
if a dealer serves food or drinks in his place i.e.' Restaurant or Hotel, Club etc, he can avail Composition Scheme as
Hotels, Restaurant etc' If he serves the food and nonalcoholic drink at any place other than a restaurant' then also, he
is governed by-the Composition Scheme and only difference is that he has to apply in Form 2'
Returns
Under 17(4) every Restaurant or caterer who has opted for composition scheme shall file six monthly returns in Form
232 within 25 days from the end of the period of six months to which return relates.
Restaurant-Cum-Bar
Restaurant-cum-bar can opt for Composition Scheme. However tax payable on alcoholic drinks cannot be
compounded. He can compound only tax on sale of food and non-alcoholic drinks only. He has to file separate returns
in Form 201 for turnover of alcoholic drinks.
Set-Off
The dealer who has opted for Composition Scheme is not eligible for Set-Off. However when he sells alcoholic liquor,
he will be paying normal rate of tax and will be eligible for set-off on the purchases of liquor.
Composition Scheme for Bakers
Who is covered
Bakers are covered under this Composition Scheme. In other words persons who do not bake but buy the bakery
products and sell them are not covered under this Composition Scheme.
Eligible products
Sales of bakery products which are manufactured by the baker himself are eligible. However for calculating the
composition tax, turnover of sales of baked goods imported out of Maharashtra State is also to be included in the
turnover of sales of goods.
4% of the turnover of sales in the case of registered dealer up to Rs. 30 lakh and 6% of the turnover of sales in the
case of an unregistered dealer. Above Rs. 30 lakh he has to pay normal tax
Condition
27
MVAT Act 2002
(a) The dealer shall be certified by the joint Commissioner for the purpose of claiming benefit under this
Composition Scheme.
(b) The dealer is not eligible for Set-Off i.e.' Input Tax Credit.
(c) The turnover of sales of bakery products including bread has not exceeded Rs' 30 lakh in the previous year
or if the dealer was not liable to pay tax in the immediately preceding year' then turnover not exceeding Rs.
30 lakh in the current year is eligible for Composition' When the turnover exceeds Rs' 30 lakh' he has to pay
normal tax on the amount exceeding Rs. 30 lakh'
(d) The dealer cannot issue Tax Invoice'
(e) The dealer should not collect tax separately on sales'
(f) If the dealer fails to comply with the conditions imposed by the joint Commissioner when granting
composition, the certificate issued by him shall be Liable to be cancelled.
If the dealer wants to avail Composition Scheme' he has to apply in Form 3. The application is to be made before 15th
July 2005 or at the time of application for Certificate of Registration' If the option is once exercised it cannot be
changed during the financial year' It can be changed in the next financial Year only'
Returns
Under 17(4) every dealer who has opted for composition shall file six monthly returns in Form 232 within 25 days
from the end of the period of six months to which return relates.
Composition scheme for Dealers in Second Hand Motor Vehicles
Who is covered
Registered dealers selling second hand passenger motor vehicle, whether or not sold after reconditioning or
refurbishing, are covered by this Composition scheme provided the dealers principal business is of buying or selling
of motor vehicles.
12.5% on 15% of the sale price of the vehicle.
Condition
(a) The dealer shall be certified by the Joint Commissioner for the purpose of claiming benefit under this
Composition Scheme.
(b) The dealer has to prove to the satisfaction of the Commissioner that the Entry Tax in respect of the vehicle
has been paid or the vehicle is registered in Maharashtra and registration mark of Maharashtra State was
allotted to the vehicle.
(c) The dealer cannot issue Tax Invoice.
(d) The dealer should not collect tax separately on sales.
Set-Off
The dealer shall be entitled for set-off of tax paid on purchases of materials used for reconditioning or refurbishing of
the vehicle. However he shall not be eligible to claim set-off of sales tax or of entry tax paid on purchase of second
hand motor vehicle.
If the dealer wants to avail Composition Scheme' he has to apply in Form 5. The application is to be made before 15th
July 2005 or at the time of application for Certificate of Registration' If the option is once exercised it cannot be
changed during the financial year' It can be changed in the next financial Year only'
Returns
Under 17(4) every dealer who has opted for composition shall file six monthly returns in Form 232 within 25 days
from the end of the period of six months to which return relates.
Composition Scheme for Works Contracts
The State Government may provide scheme of composition of payment of tax on works contract at 8% of the value of
sales effected.
The contractor can avail the Composition Scheme for all his contracts or he can avail the scheme for selected
individual contracts.
The composition tax shall be calculated at the total value of the" Works Contract without any deduction'
This Act covers Works Contract also and there is no separate enactment dealing with Works Contract. All provisions
of the Act and Rules are applicable to Works Contracts also. However due to the peculiarity of Works Contracts some
special provision relating to Sale Price, Tax Deducted Source, Set-Off etc. are provided in the Act rule.
The Act which was repealed by this Act was called as "The Maharashtra Sales Tax on the Transfer of Property in
Goods involved in the Execution of Works Contract Act, 1989". The name itself suggest 'sale' in Works Contract.
With effect from 20th June, 2006 the following definition of 'Works Contract' has been inserted in the Explanation to
Works Contract namely, an agreement for carrying out for cash, deferred payment or other valuable fabrication,
28
MVAT Act 2002
erection, installation, fitting out, improvement, modification, repair or commissioning of any movable or immovable
property. This definition is different from the definition provided in the CST Act.
Definition under CST Act
The Central Sales Tax Act being amended to include the following definition in that Act. "Works Contract" means a
contract for carrying out any work which includes assembling, construction building, altering, manufacturing,
processing, fabricating, erection, installation, fitting out, improvement, repair or commissioning of any movable or
immovable property."
In the case of Works Contract Sale can be defined as transfer of property in goods, whether as goods or in some other
form, involved in-execution of a works contract in the state.
There are three important components of a sale in works contract:
(i) There should be works contract'
(ii) It should be executed in the State of Maharashtra and
(iii) There should be transfer of property in goods involved in execution of a 'works contract'
Indivisible contracts
Ordinarily all types of indivisible contract for supply of material and application of labour is a works contract.
However it is difficult to decide whether a particular transfer comes under sale or works contract.
Not works contract
The contract that is merely for supply of goods or only for labour is not a works contract.
Examples of works Contract
The following types of indivisible contracts for supply of material as well as application of labour to do the job have
been held as works contract and which may be considered for the purpose of levy of tax under this Act.
1. All types of contracts for constructions, repairs, improvement, fixing, painting'. Etc. Contract for fixing tiles,
windows, grills, electric installations, sanitations and plumbing has also been held as Works Contract.
2. Composite contract for manufacture, supply, installations and erection of moveable properties like
machineries, cranes, air conditioners, cooling equipments etc.
3. Composite contract for maintenance and service, repairs, improvement, alteration, amendment, mixing,
blending, processing, servicing of any immovable or moveable property.
4. Contract for galvanizing electroplating, gold plating, and chrome decoration.
Whether in a given case, the contract is composite and indivisible is a question of fact to be decided on the basis of
terms and conditions of the contract, nature of contract, manner in which property in goods passes, fixation of price
etc.
Labour Contracts
All Contracts for purely labour, where no material is transferred is not a works contract, Contract for rendering
professional services or contract for work of an art and skill in which the passing of property in goods is incidental is
also not a works contract, e.g. contract for taking photograph is a work of an art and skill. Sale taxable under this act
is one in which transfer of property in goods involved in execution of works contract. Not only there should be a
transfer of property in goods but also it must be involved in execution of a works contract. The term involved means
during the course of execution of works contract i.e. as and when work is executed, property in goods with which
works is done passes at that stage only and not on delivery of goods.
Example.- In case of a contract for construction of a wall property in bricks, cement and sand and cement will pass to
the contractee as and when wall is constructed in- the form of wall.
Goods consumed during the performance of the contract
In case of contract, where no property in goods passes or which gets consumed in the process of execution of works, it
is not sale e.g. contract of pest control in which chemical or insecticides gets consumed and no property in chemical
passes to the contractee and therefore not a sale.
Sale Price of Works Contract
Value of goods which are used in the Works Contract is alone taxable under Maharashtra VAT Act. The State
Government has no right to tax the cost of labour, cost of consumables etc. In order to arrive the sale price of works
contract, the Act has prescribed the following method:
Particulars
Amount Amount
Entire Value of Contract
Less:
1. Labour Charges for execution of the Works contract.
2. Amounts paid by way of price for the entire sub-contract to sub-contractors.
3. Charges for planning, designing and architect's fees.
4. Charges for obtaining on hire machinery and tools used for the execution of the Works
Contract.
5. Cost of consumables such as water, electricity, fuel, etc. used in the execution of the
contract, the property in which is not transferred in the course of execution of the Works
Contract.
29
MVAT Act 2002
6. Cost of establishment of the contractor to the extent to which it is relatable to the supply of
labour and services to Works Contract.
7. Other similar expenses relatable to the supply of labour and services.
Profit earned by the contractor to the extent it is relatable to the supply of labour and
services.
If the above mentioned method is used to arrive at the Sale Price, first value of Sub-contract is to be deducted from
the Contract price. However the Contractor has right to arrive the Sale Price by adding the purchase prices of all
materials used in the contract and adding the profit margin to the total purchase price of all materials.
If the Contractor is not maintaining accounts which enable the verification of various deductions or the Commissioner
finds that the accounts maintained by the contractor are not sufficiently clear or intelligible, he can deduct the
percentage of contract value from the contract value to arrive at the sale price as given below:
Sr.
Types of Work Contract
Amount to be deducted from
No.
contract price in % terms
1
Installation of Plant and Machinery
15%
2
Installation of Air Conditioners and Air Coolers.
10%
3
Installation of Elevators (lifts) and Escalators.
15%
4
Fixing of Marble Slabs, Polished Granite Slabs and Tiles (Other than Mosaic 25%
Tiles)
5
Civil Works like Construction of Buildings, Bridges, Roads etc.
30%
6
Construction of Railway Coaches on Under Carriages supplied by Railways.
30%
7
Ship and Boat Building including Construction of Barges, Ferries, Tugs, 20%
Trawlers and Draggers.
8
Fixing of Sanitary Fittings for plumbing, Drainage and the Like.
15%
9
Paintings and Polishing
20%
10
Construction of Bodies of Motor Vehicles and Construction of Trucks.
20%
11
Laying of Pipes.
20%
12
Tyre Re-treading
40%
13
Dyeing and Printing of Textiles
40%
14
Annual Maintenance Contract
40%
15
Any Other Works Contract,
25%
From the contract value, first the value of the subtract contract on which the tax is paid by the sub-contractor and
quantum of tax separately charged by the contactor are to be deducted and then the percentage is to be applied to
arrive at the deductible amount.
Calculation of Tax liability
After arriving the Sale Price of the Works Contract for the purpose of taxation under this Act, he has to calculate the
tax according to the value of each materials used in the contract.
For example total sale price (including profit margin) for levying tax under this Act come Rs. 12,00,000 and Contract
Price is Rs. 20,00,000 classification of materials and tax rate are as follows:
Material
Value Rs. Tax Rate %
Tax
Schedule A 1,00,000
0
0
Schedule C 6,00,000
5
30,000
Schedule E 5,00,000
12.5
62500
Total Tax
92,500
Under the composition scheme, the tax liability is Rs. 1,60,000. In this case, it is advisable to go for regular scheme
only.
Works Contract Composition Scheme
With effect from 21st June, 2006 Section 42(3) of the Act provides two types of composition., schemes. In the case of
goods (whether as goods or in some other form) utilised in Construction contracts and the dealer opts for Composition
Scheme, he has to pay 5% composition tax on the contract value and in the case of other work contract, the
composition tax rate is 8%. In this case he cannot deduct value of labour, consumption, Declared goods etc. from the
contract price. He has right to opt for composition scheme or regular scheme.
He is entitled for Setoff at 64%o of the normal Setoff when he has paid 8% composition. If he pays 5% composition tax
in the case of construction contract, he has to forgo 4% of the purchase value of goods transferred to the contractee
by way of works contract as goods or in some other form. In both the cases he is entitled for normal Set Off in the
case of capital goods and other goods which are not transferred to the contractee.
Option to each contract
The contractor can choose Composition Scheme for certain contracts and regular scheme for other contracts. Actually
he can work out the tax liability under both the schemes and choose the scheme where he has to pay lower tax.
Issue of Tax Invoice
The contractor who opted for Composition Scheme can issue Tax Invoice and recover the 8% or 5% Tax through the
Invoice.
Input Credit and Works Contract
30
MVAT Act 2002
Contractor opting for Regular Scheme and Input Credit Contractor who is opting for the regular Scheme is eligible for
full Input Credit like other manufacturers. However he is not eligible for Input Credit on building materials which are
not resold but used in the activity of construction. For example if the contractor purchases steel rods, timber, screws
etc. and converts them into windows, he is not eligible for Input Credits on these materials. On the other hand he
uses cement, bricks etc. in construction of building, he is eligible for Input Credit on these materials as he has sold
these materials by way of transfer of property in goods involved in the execution of works contract.
Composition Scheme and Input Credit
Sub-rule (a) of rule 53 deals with availment of input credit by the contractor in the case of composition scheme. This
rule has been amended to the following effect with effect from 8th September, 2006. In the case of works contractors
paying composition tax at the rate 8% of the total contract value will be eligible for normal set off in the case of capital
goods and goods in which property is not transferred. In the case of other goods i.e. goods in which property is
transferred to the contractee, he shall be eligible for 64% of the normal set off. This amendment is more in the nature
clarification and the benefit should be available with effect from 1st April, 2005.
Effective From 21st June, 20O6
In the case works contractor paying composition tax in the case of construction contracts at the rate 5% of the total
contract value, he has to forgo 4% of the purchase price of the goods in which property is transferred to the
contractee. This is effective from 21st June' 2006' In the case of construction contracts, the contactor can opt to
composition tax at the rate of 5% and this provision has been introduced with effect from 21st June, 2006 only'
Return
All dealers who are executing works contracts' whether as part of the business or the entire business and whether or
not the business or part of the business is under composition who has use form 233 to file the return with the
department.
Joint and Several Liability
In the works contract, where the principal contractor assigns the whole or part of the execution of the works contract
to different sub-Contractors i.e. agents, the principal would be liable to pay tax under this act as if such works
contract has been executed by himself.
Where agent executes works contract on behalf of the principal and each or either of them liable to pay tax, the
principal and the agent shall be jointly and severally liable to pay in respect of the transfer of property in goods
involved in the execution of the works contract.
However if one of them proves that the other party has paid the tax, then, the principal or agent will not be liable to
pay the tax.
No deduction from payment of tax shall be given to the principal or agent, unless a duly signed certificate in the
prescribed form is produced.
A principal contractor assigning execution of a works contract to a sub contractor registered under this act, may
deduct from his total contract value, the value of the contract carried out by the sub-contractor provided a declaration
in Form 408 signed by such sub-contractor is produced
Likewise the sub-contractor who has been assigned execution of works contract by a principal contractor may deduct
from his total contract value, the value in respect of such works contract executed by him provided a declaration in
Form 409 signed by such principal contractor is produced.
If the principal contractor produces Certificate of Payment of Tax by his sub-contractor by producing Form No. 407,
he shall be absolved from the liability to pay tax on the portion of the contract assigned to the sub-contractor.
Likewise on production of Certificate of Payment of Tax by the principal contractor in Form 406, the sub-contractor
shall be absolved from the liability to pay tax on portion of contract assigned to him by the principal contractor.
TAX DEDUCTION
AT SOURCE
Section 31 gives power to the Commissioner to require any dealer or person or class of
persons to deduct the tax payable on the purchases other than the purchases to which
Section 8 applies. However at present Tax Deduction at
Source is applicable to Works Contract only.
Works Contracts and TDS - Important Ingredients

(i) No tax is to be deducted on the tax i.e. VAT or Composition Tax charged separately in the invoice. Moreover
amount of Service Tax charged by the contractor separately is to be excluded for the purpose of Tax Deducted at
Source and this provision has been added with effect from 20th June, 2006.
(ii) The quantum of Tax Deducted at Source shall not exceed the amount of tax payable towards such works
contract.
(iii) The principal contractor need not deduct tax at source from the payments to be made to sub-contractor.
(iv) Section 8 deals with certain sales and purchases such as Sale in the Inter-State Trade etc. which are not to be
liable to tax. In these cases no tax at source is to be deducted.
(v) When an advance payment is given, the employer need not deduct any tax at source and he has to deduct at
source when he adjusts the advance towards, in part or otherwise, the amount payable towards the works
contract.
Tax Deducted at Source Rate
Sr.
No.
Employer
Rate of TDS
Registered
Unregistered
31
MVAT Act 2002

1
2
3
4
5
6
7
The Central Government

The State Government
All Industrial, Commercial or Trading undertakings, Company or
corporation of the Central Government or of any State Government.
A Port Trust set up under the Major Ports Act.
Limited Company. (it includes Private Limited Company also)
Local Authority including a Municipal Corporation, Municipal Council,
Zilla Parishad and Cantonment Board.
A Co-operative Society including Co-operative Housing Society.
Any Registered Dealer under the Maharashtra Value Added Tax Act.
"lnsurance Corporation', A Finance Corporation or Company', Any
Schedule Bank', Public Trust and Private Trust'
Dealer
2%
2%
2%
Dealer
4%
4%
4%
2%
2%
2%
4%
4%
4%
2%
2%
2%
4%
4%
4%
Initial Exemption for TDS

If the aggregate amount payable to a dealer is less than Rs. 5 lakh in a financial year, no Tax at Source is to be
deducted. It is not given in the notification whether the Employer has to deduct tax at source from the initial amount
of payment to the contractor when the payment exceeds Rs. 5 lakh in a financial year. When the payment exceeds Rs.
4 lakh it is better to deduct TDS from Gross payment.
Certificate of Deduction of Tax at Nil Rate
The contractor can apply to his registering officer for grant of Certificate of Deduction of Tax at Source at Nil rate u/s
3193). The application shall be accompanied by copies of the contract etc on the basis of which the claim of lower rate
or no deduction is made.
The registering authority is satisfied that the contract involves only labour or service, he shall grant a certificate to the
effect base need not be deducted. He is required to give the applicant of a reasonable opportunity being heard.
The officer has to issue the certificate within one month. He shall forward a copy of the certificate to the employer for
whom the work is executed. If it comes to the notice of the registering authority that the certificate is wrongly granted,
he may cancel the certificate or modify it. Before doing this he to give the dealer a reasonable opportunity of being
heard.
Tax to be Deducted at Nil Rate
Moreover issue of certificate will not affect the tax liability of the contractor. When the contractor produces the
certificate, the employer need not deduct tax at source.
When to Deduct
When the contract amount is credited to any account whether called the suspense account or by any other name in
the books of account, of employer, such crediting will be treated as payment to the contractor and tax to be deducted
at that time
Remittance of Tax Deducted Amount
Every employer, who has to deduct tax at source, has to remit the tax deducted at source within 10 days from the
expiry of the month during which he has deducted it. He has to remit the full amount of tax due and deductible
irrespective of the actual amount of tax deducted by him or not. He has to use Form 210 for remitting the TDS.
Tax Deducted at Source is Tax paid by the Contractor
Any sum deducted as tax deducted at source under this section and pad to the State Government shall be treated as
a payment of tax by the contractor when he produces the Certificate of Tax Deducted at Source.
Non-Deduction or Non-Payment of Tax
The employer has to deposit the Tax Deducted at Source within the prescribed time to the State Government. If he
does not deduct or after deducting fails to pay the tax as required, he shall be treated not to have paid the tax within
the time and all the provisions of Act including the provisions relating to interest shall apply mutatis mutandis to this
un-deducted or not remitted tax.
Tax deducted at Source One Method of Tax recovery
The power to recover tax by tax at source shall be without prejudice to any other mode of recovery
Issuance of Certificate
The employer who had deducted tax at source has to issue Certificate immediately after the deduction is made. The
certificate required to be issued by the employer to the dealer under section 31 shall be in Form 402.
Statement to the Assessing Authority
The employer who had deducted and remitted the tax shall send a statement in duplicate to the assessing authority
who has jurisdiction over the contractor. The Form 403 is to be used in this case.
In case of unregistered contractor, whether or not resident in the State of Maharashtra, the employer in Mumbai Zone
send a statement to the assessing authority designated for Non-Resident Dealers. In case of unregistered contractor,
32
MVAT Act 2002
whether or not resident in the State of Maharashtra, the employer in Mofussil shall send the statement to the
respective Joint Commissioner of Sales Tax (Administration) in whose jurisdiction the employer is situated.
In all these cases the statement is to be submitted within 20 days after the end of the month to which such statement
relates.
ADVANCE
RULING AND
DETERMINATION
OF DISPUTED
QUESTIONS
It is like Advance Ruling in Income Tax Act. It is older than Advance Ruling in Income
Tax and also broader than Advance Ruling. If any question has to be referred to the
Commissioner for Determination, the question should not be before a Court or the
Commissioner should not have commenced assessment or reassessment of dealer. Now
under this Act Advance Ruling also has been introduced.
Advance Ruling (Section 55)

In the case of Determination of disputed questions, the question can be referred to the
Commissioner and his order is finding on the Department. Like in Income Tax, Customs and Excise, the Concept of
Advance Ruling being introduced in VAT also.
Who Can Apply
Any registered dealer can apply to the Tribunal for obtaining an advance ruling on the interpretation of any provision
of this Act, Rules or Notification in respect of a transaction proposed to be undertaken by him even though any
question relating to the said provision has not arisen in any proceeding.
Rejection
If the tribunal finds that the application does not involve any important and substantial question of law, it can, after
giving the applicant a reasonable opportunity of being heard, reject the application.
Procedure
If the application is admitted the president shall constitute a bench consisting of three members of the tribunal, a
senior practitioner entitled to appear before the tribunal and an Officer of the Sales Tax Department of the rank of
Deputy Commissioner or above, to be nominated by the Commissioner. After hearing the applicant, the Bench should
pronounce its advance ruling on the question specified in the application. If the members are divided, then the
decision shall be the decision of the majority. The Bench has to pronounce the Ruling within four months of the
receipt of the application by the Tribunal. (Sub-section 3).
Binding Nature
The advance ruling shall be binding unless there is a change of law on the basis of which the advance ruling has been
given. No question decided in Advance Ruling shall be entertained in any proceeding by any authority appointed or
constitute under this Act, save as provided in Section 27 and Section 27 deals with appeal to High Court. In other
words appeal lies with High Court.
No reference of Questions which can be referred under Determination of Disputed Question
Advance Ruling shall not be sought on any question which can be posed under Section b6. Section 56 deals with
Determination of Disputed Question.
Determination of Disputed Questions (section 56)
Questions which can be referred
If any question arises, other than in proceedings before a Court or the Tribunal or before the Commissioner has
commenced assessment of a dealer under section 21' the dealer can apply to the Commissioner for determination of
the question. The following question can be posed for determination:
(a) any person, society, club or association or any firm or any branch or department of any firm' is a dealer' or
(b) any particular person or dealer is required to be registered, or
(c) any particular thing to any goods amounts to or results in manufacture of goods' or
(d) any transaction is a sale or Purchase or where it is a sale or purchase the sale price or the Purchase Price, as
the case may be, thereof, or
(e) in the case of any person or dealer liable to pay tax, any tax is payable by such person or dealer in respect of
any particular sale or purchase or if the tax is payable the rate thereof, or
(f) set-off can be claimed on any particular transaction of purchase and if it can be claimed' what are the
conditions and restrictions subject to which such setoff can be claimed.
Commencement of Proceedings
Explanation to this Sub-section states that the Commissioner shall be deemed to have commenced assessment of the
dealer under Section 23 when the dealer is served with any notice by the Commissioner under that Section.
Determination Order
The Commissioner shall make an order determining such question. He has to give opportunity to the applicant to
present his side. He can direct that the determination will not affect the sale or purchase prior to the determination of
the question. Likewise he can direct that the decision will not affect the purchase or sale done by any other dealer
prior to the determination of the question. In other words the determination can be prospective.
Review of the Order
33
MVAT Act 2002
If the Commissioner wants to review the Determination order, he can review the same. In this case he has to obtain
permission from the Government. No order shall be passed reviewing the earlier order unless the dealer or the person
in whose case the order is proposed to be passed has been given a reasonable opportunity of being heard.
Appeal to Appellate Tribunal
The order determining the disputed question can be challenged in an appeal to Appellate Tribunal. (Sub-section 4)
The Commissioner shall decide the applications for determination in the chronological order in which they were filed.
Self Assessment
Notice within two years
If a registered dealer has filed the return before the due date, then the department cannot
issue notice calling the dealer for assessment in respect of the period covered by the return after two years from the
end of the year containing the period to which the return relates.
ASSESSMENT
Return not filed - Three year

If a registered dealer has not filed the return before the due date, then the department cannot issue notice calling the
dealer for assessment in respect of the period covered after three years from the end of the year containing the period.
(Sub-section 1)
Best judgement
If the registered dealer fails to file a return in respect of any period before the due date, the Officer may assess the
dealer in respect of the period to the best of his judgment without serving a notice for assessment and without
affording an opportunity of being heard. If the dealer after the assessment order is passed submits the return for the
period along with evidence of payment of tax due as per the returns or submits evidence of return for the period
having been filed before the passing of the assessment order along with the evidence of payment of tax, then the
Officer shall cancel the assessment by passing order in writing.
If the order is cancelled, the dealer shall be assessed under other provisions and cancellation shall be without
prejudice to any interest or penalty that may be levied in respect of the period. Order under this Sub-section can be
passed within 3 years from the end of the year containing the period.
Assessment in the case Return is filed
Where the return in respect of any period has been filed by the prescribed date and if the Commissioner consider it
necessary to require the presence of the dealer or the production of documents, he shall serve on such dealer, a notice
requiring him to attend or produce the documents on which he relies in support of the return or documents on a date
and at a place specified in the notice. If the dealer complies with the notice, the Commissioner has to assess the tax
on that day or as soon as after that date. If the dealer fails to comply with the terms of the notice, the Commissioner
shall assess to the best of his judgment the amount of tax due from the dealer. The assessing officer has to pass the
order within 4 years from the end of the year containing the period to which the return relates.
Assessment in the case not Return is filed
Where a registered dealer has not filed the return in respect of any period on the prescribed date, then the
Commissioner may issue notice, serve on the dealer a notice requiring him to attend on a date and place specified.
After giving the dealer a reasonable opportunity of being heard, proceed to assess to the best of his judgment the
amount of the tax due from him. In this case the order is to be passed before the expiry of five years from the end of
the year containing the period. (Sub-section 3).
In the case of a dealer who has not got registration or failed to apply for registration within the time limit, the
Commissioner within five years from the end of the concerned year may serve the notice on the dealer and proceed to
assess the amount of the tax due from the dealer to the best of his judgment after giving the dealer a reasonable
opportunity of being heard. Assessment under this Sub-section 4 has to be carried out by the Commissioner when
has reason to believe that a dealer is Liable to pay tax in respect of any period, but has failed to get registration or
applied for registration after the expiry of the time limit for registration. The order should be passed within 8 years
from the end of the concerned year containing the concerned period.
During the proceedings under Section 64, the Commissioner on the basis of evidence to him is of the opinion that i.
due tax is not paid,
ii.
because of any deduction tax is not calculated correctly,
iii.
set-off has been incorrectly claimed in respect of any transaction,
he can serve notice on the dealer and after giving him reasonable opportunity of being heard proceed to assess best of
his judgment. This right can be exercised even after issuing any notice for assessment has been issued under other
provision of this section. No Notice under this Subsection shall be served on the dealer after a period of four years
from the beginning of the concerned year. If during the course of any proceedings under Section 64 the concerned
authority is satisfied that the tax has been or is sought to be evaded, the authority can proceed to assess such dealer
as provided above in respect of any such transaction or claim relating to any period and the authority deemed to have
requisite jurisdiction and power to assess such dealer or person in respect of such transaction of sale or purchase or
claim. This assessment proceedings shall for all the purposes of this Act be deemed to have been transferred to such
Authority. Assessment under this Subsection is to be carried out after serving notice and giving opportunity of being
heard. Section 64 deals with Production and inspect of accounts and documents and search of premises.
Section 59 deals with power to transfer proceedings.
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MVAT Act 2002
Assessment as stated above shall be without prejudice to the assessment proceedings in respect of the period under
any other sub-section or under other provisions of this Act by any authority who otherwise has jurisdiction to
assesses the dealer or person in respect of other transactions which are not covered by clause (a) and (b). If once the
dealer or person is assessed under this sub-section no tax from such transaction or claim and penalty and interest
consequent upon such tax shall be levied or demanded from the dealer or person at the time of assessment under
other provisions of the Act. (Subsection 5)
If sale or purchase is not disclosed
If the Officer is of the opinion that any turnover of sales or of purchases has not been disclosed or that tax has been
paid at a lesser rate, set-off has been wrongly claimed or deduction has been wrongly claimed, then the Officer may at
any time within 5 years from the end of the year containing the concerned period serve a notice in the prescribed form
on the dealer and proceed to assess him in respect of the period. The officer can do this after giving the dealer a
reasonable opportunity of being hear. This best judgment order shall be passed within 5 years. [Sub-section 6).
Adjustments to be made to give effect the findings of the Tribunal or the High Court
Sub-section 7 deals with the adjustments to be made to give effect to the findings of the Tribunal or the High Court or
the Supreme Court. In order to give the effect of the findings of the above courts, the assessment is to be completed
within thirty six months from the date of communication of such finding or direction containing in the order to the
Commissioner. For calculating any period of limitation laid down in this section, the time during which the
assessment remained stayed under the order of the Tribunal or of the High Court or of the Supreme Court shall be
excluded.
If the supplies the certified copy of the order before it is communicated to the Commissioner, then thirty six months
will be calculated from the date supply of certified copy of the order.
When a matter is decided against the Government and appeal is Pending
Sub-section 8 deals with the power of the commissioner to assess in a case notwithstanding that in a similar matter,
the Tribunal has given a decision against the State Government. If in such mater the state Government has already
filed an appeal before the appropriate forum against the order of the tribunal and such appeal is pending' then the
Commissioner can decide the case against the decision in a similar case. However no order of recovery of the dues
including the penalty or interest or forfeiture shall be passed by the Commissioner in such case, pending decision by
such forum, in the matter and on decision of the concerned forum, the Commissioner shall modify the order in
accordance with the order of the concerned forum after giving the dealer an opportunity of being heard'
Direction to the Assessing Officer
Under sub-section 9 the commissioner may on application made by the dealer, call for records and examine and give
direction to the Assessing officer regarding the assessment. However he cannot give order prejudicial to the dealer
without giving an opportunity of being heard' However' direction by him to investigate in relation to the assessment is
not an order prejudicial to the dealer'
Best judgment Assessment - Important Aspects
Even in the case of best judgement assessment, the assessing officer cannot decide the turnover as he likes'
Cancellation Ex-parte Order
With effect from 20th June, 2006 Sub-section 11 and 12 to Section 23 has been added' If the authority has passed
Best judgment assessment order' under Sub-section 2, 3 or 4 and the dealer can make an application within 30 days
from the date of service of the assessment order to the assessing authority for the cancellation of the assessment on
the ground that he had not been able to attend or remain present before the assessing authority at the time of
hearing. The assessing authority shall, after verifying that the contention of the dealer is correct, cancel the
assessment including any penalty or interest levied and shall make a fresh assessment in accordance with the
provisions of the Sub-section 2, 3 or 4.
Only once for one Assessment Period
The dealer can make only one application for cancellation under this Sub-section in respect of any period of
assessment. (Sub-section 11)
Fresh Order Within 18 months
The fresh assessment order has to be passed before the expiry of a period of 18 months from the date of service of the
cancellation order.
Special provisions for statutory orders pertaining to a period shorter or longer than a year
Where any order is being passed in respect of any dealer for any reason for a part of a year, then for the purpose of
levy of tax or exemption etc. will be taken proportionately and Section 3 shall be exception to this rule. This Section 3
deals with rate of tax leviable on sale or purchase. The proportion will be calculated as per months and fifteen days or
more in a period will be taken as a month and less than that will be ignored. (Section 58).
REFUND
As explained in the earlier Chapters Set Off of the input tax is the important feature of Value Added
Tax. In many cases assesses are not in a position to utilise the credit in their Set Off account. For
example textile manufacturers will not be paying Value Added Tax on their sales as they come
35
MVAT Act 2002
under Additional Excise Duty regime and will be paying VAT on many of their inputs and they will have accumulated
credit in their Set Off account. Refund might be due to excess payment of tax by the assessee also.
Refund of excess payment
If any dealer has paid tax, interest, penalty etc in excess, the excess amount is to be refunded to him. The refund may
be by way of deduction from the amount payable by the dealer in respect of any other period or by cash payment.
Refund of Tax Collected From Diplomatic Authorities
The Notification No.VAT.1509/CR-89/Taxation-1, 5th November 2009 has replaced the Notification No.VAT-1507/
CR-41/Taxation-1 dated 25th June 2007. This Notification provides for grant of refund of the tax collected by any
registered dealer on his sales made to the Diplomatic authorities and International bodies or organizations mentioned
in the Notification subject to the conditions specified against each of them in it.
Amount to be Applied to Recover the Dues
However the Commissioner shall first apply such excess towards the recovery of any amount due in respect of which
a notice under Sub-section 4 of Section 32 has been issued, or any amount which is due as per any return or revised
return but not paid and refund the balance.
Dealer can adjust the Refund Amount against tax payable in the Subsequent Months
If any refund is due to any dealer according to the return or revised return furnished by him for any period, then it
can be adjusted by the dealer against the tax due and payable as per the returns or revised return furnished under
Section 20 for any subsequent period. However this can be done only after deducting all dues from the dealer on the
date of such adjustment. (Section 50)
Application for Refund
If a dealer is entitled to refund as per any return, fresh return or revised return and he has not undertaken to adjust
the amount against the amount due as per any subsequent return, the authority shall grant refund of the amount.
The dealer has to make application for refund. (Sub-section 1 of section 51)
Time Period
The authority shall grant the dealer refund claimed within 6 months of the end of the year to which the return, fresh
return or revised return relates. The refund relating to all the periods contained in one year may be granted by a
single order. (Sub-section 1 of Section 51)
The dealer can make application for refund of the amount claimed refundable in the return or fresh return or revised
return after the end of the year to which it relates. The Department can ask for any additional information from the
dealer within one month of the receipt of the refund application. It has to grant the refund within 3 months of the
receipt of the refund application or receipt of additional information whichever is later. If the additional information is
not furnished, then the refund shall be granted within six months of the application.
In the case of dealers, who obtained registration under this Act, the refund in respects returns in respect of the year
containing the date of effect of registration shall be granted within 6 months of the end of the year succeeding the said
year. In simple words in the case first year of registration the refund shall be made within 6 months of the end of the
year succeeding the first year of registration. However the dealer may apply for refund to the authority after the end of
the year to which the refund relates and the authority may grant refund subject to rules including rules relating to
bank guarantees. If the dealer has filed the return after the date prescribed for filing the last return, then the refund
shall be granted within 18 months of the date of filing the return. [Subsection 2(b) of section 51].
Refund within one Month
However in the following cases the refund relating to any period covered by a return shall be granted within one
month of the receipt of the refund application.
1. The dealer is an exporter within the meaning of Subsection (1) of Section 5 of the Central Sales Tax Act,
1956. In this case the Merchant Exporters will be buying the goods and paying the tax and claim refund of
the tax paid on the goods.
2. The dealer is a unit specified in the Explanation to Sub-section 3 of Section 8. They are Unit in the Special
Economic Zone, Unit in the Software Technology Park, Unit in the Electronic Hardware Technology Park and
Hundred Per Cent Export Oriented Unit.
3. The dealer holds a Certificate of Entitlement under any Package Scheme of Incentives.
4. Dealers selling goods in the inter-State trade or commerce;
5. The Canteen Stores Department of the Indian Naval Canteen stores.
The authority may require the dealer to furnish bank guarantee. He can specify the amount, banks from whom
guarantee to be obtained, period of guarantee and to whom the guarantee is to be submitted. He can call for
additional information. (Sub-section 3 of Section 51).
Bank Guarantee and Refund
If the authority asked the dealer to submit Bank guarantee under Sub-sections 2, 3 or 4, then, he has issue the
refund within one month from the date of submission of the Bank guarantee. If the authority has not asked for Bank
guarantee or he called for additional information, then he shall grant the refund of the amount found due. In this case
refund has to be made within 3 months from the date of receipt of the refund application or, the date of receipt of the
additional information, whichever is later. [sub-section 5 of Section 51]
36
MVAT Act 2002
Grant of refund - procedures

Rule 60 deals with Grant of Refund. The provisions are:
i. Section 51 deals with application by the dealer for refund of excess paid as per his return. The dealer has to apply
in Form 501.
ii. If the Commissioner is satisfied that a refund is due, the Commissioner has to pass an order in Form 502
indicating the refund and it should be communicated to the Dealer.
iii. If an order for refund has been made under any rule and the applicant desires payment in cash, the
commissioner shall issue to him a refund payment order in Form 503 and 504.
If the applicant wants the refund adjusted against tax payable in respect of any subsequent period contained in the
year to which the refund relates under this Act, the Central Sales Tax Act, 1956, or the Maharashtra Tax on Entry of
Goods into Local Areas Act, 2003, the Commissioner shall issue a Refund Adjustment Order in Form 506.
Bank Guarantees - Procedures
The provisions regarding Guarantees are:
1. The Bank Guarantee shall be obtained from any branch of a bank notified as a Government Treasury.
2. The maximum period for a Bank Guarantee shall be of 36 months.
3. It shall be furnished to respective joint Commissioner in charge of grant of refunds.
4. The Bank Guarantee shall be for such amounts and such periods as the Commissioner may by public notice
notify from time to time.
Interest on Delayed Refund
If the refund is not refunded within 90 days as provided in Section 51 or by virtue of an order passed under any other
provision of the Act, the authority shall pay simple interest at the prescribed rate on the refund amount from the date
immediately following the expiry of the ninety days to the date of the refund.
If an application for interest on any delayed refund is made and the Commissioner is satisfied that such interest is
due and payable to the applicant or any other person, he shall pass on order specifying the amount of refund the
payment of which is delayed, the period of delay for which interest is payable and the amount of interest payable. The
order is to be the communicated to the applicant.
Assessment Proceedings or Proceeding under Section 64 and refund
If a notice for assessment covering the period to which the refund relates is issued or proceedings under Sub section
(3) or [a) of Section 64 are initiated, then, if the dealer has not furnished a bank guarantee then no refund under this
section shall be granted. If the dealer has furnished a bank guarantee, then an amount equal to the guarantee
amount shall be granted. [Sub-section 6[a)].
Excess Refund and Recovery
If due to any order passed under this Act, it is found that the refund is in excess of the refund due, then the excess
shall be recovered as if it is a tax due from the dealer. On the excess amount interest shall be leviable at the
prescribed rate per month or part thereof from the date of grant of the provisional refund till the date of the order.
[Sub-section 6(b)]
Time-Limit to make Application
The dealer has to make application for refund in the prescribed form. The application has to be made within 3 years
from the end of the year containing the period to which the return and refund relates. (Sub-section 7).
AUDIT
This Act has two different audits. One Audit is carried out by the Department and another is carried
out by the Chartered Accountant, Cost Accountant in some specified cases. The second audit is like
Tax Audit under the Income tax.
Audit by the Department
Audit of any dealer
The Commissioner may arrange for audit of the business of any registered dealer with a view of promoting compliance
with the provisions of this Act. (Sub-section 1)
Period of Audit
The audit of business may be made in respect of any period. Even if any proceedings in respect of the said period are
pending or any order has been passed under this Act, the Audit may be ordered.
Facility to verify
The dealer has to afford to the audit officer the necessary facility to inspect the books of accounts or other documents
and to check the cash or stock. He has to furnish necessary information to the audit officer.
No removal of Books
The officer shall not remove or cause to be removed any books of account, other documents, cash and stock during
the audit.
On-line Submission Application Compulsory
37
MVAT Act 2002
Notification No. VAT/Amd-1009/IB/Adm.6 dated 21st August 2009 provides that the information to be provided in
respect of proceedings of Business Audits under Section 22, should be submitted electronically in Form 801 on or
after 1st October, 2009.
Tax Audit
Compulsory Tax Audit
Like in Income Tax, Tax Audit has been introduced in VAT. If following condition is fulfilled, the dealer is liable to get
his books audited by an accountant.
W.e.f. 1st May2010 (financial year starting from 1st April2010), if the Turnover of sales or purchases exceeds rupees
sixty lakhs in any year.
Who is Eligible to Carry out the Audit?
The accounts has to be audited by Chartered Accountant. This provision has been amended. The cost accountant
also can carry out the Audit.
Form
The Audit Report shall be in Form 704. Recently Form 704 has been revised.
Time Limit
The audit Report shall be submitted within 08 months from the end of the year to which the report relates.
Failure to File Audit Report
If any dealer liable to get his accounts audited fails to furnish a copy of the report within the prescribed time, the
Commissioner shall 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. Before imposing penalty, the Commissioner should give opportunity to the dealer being heard.
If the dealer fails to furnish a copy of the report within the prescribed period but files it within one month of the end of
the period and the dealer proves to the satisfaction of Commissioner that the delay was an account of factors beyond
his control, then the Commissioner may condone the delay.
Exemption from Audit
Proposed amendment exempts the following dealers from the provisions of this section i.e. no Audit Report has to be
submitted by these dealers.
(i) Departments of the Union Government.
(ii) Departments of State Governments.
(iii) Local authorities.
(iv) Railways.
(v) Konkan Railway Corporation Ltd.
(vi) Maharashtra State Road Transport Corporation.
Audit Report to be Filed Electronically
Any dealer who files Audit Report on or after 1st October 2009 for any period shall file the Audit Report in the New
Form 704 and it is mandatory for all the dealers filing shall file the Audit Report in New Form 704 electronically.
Trade Circular dated 1st October, 2009 provides Guidelines to file the Form 704 electronically.
RECTIFICATION
AND REVIEW
Rectification apparent on the record can be carried out by the Commissioner within
two years on his motion or at the request of the Assessee. On the other hand Review
shall be carried out by the Commissioner on his own motion only and the Assessee
has no right to ask for any review.
Rectification of Mistake Apparent on the Record

The Commissioner may rectify the mistake apparent on the record within two years from the date of serving the order
passed by him on his own. If any mistake apparent on the record has been brought to his notice within two years by
any person affected by such order, the assessing officer can rectify the mistake within two years or thereafter. If the
rectification order is have the effect of:
(i) enhancing the tax or
(ii) reducing the amount of refund, or
(iii) reducing the interest payable on refund,
the Commissioner has to give notice in writing and he has to be allowed a reasonable opportunity of being heard.
When the affected party apply for rectification of the mistake apparent on the record, it cannot be rejected on the
ground that there is no mistake apparent on record unless the party concerned has been given a reasonable
opportunity of being heard. If the dealer has applied for within the period for rectification of the order and claimed
reduction in quantum of tax payable after rectification of the order, then the Commissioner shall stay the recovery of
such amount till the disposal of the application for rectification. (Sub-section 1)
The Cardinal Rules of Rectification
(i) The scope is limited to apparent and glaring mistake on records.
(ii) Mistake of law can be rectified provided the same are glaring and obvious not requiring long drawn process of
reasoning.
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MVAT Act 2002
Rectification on filing Declarations etc.

Under Sub-section 2 the dealer, who has claimed tax concession on the basis of declaration or certificate etc. and
unable to produce the declaration form or certificate at the time of assessment and the Commissioner has passed the
assessment order without giving effect to the claim of concession under section 23, may apply to the Commissioner
for rectification of the order on the ground that he has received such declaration or certificate and in a position to
produce the same. He has to apply within two years from the end of the financial year in which the said order has
been served. He has this right to apply for rectification if he has appealed against that order and he can apply only
once against the order for rectification under this Sub-section.
Rectification by Appellate Authority
Sub-section 1 shall apply mutatis mutandis to the rectification of a mistake apparent from the records by the
Tribunal or an appellate authority as they apply to the rectification of a mistake by the Commissioner. The Tribunal
or appellate authority can rectify the order on any matter other than the matter which has been so considered and
decided. the mistake even after deciding on other matters. (Sub-section 3)
Refund due to Rectification
Due to rectification if any refund is due the commissioner shall refund the person. (Sub-section 4)
Recovery due to Rectification
If the effect of rectification is of enhancing:
(i) amount of tax, or
(ii) penalty, or
(iii) interest, or
(iv) the amount of forfeiture, or
(v) reducing the amount of the refund,
the Commissioner shall recover the amount due from the person. (Sub-section 5)
Review (Section 25)
Review by the Commissioner
The Commissioner can review the order passed by his subordinate officers. He can review it on his own motion or
upon receipt of a report by him from any authority appointed under this Act or upon information received by him. He
can call for the record of such order, including an order passed under this Section or an order passed in appeal and
examine whether:
A.
i. Any turnover of sales or purchases has not been brought to tax
ii. has been brought to tax at a lower rate or
iii. has been wrongly classified or
iv. any deduction has been incorrectly made or
v. any refund or set-off has been incorrectly granted or
vi. the liability has been under stated or
B. in any case, the order is erroneous, in so far as it is prejudicial to the interests of the revenue.
After examination he shall pass an order. The Commissioner may require the dealer to produce books, other evidence
etc. for the purpose of this examination before him on an appointed day and he has to serve suitable notice in this
regard.
The Commissioner may pass an order to the best of his judgment on the basis of examination and on the basis of any
other points which may have come to his notice. Review order cannot be passed after the expiry of five years from the
end of the financial year in which the concerned order is served on the dealer. If the appeal against the concerned
order has been passed or pending before any appellate authority, the Commissioner may make a report to the order
to the concerned appellate authority regarding his examination, finding as also of any other point which may have
come to his notice. He has to send the report within three years from the end of the financial year in which the
concerned order is served on the dealer. The appellate authority, after giving the dealer a reasonable opportunity of
being heard, passes an order under this section to the best of its judgment where necessary. For the purpose of
Section 26, this order shall be treated as an order passed in appeal' (Sub-section 2).
When any point is decided against the Government and it has appealed against it
If the State Government or the Commissioner has initiated any proceedings before an appropriate forum, against a
point which is decided against the State by a judgment of the Tribunal, then he Commissioner can review any
assessment order other than the order under appeal as if the point was not decided against the State, but shall stay
the recovery of the dues including interest, penalty, or forfeited in so far as they relate to such point until the
appropriate forum. After the forum decide the point, the Commissioner may modify the order of review if necessary,
after giving the dealer a reasonable opportunity of being heard. The dealer has no right to apply for review of the
order.
Appeal is a remedy for redressal of grievances before higher authority or higher court. It is a
proceeding to rectify any erroneous decision of a judicial/quasi-judicial authority or court by
submitting the question to a higher authority or higher court. Appeal is a continuation of a suit or
proceedings wherein the entire proceedings are again left open for consideration by the appellate authorities which
have the power to review the entire matter, of course, to the prescribed statutory limitations.
APPEAL
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MVAT Act 2002
There is no inherent right of appeal. Appeal is a creation of statute and therefore is subject to the limitations and
restrictions placed by the concerned statute. Section 26 deals with appeal.
First Appeal
Every original Order can be appealed against and the appeal shall lie as given below:
Assessing Authority
A The Sales Tax Officer or the Assistant Commissioner.
B Deputy Commissioner or Senior Deputy Commissioner
C The Joint Commissioner, The Additional Commissioner, The Commissioner.
Appellate Authority
The Deputy Commissioner.
The Joint Commissioner.
The Tribunal.
Second Appeal
If the first appeal order is passed by the Deputy Commissioner or the Additional Commissioner, then second appeal
lies with the Tribunal.
Finality of the Appeal Order
The appeal order passed by the Tribunal shall be final subject to the provisions of Section 24 and Section 27. Section
24 deals with rectification of mistake apparent on records and Section 27 deals with appeal to High Court in certain
cases. Orders passed by other appellate authorities shall be final subject to Sections 24, 25 and 22. Section 25 deals
with Review by the Commissioner.
Time Limit to file Appeal
The appeal is to be filed within 60 days from the date of communicating the order appealed against.
Condonation of Delay
Many dealers have problem in appealing in time due very poor systems prevailing in their oganisations. As stated
above, sixty days time available to file the appeal and sixty days are more than enough to file the appeal. However, if
the assessee is not in a position to file he should ask for Condonation of delay. Section 60 provides that an appellate
authority may admit any appeal after the period of 60 days, if the applicant satisfies the appellate authority that he
had sufficient cause for not preferring the appeal within 60 days. The explanation to this Section provides that the
ground that the appellant came to know of any judgment, decision or order of any Court, Tribunal or other authority
after the expiry of the period of limitation shall not be deemed to constituted a sufficient cause. Normally the following
reasons accepted as sufficient cause for delay and Condonation is given:
(1) The person authorised to sign on behalf of the assessee was away for long period or he was sick.
(2) Due to the sickness of the Consultant, who is supposed to file the appeal, the appeal was filed late.
(3) Due to negligence of the consultant, the appeal was filed late.
(4) Order was served on a person other than a person prescribed in Rule.
(5) Any other circumstances which can be shown to be sufficient reasons for not filing the appeal in time.
Powers of Appellate Authority
The appellate authority has the following powers:
(i) It can confirm, reduce, enhance or annul the assessment. The tribunal may set aside the assessment and refer
the case back to the assessing authority for making a fresh assessment in accordance with the direction given by
it. The assessing authority shall proceed to make fresh assessment and determine the amount of tax payable on
the basis of the fresh assessment.
(ii) In the case of appeal against an order imposing penalty, the authority may confirm or cancel or modify it.
(iii) In the case of appeal against an order imposing interest, the authority may confirm or cancel or modify or remit it
or remit the interest in full or part.
(iv) In any other case, the authority may pass such order as it deems just and proper.
Enhancement of Liability
The appellate authority cannot enhance the tax payable or a penalty or interest or sum forfeited or reduce the amount
of set-off refund of the tax, unless the dealer has been given a reasonable opportunity of showing cause against such
enhancement of liability or reduction in refund.
New points raised during the Appeal
The appellate authority has power to consider and decide any matter arising out of the proceedings in which the order
appealed against was passed, notwithstanding that such matter was raised before it by the appellant or that no order
was made in the said proceedings regarding such matter.
Power to Stay the Order Appealed Against
The appellate authority at the time of admitting the appeal may stay the order appealed against in full or part. It can
impose conditions or restrictions at the time of staying the order. It may give direction for depositing a part or whole of
the disputed amount by the appellant. The appellate authority shall decide the appeals pending before it by such
priorities as may be prescribed. Any person who has attained the age of 75 years and he is a proprietor", partner or a
director having substantial interest in a company, then on an application made by him in this regard, any appeal
made by the proprietary concern, partnership firm or the company shall be decided on priority.
Important aspect of stay of recovery of tax due
40
MVAT Act 2002
As given above the appellant need not pay the tax due as per the order appealed against before the appeal being
admitted. He has to apply to the Appellate Authority to grant stay of recovery of demand raised by the order appealed
against and thereby to restrain the sales tax authorities from recovering the tax dues. The appellate authority can give
stay without any part payment. The authority has to take into consideration the following aspects:
(i) The quantum of dues in appeal.
(ii) Issues relating to the appeal.
(iii) Facts and circumstances of each case.
If the appeal is filed against an 'ex parte' order, the stay may be issued without part payment or on payment of token
amount.
Appeal - Continuation of assessment proceeding
In reality the appeal is the continuation of the assessment proceedings. Because of this fact, the appellant can
produce any declaration such as Form C, Form E, Form 14, Form BC, Form 15 etc. which he could not submit to the
assessing officer. The appellate authority can accept these forms if sufficient cause is shown for non-submission of
forms at the time of assessment.
Appeal to High Court
Section 27 deals with appeal to High Court.
Order Passed By Appellate Tribunal
Against every order passed by the Tribunal lies to the High Court provided the High Court is satisfied that the case
involves a substantial question of law. Appeal can be filed against Advance Ruling also.
Time Limit
The Commissioner or the applicant before the Tribunal aggrieved by any order passed by the Tribunal may file an
appeal to the High Court. The appeal is to be filed within 120 days from the date on which the order appealed against
is received by the Commissioner or the assessee. The appeal should be in the form of a memorandum of appeal
precisely stating therein the substantial question of law involved. (Sub-section 2).
Substantial Question of Law
If the High Court is satisfied that a substantial question of Law is involved, it shall formulate the question. The appeal
shall be heard only on the question of law so formulated and the parties shall not be allowed to argue any other point.
However if the High Court is satisfied that the appeal on any other substantial question of Law not formulated by it, it
can hear the same and it has to record the reason for doing the same.
To decide the Question of Law
The High Court shall decide the question of law and give judgment containing the grounds on which such decision is
founded and may award such cost as it deems fit.
Power to determine any matter not determined by the Tribunal
The High Court may determine any matter which has not been decided by the Tribunal or has been wrongly
determined by the Tribunal.
No Stay of Payment
The payment of any amount to be paid by the applicant to the department or by the Commissioner to the applicant
shall not be stayed by the High Court. On final disposal of the appeal, if required, the payment shall be made by the
applicant or the Commissioner as the case may be.
Effect is to be given by the Tribunal
When the High Court delivers the judgment in an appeal filed before it, the effect shall be given by the Tribunal to the
order passed in the appeal on the basis of certified copy of the judgment, The certified copy can be provided by the
dealer or the Commissioner.
Applicability of Code of Civil Procedure
The provisions of the Code of Civil Procedure, 1908 relating to appeals to the High Court shall apply in the case of
appeals under Section 27.
INTEREST
AND
PENALTY
Like any other taxation law, this Act also provides for levy of penalty and interest for various
defaults committed by the dealer. It will be the aim of the Sales Tax Departments to recover the
tax maximum as it can be and tendency of Companies to avoid payment of interest and
penalties. Now a days market rate of interest rate is very low and if the company pays interest to
the Government it will be comparatively high.
Imposition of penalty in certain instances. Section 29 deals with imposition of penalties.

Penalty for Concealment
For concealing or omission or commission of the following, the Commissioner may impose a penalty equal to the
amount of tax found due as a result of concealment or omission or commission:
(i) Concealed the particulars of any transaction liable to tax,
(ii) Has knowingly furnished inaccurate particulars of any transaction liable to tax,
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MVAT Act 2002
(iii) Knowingly misclassified any transaction liable to tax,

(iv) Knowingly claimed set-off in excess of what is due to him.
He may notice these commissions or omissions or it might have been brought to his notice and he has to give the
person reasonable opportunity of being heard and the order has to be in writing. (Sub-section 3).
Issue of False Document
If any person issues or produces any false document including a false bill, cash memorandum, voucher, declaration
or certificate and because of issue of such false document any transaction of sale or purchase effected by him or any
person is not liable to be taxed or taxed at a lower rate or incorrect set-off is liable to be claimed, the Commissioner
may impose in addition to any tax payable by him, a penalty equal to the amount of tax as a result of any of the
aforesaid act of submission of false document. He has to give the person reasonable opportunity of being heard before
imposing penalty and the order imposing the penalty has to be in writing. (Sub-section 4).
Issue of wrong Invoice
Section 86 deals with issue of Tax Invoice and Memorandum of sales or purchases. If any person contravenes the
provision of Section 86 in order to have the tax payable by him to be under-assessed, the Commissioner may impose
a penalty equal to half the amount of tax which would have been under-assessed or one hundred rupees, whichever
is more. The penalty is over and above the tax payable by the dealer. The order has to be in writing. The
Commissioner has to give an opportunity of being heard before imposing penalty on the dealer. (Sub-section 6).
The Maharashtra Tax Laws (Levy and Amendment) Act, 2010 has increased the penalty under this Sub-section from
Rs. 100 to Rs. 1000 with effective from the 1st May,2010.
Failure to Comply with any Notice
If any person has failed without reasonable cause to comply with any notice in respect of any proceedings, the
Commissioner may impose a penalty equal to one thousand rupees. He has to give the person reasonable opportunity
of being heard and the order has to be writing. (Subsection7).
The Maharashtra Tax Laws (Levy and Amendment) Act, 2010 has increased the penalty from Rs. 1000 to Rs. 5000
with effective from the 1st May, 2010.
Failure to File Return
Section 20 deals with filing of Return. If any person failed to file the return as required under Section 20, the
Commissioner may impose a penalty of rupees ten thousand. However if the return is filed before the initiation of the
proceeding for levy of penalty, the penalty shall be rupees five thousand. He has to give the person reasonable
opportunity of being heard and the order has to be writing' (Sub-section 8).
Failure to File Return - Penalty Provision Changed with Effect from 1'7'2009
By The Maharashtra Tax Laws (Levy, Amendment and Validation) Act 2009, Sub-section (8) Section 29 has been
substituted with new Sub-section. This is effective from 1st July, 2009. According to the amended Sub-section 8, the
penalty Leviable has been reduced to Rs.5000 as in the sub-section 8 before amendment, this penalty shall be
without prejudice to any other penalty which may be imposed under this Act.
Payment of Interest on Delayed Payment of Tax
Interest at 1.25% per month or part thereof on the tax paid after the prescribed date is payable [Section 30(2) and
Rule 88]. The dealers can pay in the return/challan itself the interest along with the tax paid after the due date. This
will save the dealer's from botheration of making separate interest Payment.
Penalty under Section 29[8) is attracted for non-filing or late filing of returns. However, no penalty under this Section
will be levied in the cases where full interest is paid suo-motto along with the tax in the late return.
Filing Incorrect Return
If the dealer has filed a return and it is found to be incorrect, the Commissioner may impose a penalty of rupees one
thousand. The penalty can be imposed as stated above after giving the dealer a reasonable opportunity of being
heard. The order has to be in writing. This penalty is without prejudice to any other penalty which may be imposed
under this Act' (Sub-section 9).
Procedural Requirement for Imposing Penalties
For imposing penalties under the above mentioned subsections, the time and period for service of notice for levy of
penalty and passing the order of penalty shall be the same as applicable to the service of notice for assessment and
passing of the order of assessment under the provisions of section 23. (Sub-section 10).
Collection of Tax in Contravention of Section 60
Section 60 deals with prohibition of collection of amounts by way of tax or in lieu of tax in certain cases such tax free
goods etc. Where a person has collected any sum by way of tax in contravention of Section 60, he shall be liable to
pay a penalty not exceeding two thousand rupees and any sum collected shall be forfeited by the State Government.
The Commissioner, if he is of the opinion that any person has collected tax in contravention of Section 60, may serve
on such person notice requiring him on a date and at a place specified in the notice to attend and show cause why a
penalty should not be imposed and why the amount should be forfeited. The Commissioner after holding enquiry
shall make such order as he thinks fit. When any order of forfeiture is made, the Commissioner may publish a notice
for the information of the persons concerned giving such details. (Sub-section 11)"
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MVAT Act 2002
Penalty for Non-compliance conditions under Section 8

Exemption is available from payment of tax under Subsections (3), (3A), (3B) or (5) of Section 8. If the purchaser fails
to comply with the conditions or restrictions subject to which the exemption is given, the authority may impose
penalty on the purchasing dealer. The penalty may be equal to one and a half times the tax which would have become
payable on the purchase if the exemption was not available on the purchase. The authority has to the purchaser a
reasonable opportunity of being heard before imposing the ' penalty.
Power of Various Authorities to impose Penalty
Under sub-section 12 the various authorities got power to impose Penalty as given below:
(a) A Sales Tax Officer or an Assistant Commissioner has to take prior approval of Deputy Commissioner to impose
penalty above Rs. 5 lakh.
(b) A Deputy Commissioner or a Senior Deputy commissioner has to take prior approval of joint Commissioner to
impose penalty above Rs' 10 lakh'
However appellate authority can impose any amount of penalty as per the provisions of the Act' (Sub-section 12)'
This section gives discretion to the officer only to the extent, whether penalty is leviable or not' Once it is held that
penalty is leviable then there is no scope for discretion' As far as quantum of levy is concerned' unfortunately even the
Appellate Authorities have no discretion.
Limitation Period
The Maharashtra Tax Laws (Levy and Amendment) Act 2010 has increased. the limitation period from 5 years to 7
years with effective from the 1st May' 2010'
Dealer Failed to apply for Registration
Any 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 within the time specified shall be liable to pay by way-of simple interest in addition to the amount of tax payable
a sum equal to the prescribed rate of the amount of such tax for each month of or part thereof for the period
commencing on the 1st April of the respective year to the date of order of Assessment or date of the payment of tax
whichever is earlier. If the tax is paid on different days, the interest calculation should be made by taking the date of
payment. If the tax amount payable is reduced or enhanced in the appeal, the interest should be made on the
reduced or enhanced. However total interest amount shall not exceed the amount of tax found payable for the
respective years. (Sub-section 1).
Failure to Pay Tax in Time
A registered dealer, who has not paid to pay the tax within the specified time, shall be liable to pay by way of simple
interest, in addition to the amount of tax, a sum equal to the prescribed rate of the amount of tax for each month or
part thereof after the last date by which he should have paid the tax. When part of the tax is paid, interest is to be
calculated on the balance amount only. If the dealer has filed a fresh return or revised return and the tax payable is
more than the tax paid as per the original return, the dealer has to pay interest on difference amount payable as the
fresh return or revised return. If any other tax under this Act has remained unpaid up to one month after the end of
the period of assessment, the interest is leviable as stated above. (Sub-section 2).
Non-Payment of Other Amount
If any tax other than the tax on which interest is leviable under sub-section 2 as stated above has remained unpaid
up to one month after the end of the period of assessment, then the concerned person is liable to pay interest under
this sub-section. He is liable to pay simple interest be 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 assessment. If he has paid the unpaid tax whether in full or part on or before the date of
order of assessment, the amount of such interest shall be calculated by taking into consideration the amount and the
date of such payment. If tax is reduced or enhanced by order passed under this Act, then, interest has to be
calculated with reference to enhanced or reduced amount.
25% of Tax as Interest
By The Maharashtra Tax Laws (Levy, Amendment and Validation) Act 2009, a new Sub-section (4) has been added to
Section 30. This is effective from 1st July, 2009' If the dealer files return or revised return in the following cases, he
has to pay by way of interest in addition to the amount of tax payable as per the return or revised return, 25% of the
additional tax payable as per the return or revised return.:
1. After the commencement of
a) audit of the business of the dealer in respect of any period; or
b) inspection of the accounts, registers and documents pertaining to any period, kept at any place of business of
the dealer; or
c) 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.
2. In consequence of any intimation issued under subsection (7) of section 63.
OFFENCES
AND
PENALTIES
Section 74 deals with offences and imposition of penalties.

Punishment for misrepresenting as registered dealer etc. If a person knowingly
commits the following, he shall on conviction be punished with rigorous imprisonment for
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MVAT Act 2002
a term which shall not be less than one month but which may extend to one year and with fine:
(a) Unregistered Dealer represents himself as registered dealer.
(b) Furnishes false return when required to furnish under this Act.
(c) Produces before the Commissioner or the Tribunal a false bill, cash memorandum, voucher, declaration,
certificate or other document referred to in subsection (4) of Section 29.
Sub-section (4) of Section 29 deals with issue of false documents etc. If any person issues or produces any false
document including a false bill, cash memorandum, voucher, declaration or certificate and' because of
issue of such false document any transaction of sale or purchase effected by him or any person is not liable to
be taxed or taxed at a lower rate or incorrect s e t-of f is liable to be claimed, the Commissioner may impose
in addition to any tax payable by him, a penalty equal to the amount of tax as a result of any of the aforesaid
act of submission of false document. He has to give the person reasonable opportunity of being heard before
imposing penalty and the order imposing the penalty has to be in writing. [Sub-Section (4) of Section 29].
(d) Keeps false account of the value of goods bought or sold by him in contravention of sub-section (1) of Section
63. Sub-section (1) of Section 63 requires the dealer to keep a true account of the value of the goods sold or
purchased by him.
(e) Produces a false accounts, registers or documents or knowingly furnishes false information.
(f) 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.
(g) Falsely represents that he is authorized under Section 82 to appear before any authority in any
proceedings.
Section 82 deals representatives appearing before the any authority.
Punishment for attempting to evade payment of Tax etc.
If any person willfully attempts to evade any tax leviable or willfully attempts to evade any payment of any tax or
penalty or interest or all under this Act shall on conviction be punished with rigorous imprisonment which shall
not be less than three months but which may extend to one year and with fine.
Punishment for engaging in business without registration etc.
If any person does the following, he shall, on conviction, be punished with imprisonment for a term which may extend to six
months and with fine.
(a) Fails without sufficient cause to comply with the requirements of Sub-section (3) of Section 14. It thus deals
with non-attending or non-submitting of documents etc. before the Commissioner or Tribunal when
summonses are issued.
(b) Engaged in business as a dealer without being registered under and in willful contravention of Section
16. Section 16 deals with registration of dealers under this Act.
(c) Fails without sufficient cause to obtain in lieu of the existing certificate of registration of fresh certificate of
registration when required to do so as provided in subsection (1) of Section 17.
Section 17 deals with obtaining fresh certificate from a notified date. The Commissioner may require every dealer who
holds a valid registration certificate on a specified date notified by him in the Official Gazette to obtain in lieu of the
existing certificate of registration a new certificate of registration. Every dealer, who is required to obtain a new
certificate, shall apply in the prescribed form within the stipulated period to the concerned authority and the
application should be accompanied by the existing certificate of registration together with all additional copies,
if any, issued to him. On issue of new certificate of registration, that will be treated as Certificate of Registration
as required under Section 16. The Commissioner may notify in the Official Gazette a date for cancelling the
existing certificates of registration and from that date all the existing registration certificates will be treated
as cancelled. The Commissioner has power to require a class of dealers to surrender the existing certificates of
registration and obtain new certificates of registration and also cancel the certificates of registration of a class of
dealers by notification in the Official Gazette. (Section 17).
(d) Fails without sufficient cause to furnish information regarding change in business. Section 18 deals with
furnishing of information regarding change of place of business.
(e) Fails without sufficient cause (i) to furnish a declaration regarding manager, (ii) to communicate the
permanent account number obtained under the Income Tax Act, 1961 or fails to state whether he has applied
for the Permanent Account Number and fails to provide the details of the application as provided in subsection (2) of Section 19.
(f) Fails without sufficient cause to furnish any return or a self-consistent and fully filled in return as required
by Section 220 by the date in the manner prescribed.
(g) Fails without sufficient cause to deduct tax at source or pay such tax deducted at source or to obtain the
sales tax deduction account number or to file a return required the Section 31. Section 31 deals with Tax
deducted at Source and procedure to be followed to deduct the tax at source, pay to the Government,
Return to be filed etc.
(h) Fails without sufficient cause to comply with the requirements of the notice issued under sub-section (1) of
Section 33. Section 33 deals with Special Mode of Recovery and Sub-section deals with issue of notice
asking any person to pay the tax dues etc. to the Commissioner.
(i) Fails without sufficient cause to comply with the requirements of any order issued under sub-section (1) of
Section 35. Section 35 deals with provisional attachment to protect revenue in certain cases and subsection
deals with attaching provisionally by order in writing any money due or which may become due to such
person or dealer from any other person etc.
44

(j)
(k)
(l)
(m)
(n)
(o)
(p)
(q)
(r)
(s)
(t)
MVAT Act 2002
Fails without sufficient cause to comply with the requirements of any order issued under Sub-section (3) of
Section 38. Section 38 deals with transfer of assets to defraud revenue and it declares that transfer of
assets to defraud is void. Sub-section 3 deals with the order issued under this section.
Fails without sufficient cause to comply with the requirements of Section 42. Section 42 deals with
composition tax as notified in the Official Gazette.
Without reasonable cause collects tax on non-taxable goods or under composition scheme etc prohibited by
Section 60.
Fails without sufficient cause to comply with the requirements of Tax Audit under Section 61.
Fails without sufficient cause to comply with requirements under Section 63 to keep accounts or
record.
Fails without sufficient cause to comply with any requirements regarding inspection of accounts and
documents and search of premises, under Section 64.
Fails without sufficient cause to comply with any requirements regarding cross checking of transactions
under Section 65.
Fails without sufficient cause to furnish any information or return required to collect statistics under
Section 70 or willfully furnishes any information or return which he knows to be incorrect or false.
Fails without sufficient cause to issue a tax invoice or a bill or cash memorandum as required under
Section 86.
Contravenes without reasonable cause any of the conditions subject to which the certificate of entitlement
is granted.
Fails without sufficient cause to comply with any notice in respect of any proceedings. (Sub-section 3)
Punishment for inducing commissioning of offence

Any person aids or abets or induces any person in commission of above-mentioned acts shall be punished with
rigorous imprisonment which shall not be less than one month but which may extend to one year and with
fine. (Sub-section 4).
Punishment for Continuing Offence
If any person commits the above-mentioned offence and the offence is a continuing one, then, the person shall on
conviction be punished with daily fine not less than Rs.100 during the period of the continuance of the offence in
addition to the punishments provided under this Section. (Sub-section 5).
Position of the Manager
For the offence committed under sub-sections 1, 2 or 3 the person, who is a Manager of a 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. (Sub-section 6).
Requirement of Culpable mental State
In any prosecution for an offence under this Section, which requires a culpable mental state on the part of the
accused, it will be presumed the existence of such mental state.
However, the accused can prove that no such mental state with respect to the act charged as an offence in that
prosecution. The explanation to this sub-section gives inclusive definition of Culpable mental state. It states that
"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.
Offences by companies
Section 75 deals with offences by companies:
In the case of Company every person who at the time of the offence was committed was in charge of it shall be
liable for the offence. He shall not be liable if he can prove that the offence was committed without his knowledge or he
exercises all due diligence to prevent the commission of such offence.
If any offence was committed by a company and it is proved that the offence has been committed with the
consent or connivance of or is attributable to any neglect on the part of any director, manager, secretary or other officer,
they shall also be deemed to be guilty of that offence. For the purpose of this Section, company means a body
corporate and includes a firm or other association of individuals and director in relation to a firm means a
partner.
When offence is committed by an HUF, the Karta shall be deemed to be guilty of the offence. However if he can prove
that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the
commission of such offence. Like in the case of a company, if the offence is committed with the consent or
connivance of or is attributable to any neglect on the part of any adult member of the HUF, such member shall also be
deemed to be guilty of the offence.
Offences Cognizable and Bailable
Section 76 deals with this aspect.
All offences punishable under this Act shall be cognizable and bailable.
A Metropolitan Magistrate or Judicial Magistrate First Class may impose on any person found guilty of an offence under
Sections 71, 72 or 74 a punishment as provided in the relevant section.
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MVAT Act 2002
If any prosecution for an offence has been instituted in respect of the same facts on which a penalty has been
imposed or if the offence has been compounded, on conviction as a result of the final proceedings, the
Commissioner shall refund the amount collected as penalty or amount compounded.
Investigation
The Commissioner may authorise any officer to investigate any of the offences under this Act and the officer shall
exercise the powers conferred by the Code of Criminal Procedure, 1973, upon an officer in charge of a police
station for the investigation of a cognizable offence. (Section 77).
Compounding
Section 78 deals with compounding of offences. The Commissioner may accept from any person charged under
Sub-section (4) of Section 74, a sum not exceeding two thousand rupees and in any other case a sum not exceeding
double the amount of tax which would have been payable on the sale, purchase or turnover to which the offence
relates, by way of composition. The Commissioner may accept it either before or after initiation of the proceedings
and he should afford the concerned person an opportunity of being heard.
On payment of Compounded amount no further proceedings shall be taken against the accused person in respect
of the same offence. If any proceedings is already taken shall stand abated.
Action against any authority for vexatious order etc.
Section 12 gives power to the Commissioner to take action against the Sales Tax
authorities for vexatious, false order etc. on receipt of complaint from the dealer. This
section also gives power to the Commissioner to fine the dealer making false or mischievous complaint.
MISCELLANEOUS
Classification of Turnover - Section 28

When any appellate authority or any other authority passes an order in appeal or review to the effect that any tax
assessed under the Act or other Act should have been assessed under the provisions of a law other than that under
which it was assessed, the effect has to be given to the order within five years from the date of such order. When the
assessment has already been made, the assessment shall be modified after giving the dealer a reasonable opportunity
of being heard. This is to be done notwithstanding that any provision regarding limitation applies to such assessment
period.
This is a new provision under this Act. For example, if a particular transaction was taxed under CST and if the
Authority holds that it is wrongly assessed under CST Act and it should have been assessed under this Act or viceversa, the Assessing Authority can modify the order within five years from the date of the judgment.
Tax Clearance Certificate
Any dealer can apply for a Clearance Certificate to the Commissioner and the Commissioner may on the basis of
record, issue a certificate within a period of fifteen days from the date of receipt of the application. The certificate may
state the following:
(i) The periods for which the returns have been filed.
(ii) The periods for which Returns not filed.
(iii) The period for which assessment has been completed.
(iv) The status of pending proceedings, if any.
(v) The amount payable by the applicant, if any.
The Commissioner may every year on the basis of record issue to every registered dealer regarding the amount payable
by him as on the 1st April of the year, stating therein the periods for which returns have not been filed, the period-wise
outstanding amounts of tax, penalty, interest and sum forfeited payable etc.. The certificate shall, as far as possible, be
issued immediately after the 1st of every year. The Commissioner shall be in a position to initiate or continue any
proceedings including recovery proceedings, if it is subsequently found that the certificates were issued on the basis of
incomplete or erroneous information.
Tax Clearance Certificates under the MVAT/CST Act:
As far as the recovery position of a dealer is concerned two types of certificates are issued by the sales tax authorities
i.e. "Tax Clearance Certificate" and the "Tax Dues Certificate". As per the provisions of Section 32(8)(a), (read with
MVAT rule 42) application for the "Tax Clearance Certificate" should be made in Form 414. The "Tax Clearance
Certificate" should be in Form 415 [MVAT Sec. 32(8)(a) read with MVAT rule 43]. "Tax Dues Certificate" has to be
issued in Form 416 [MVAT section 32(8)(b) read with MVAT Rule 44]. It may be noticed that these are Forms
prescribed under the MVAT rules; hence any of the departmental authorities is not permitted to deviate from this
format. Under the PT Act/Rules, no such formats have been prescribed.
Issuing Authority:
Tax Clearance Certificate in the case of dealers, holding VAT/CST TIN shall be issued by the VAT Recovery Officer. VAT
Recovery Officer in such cases shall issue the Tax clearance certificate for VAT/CST as well as other Acts, if the dealer
has applied for the clearance certificate for all Acts. He may call for the recovery/dues position for PT from the
Profession Tax Office. In case the applicant dealer does not hold VAT/CST TIN then the Tax Clearance Certificates shall
be issued by the PTO.
Special Mode of Recovery
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MVAT Act 2002
The Commissioner may on noticing that there is an outstanding liability of tax, interest or penalty from a dealer in
spite of notice being issued under Sub-section 4 of Sections 32 or in whose case any amount is due under Subsections 2, 3 or 4 of Section 32 but is unpaid by issuing notice in writing require,
(i) any person from whom any amount of money is due, or may become due to the defaulting dealer, or
(ii) any person who holds or subsequently hold money for or on account of such dealer,
to pay to the Commissioner. It is to be paid immediately upon the money becoming due or within the time specified in
the notice. However, the Commissioner cannot take any action under this Section till the date prescribed for filing for
appeal, if the dealer makes an application to the Commissioner before the said date stating that he is proposing to file
an appeal against the order in pursuance of which under Sub-section 4 of Section 32 has been served on him. The
amount due to dealer from or money held for or on account of a dealer by any person shall be calculated after
deducting there from such claims lawfully subsisting at the time of issue of notice to him. The Commissioner may
amend, revoke any such or extend the time for making any payment in pursuance of the notice. Any person making
payment in compliance with a notice this section shall be discharged from liability to the extent the amount is paid to
the Commissioner. Any person discharges any liability to the dealer after receipt of the notice shall be treated as
personally liable to the Commissioner to the extent of the liability discharged by him. If the person who received the
notice proves to the Commissioner that the sum demanded or any part thereof is not due to the dealer or that he does
not hold any money for or on account of the dealer, he will not be liable under this section for making any payment to
the Commissioner. If any amount remains after the person received the notice under this section in spite of the person
having the dealer's money, the unpaid amounts shall be recoverable as arrears of land revenue. (Section 33).
Special powers of Sales Tax authorities for recovery of tax as arrears of land revenue
The various authorities under the Act have power of various Authorities under the Maharashtra Land Revenue Code,
1966. (section 34).
Provisional attachment to protect revenue in certain cases
If during the inquiry etc. if the Commissioner is of the opinion that for the purpose of protecting the interests of the
revenue it is necessary so to do, then he may attach provisionally by order in writing any money due or which may
become due to such person or dealer from any other person or any money which any other person holds or
subsequently hold for or on account of such person or dealer. The provisional attachment order shall cease to have
effect after the expiry of one year from the date of service of the order issued. The Commissioner may, for reasons to be
recorded in writing, extent the period up to another year. The power of provisional attachment to Commissioner having
jurisdiction over the entire State or by any Joint Commissioner to whom the Commissioner has delegated such powers
by a notification published in the Official Gazette. The person who received the Provisional Attachment order
discharges liability to the dealer, he will be personally liable as stated in the previous paragraph. (Section 35).
Transfer to Defraud Revenue Void
The Commissioner is of the opinion that the liability of the dealer to pay tax or any other sum payable under this Act,
is likely to be in excess of Rs. 25,000 and he creates a charge on or parts with the possession by any mode of transfer
whatsoever, including sale, mortgage, gift or exchange of any of the assets of his business valued at rupees ten
thousand or more in favor of any person with intent to defraud revenue, such charge or transfer shall be void as
against any claim any amount under the Act. Such transfer shall not be void if made for adequate consideration and
without notice of the pendency of the proceeding. (Subsection 1 of Section 38). If the Commissioner of the opinion that
the property of the dealer has been transferred to any other person to defraud the revenue, he shall issue a notice and
hold enquiry and decide whether the charge or transfer became void under this Section. If he is satisfied that the
charge or transfer is void, he shall make an order declaring such charge or transfer to be void for the purpose of this
Act. (Subsection 2 of Section 38).
Tax liability in certain cases
Where a dealer dies and the business is continued after his death by his legal representative or by any person, he shall
be liable to pay any amount due under this Act by the deceased dealer. If the business is continued, his legal
representative shall be liable to pay the tax to the extent of the estate of the deceased. Similarly if the dealer happens to
be Hindu Undivided Family and if the HUF is partitioned then each member shall be jointly and severally liable to pay
amount due under this Act till the date of partition. Where a dealer transfers or otherwise disposes of his business in
whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded in the
business or part thereof by any other person, the dealer and the person succeeding shall jointly and severally be liable
to pay any amount due from the dealer under this Act or under any earlier law, up to the time of such transfer etc.
Where the guardian or trustee carries on the business and the guardianship or trusteeship is terminated, the ward or
beneficiary will be liable for the amount due under this Act up to the date of termination. (Section 44).
Certain agents liable to tax for sales on behalf of principal
In the case of Brokers, Agents etc. they and principal shall both be jointly and severally Liable to pay the taxes.
(Subsection 1 of Section 45).
Tax is to be paid once only
If the principal can prove that the agent has paid the tax, he will not be liable to pay the tax again in respect of the
same transaction. Likewise, if the agent can prove that the tax has been paid by the principal, then, the agent will not
be liable to pay the tax. (Sub-section 2 of Section 45)
Non-Resident Dealer
47
MVAT Act 2002
The above rules are applicable in the case of non-resident dealer also. (Sub-section 3 of Section 45)
Works Contract
In the works contract, where the principal contractor assigns the whole or part of the execution of the works contract
to different sub-contractors, i.e. agents, the principal would be liable to pay tax under this Act as if such works
contract had been executed by himself. Where agent executes works them liable to pay tax, the principal and the agent
shall be jointly and severally liable to pay tax in respect of the transfer of property in goods involved in the execution of
the works contract. However, if one of them proves that the other party has paid the tax, then the principal or agent
will not be liable to pay the tax. No deduction from payment of tax shall be given to the principal or the agent, unless a
duly signed certificate in the prescribed from is produced. A principal contractor assigning execution of a works
contract to a sub-contractor registered under this Act, may deduct from his total contract value, the value of the
contract carried out by the sub-contractor provided a declaration in the prescribed form signed by such subcontractor
is produced. Likewise the sub-contractor who has been assigned execution of works contract by a principal contractor
may deduct from his total contract value, the value in respect of such works contract executed by him provided a
declaration in the prescribed form signed by such principal contractor is produced. (Sub-section 4 of Section 45)
Liability of firms and partners
In the case of partnership firms, the firm and each of the partners are jointly and severally liable to pay any dues under
the Act. Notice, Order may be served on any person who was a partner during the relevant time, whether or not the
firm has been dissolved. Any partner who retires from the firm is liable to pay all dues payable by the firm till the date
of retirement. If any partner dies, then his legal representative shall be liable to pay any amount remaining unpaid at
the time of death and any amount due up to the time of death though un-assessed at that time. (section 46).
Amalgamation of Companies
When two or more companies are amalgamated by the Order of the Court or of the Central Government and the
amalgamations and the order is passed after the appointed day and is to effect prior to the date of the order, then, sale
between the amalgamating companies shall be included the turnover of the respective companies for the period when
the transactions took place. (Subsection 1 of Section 47)'
Demerger of Companies
If any company is to be demerged by the order of the Court or of the Central Government into two or more companies
and the order is passed after the appointed day and is to take effect from a date earlier to the date of the order, then for
all practical purposes of this Act, it is presumed that the two or more demerged companies have not sold or purchased
any goods to each other from the date of effect of the order to the date of the order. (Section 47)'
Refund in the case of Inter-State Trade
If any declared goods are sold by the dealer in the course of inter-state trade and tax has been under the central sales
Tax Act, 1956 and the dealer proves to the satisfaction of the commissioner that tax under this Act or any earlier law
has been paid in earlier sale or purchase of such goods made in the State, then an amount equal to the tax so paid
shall be reimbursed to the dealer. (Section 49)'
Accounts
All dealers liable to pay tax and other dealers who are required by the Commissioner shall keep a true account of the
value of goods sold or purchased by him. If the Commissioner considers that the accounts are not sufficiently clear or
intelligible or enable him to determine the tax payable by him or scrutinize the returns etc, the Commissioner may
require such dealer by notice in writing to keep such accounts in such form or manner as in his opinion is necessary
for the purpose of quantifying the tax etc. He may require any dealer in writing or class of dealers by notification in the
Official Gazette to maintain accounts and records showing such particulars regarding their purchases, sales or delivery
of goods and payments made or received towards sales or purchases of goods in such form and in such manner as
specified by him. Registered dealers should maintain the books of account at the place or places of business specified
in his certification of registration. However, with the prior permission of the Commissioner, the books can be kept at
such other place as may be agreed to by him. The books of account to be maintained at the place of business provide
the following: ' Accounts, registers and delivery relating to his stock of goods, or to purchases, sales and delivery of
goods made by him or payments made, payments received towards sale or purchase of goods.
Return of Goods
Sales Return
If sale of goods is made and afterwards the goods are returned within six months, then the goods returned shall be
accounted for in the return for the period in which sales are taken in the books of account.
Purchase Return
If purchase of goods made and afterwards the goods are returned within six months, then the goods returned shall be
accounted for in the return for the period in which the purchases were accounted.
Issue of Debit Notes and Credit Notes
If Credit Notes or Debit Notes are issued due to variation in Sale Price or Purchase Price, then they shall separately
specify the component of tax and the component-of price. The Debit Note or Credit Note shall be accounted for in the
return in the period in which appropriate entries for debit notes and credit notes were accounted. Issue of Debit Notes
and Credit Notes to give effect to arrangement.
48
MVAT Act 2002
Intimation By the department

By the Maharashtra Tax Laws (Levy, Amendment and Validation) Act 2009, a new Sub-section (7) has been added to
Section 63. This is effective from 1st July, 2009. This new Sub-section enables the Department to send intimation
regarding the quantum of tax payable or, the amount of set off or refund as disclosed in the returns filed by the dealer
or recorded in the books of the dealer is incorrect. He may come this conclusion during the course of any proceedings
in the case of any dealer or otherwise' The Department has to send the intimation in the prescribed Form. This
intimation has to inform the likely additional quantum of tax which should have been paid or the likely reduction in
the quantum of set-off or refund. It may advise him to file a return or a revised return after taking into account the
contents of the intimation.
Production and inspection of accounts and documents and search of premises
The Commissioner may require any dealer to produce before him any accounts or documents. He can also ask the
dealer to furnish any information relating to stocks of goods, or to sales, purchases and delivery of goods or to
payments made or received towards sales or purchases of goods by the dealer. He can ask any other information
relating to the dealer's business, as may be necessary for the purposes of this Act. The Commissioner may inspect the
books of the dealer at any reasonable times and he can also inspect the cash and stock kept in any place of business.
The Commissioner can take copies or extract of such books, register etc. If the Commissioner has reason to believe
that any dealer has evaded or is attempted to evade the payment of any tax, the seize such accounts, registers or
documents. He has to record the reasons for seizure and he shall grant a receipt for the same. He can retain the
accounts etc. for so long as they are required in connection with any pending proceeding under the Act. If the dealers
want true copies of the accounts etc, the Commissioner has to provide the same. The Commissioner may enter and
search any place of business of any dealer or any other place where the Commissioner has to believe that the dealer
keeps any accounts, registers or documents of his business or stocks of goods relating to his business. Whatever books
of account, other documents, money or goods found in the possession or control of any person in the course of any
search, it shall be presumed that they belong to the person unless the contrary is proved.
For the purpose of section, place of business includes a place where the agent is carrying on the business, a
warehouse, godown or where goods are stored or where the books of account are kept. This section deals with search
as explained above. The powers of search is very wide in scope. A search cannot be sustained unless it is clearly shown
that it was done by an authority duly authorised therefore and all conditions precedent in relation thereto exist. A
search conducted under this section invade the privacy of a citizen. Thus, formation of the opinion or reason to believe
by the authorising officer must be apparently from the records of the case. "Reason to believe" consequent upon the
receipt of information in his possession is sine qua non for the officer to authorise the search (Section 64).
Cross checking of transactions
The Commissioner may require any class of dealers to furnish such information which are required for cross checking
the transactions. The Commissioner may by notification in the Official Gazette require any class of dealers to furnish
prescribed information, details and particulars regarding the transactions of sales and purchases effected by them
during the period mentioned in the notification in the prescribed form to the prescribed authority and to be submitted
before the specified date (Section 65).
Survey
The Commissioner shall cause a survey of unregistered dealers to be taken in order to identify the dealers who are
liable to tax and not registered under the Act. He can ask the dealers to furnish the names, addresses of persons who
have purchased or sold to the dealer or from the dealer. The Commissioner may call for details regarding the services
provided by public utilities and financial institutions including Banking companies which he is of the opinion shall be
relevant and useful for the purposes of the survey.
Serving of Orders and Notices
Orders and notices can be served by one the methods given below:
(i) Hand Delivery
(ii) By Post.
(iii) By Facsimile messages.
(iv) By sending a scanned copy of the order or notice by e-mail.
(v) By Courier Service as approved by the Commissioner.
If the department is unable to serve by the above methods, then, they can use one of the below given methods:
(i) When the addressee has no fixed place of Business in the State, notice to be published in a local newspaper or
in the Official Gazette.
(ii) The notice can be fixed on the dealer's office building.
(iii) The notice can be fixed on the residential building of the dealer.
When the notice or order is served, the acknowledgement of the person is to be taken. When service is made by post
the service shall be deemed to have been effected at the time at which the order or notice would be delivered in the
ordinary course of post provided it was posted properly.
49

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MVAT Act 2002

The Institute of Professional Studies (TIPS)

THE MAHARASHTRA VALUE

SELF READING SESSION

Value Added Tax Scheme

D.T.L. Paper IV (80 marks)

The Institute of Professional Studies (TIPS)

MVAT Act 2002

Schedule B - Precious metals and it carries 1% Rate.

D.T.L. Paper IV (80 marks)

The Institute of Professional Studies (TIPS)

MVAT Act 2002

D.T.L. Paper IV (80 marks)

The Institute of Professional Studies (TIPS)

MVAT Act 2002

Incorporated or unincorporated societies, clubs or other associations of Persons.

D.T.L. Paper IV (80 marks)

The Institute of Professional Studies (TIPS)

MVAT Act 2002

Person (Sub-section 17)

D.T.L. Paper IV (80 marks)

The Institute of Professional Studies (TIPS)

MVAT Act 2002

D.T.L. Paper IV (80 marks)

The Institute of Professional Studies (TIPS)

MVAT Act 2002

D.T.L. Paper IV (80 marks)

The Institute of Professional Studies (TIPS)

MVAT Act 2002

D.T.L. Paper IV (80 marks)

The Institute of Professional Studies (TIPS)

MVAT Act 2002

Exemption from Payment of Tax - Sale to/by Canteen Stores

D.T.L. Paper IV (80 marks)

The Institute of Professional Studies (TIPS)

MVAT Act 2002

Credit for the Tax Collected at Source

D.T.L. Paper IV (80 marks)

The Institute of Professional Studies (TIPS)

MVAT Act 2002

D.T.L. Paper IV (80 marks)

The Institute of Professional Studies (TIPS)

MVAT Act 2002

Turnover Requirement for Registration

D.T.L. Paper IV (80 marks)

The Institute of Professional Studies (TIPS)

MVAT Act 2002

Application for Registration

D.T.L. Paper IV (80 marks)

The Institute of Professional Studies (TIPS)

MVAT Act 2002

(l) Registration Fee

D.T.L. Paper IV (80 marks)

The Institute of Professional Studies (TIPS)

MVAT Act 2002

D.T.L. Paper IV (80 marks)

The Institute of Professional Studies (TIPS)

MVAT Act 2002

Who has to apply?

Issue of Tax Invoice

D.T.L. Paper IV (80 marks)

The Institute of Professional Studies (TIPS)

MVAT Act 2002

(v) Signed by the selling dealer, or authorised person. (Sub-section 2)