1

INDEX

Sr. No. Particular Page No.

1 Introduction Of MVAT

2 Registration Under MVAT

3 Declared Goods
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4 Tax Payers, Returns And Methods Of Computation

5 Case Study Of MVAT

6 Appeal Under MVAT

7 Conclusion

8 Bibliography

Maharashtra Value Added Tax

Introduction
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Value Added Tax (VAT)

A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type

of general consumption tax that is collected incrementally, based on the value added, at each

stage of production and is usually implemented as a destination-based tax, where the tax rate is

based on the location of the customer. VATs raise about a fifth of total tax revenues both

worldwide and among the members of the Organisation for Economic Co-operation and

Development (OECD). As of 2014, 160 of the world's approximately 193 countries employ a

VAT, including all OECD members except the United States.

There are two main methods of calculating VAT: the credit-invoice or invoice-based method and

the subtraction or accounts-based method. Using the credit-invoice method, sales transactions are

taxed, with the customer informed of the VAT on the transaction, and businesses may receive a

credit for VAT paid on input materials and services. The credit-invoice method is the most widely

employed method, used by all national VATs except for Japan. Using the subtraction method, at

the end of a reporting period, a business calculates the value of all taxable sales then subtracts the

sum of all taxable purchases and the VAT rate is applied to the difference. The subtraction

method VAT is currently only used by Japan, although subtraction method VATs, often using the

name "flat tax", have been part of many recent tax reform proposals by US politicians. With both

methods, there are exceptions in the calculation method for certain goods and transactions,

created for either pragmatic collection reasons or to counter tax fraud and avoidance.

Maharashtra Value Added Tax (MVAT)

The system of Value Added Tax (VAT) has been implemented, in the State of Maharashtra, w.e.f.

1st April, 2005.

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As per the provisions of MVAT, a dealer is liable to pay tax on the basis of turnover of sales

within the State. The term dealer has been defined u/s. 2(8) of the Act. It includes all person or

persons who buys or sells goods in the State whether for commission, remuneration or otherwise

in the course of their business or in connection with or incidental to or consequential to

engagement in such business. The term includes a Broker, Commission Agent, Auctioneer,

Public Charitable Trusts, Clubs, Association of Persons, Departments of Union Government and

State Government, Customs, Port Trusts, Railways, Insurance & Financial Corporations,

Transport Corporations, Local authorities, Shipping and Construction Companies, Airlines,

Advertising Agencies and also any corporation, company, body or authority, which is owned,

constituted or subject to administrative control of the Central Government, any State

Government or any local authority.

However an agriculturist, educational institution and transporters shall not be deemed to be a

dealer (subject to fulfilment of conditions).

Dealers liable to pay Tax: [Sec. 3]

1. The dealers, holding a valid registration certificate under the earlier laws, whose turnover

of either of sales or purchases exceeds the specified limits during the financial year 2004-

05, shall be deemed to be registered dealer under MVAT Act and shall, therefore be liable

to pay tax w.e.f. 1st April, 2005.

2. The dealers, holding a valid registration certificate under the earlier laws, whose turnover

of either of sales or purchases has not exceeded the specified limits during the financial

year 2004-05, but who have opted to continue their registration certificate (by applying to
 5

assessing officer in specified format), shall also be deemed to be registered dealer under

MVAT Act and shall, therefore be liable to pay tax w.e.f. 1st April, 2005.

3. New dealers, whose turnover of sales exceeds the prescribed limits during any year,

commencing on or after 1st April, 2005, are liable to pay tax from the date on which such

limit exceeds.

4. A successor in business of any dealer shall become liable to pay tax on and from the date

of succession.

5. A dealer, applying for voluntary registration, shall be liable to pay tax from the date of

6. registration.
 6

Registration Under MVAT

Registration [Sec. 16, R 8]

Every dealer, who becomes liable to pay tax under the provisions of MVAT, shall apply

electronically for registration to the prescribed authority, in Form 101, within 30 days from the

date of such liability.

Turnover limits for the purpose of Liability/Registration [Sec. 3(4)]

Category Total Turnover of taxable

of turnover goods purchased

dealer of sales or sold

Importer Rs. 1,00,000 Rs. 10,000

Others Rs. 5,00,000 Rs. 10,000

It may be noted that while the total turnover of Rs. 1,00,000/- and Rs. 5,00,000/- is in respect of

Turnover of Sales (which includes all sales whether tax free or taxable), the turnover limit of Rs.

10,000/- is in respect of taxable goods whether purchased or sold.

Both the conditions have to be satisfied for the purposes of liability/registration under this

category. [Sec. 3(4)]

Documents required for the purposes of Registration

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The Commissioner of Sales Tax, Maharashtra, has issued a circular dated 4th May, 2005,

whereby a dealer is required to submit following documents along with the application for

registration in Form 101:

Documents to be submitted along with the application for registration:

A. IN CASE OF FRESH REGISTRATION

Proof of constitution of business (as appropriate):

In case of proprietary firm: No proof required.

In case of partnership firm: Copy of partnership deed.

(Registered or unregistered)

In case of company: Copy of Memorandum of

Association

In case of other constitution: Copy of relevant documents.

Proof of permanent residential address

1 Copy of passport.

i. Copy of driving licence.

ii. Copy of election photo identity card.

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iii. Copy of property card or latest receipt of property tax of Municipal

Corporation/Council/Gram Panchayat as the case may be.

iv. Copy of latest paid electricity bill in the name of the applicant.

Proof of place of business

i. In case of owner: Proof of ownership of premises; viz., copy of property

card or ownership deed or agreement with the builder or any other relevant

documents.

ii. In case of tenant/sub-tenant: Proof of tenancy/sub-tenancy like copy of

tenancy agreement or rent receipt or leave and licence or consent letter,

etc.

iii. Copy of Electricity Bill

4. Two latest passport size photographs of the applicant **

5. Copy of Income Tax PAN Card (in case of Proprietary business: PAN of

Proprietor; in case of partnership business: PAN of partnership firm and of all

partners; and in case of registered company: PAN of the company; in case of

HUF: PAN of HUF and Karta etc.).

6. Challan in original showing payment of registration fee. (As per new procedure,

the amount of fees is payable through a bank draft to be deposited with the

registering authority along with the application. The bank draft shall be prepared,
 9

for applicant in Mumbai, in the name of "Bank of Maharashtra A/c. MVAT", and

in case of other places in the name of "State Bank of India A/c. MVAT).

B. REGISTRATION IN CASE OF CHANGE IN CONSTITUTION OF THE DEALER

1. Proof of change in constitution (e.g., if proprietary dealer converted to partnership

firm then copy of Partnership deed, etc.).

2. Copy of latest return-cum-challan.

3. Pay order for payment of fees.

4. PAN of new firm.

5. Proof of permanent residential address.

C. REGISTRATION IN CASE OF TRANSFER OF BUSINESS

1. All documents from 1 to 6 given in 'A'.

2. Copy of transfer deed.

3. Copy of latest return-cum-challan of the original dealer.

In case of partnership firm, proof of residence has to be provided for all the partners, in case of

body corporate, proof of residence of applicant.

In case of partnership firm, photographs of only applicant partner need to be submitted. In case

of corporate bodies, the details of place of residence and PAN, etc. shall be required to be

furnished only for the signatory to the application.

Further, in case of Voluntary Registration, it is necessary that the applicant dealer is having a

current bank account and such dealer has to be introduced either by a registered dealer or by an
 10

advocate, chartered accountant or sales tax practitioner. (The fees payable for voluntary

registration is Rs. 5,000/- while for others it is Rs. 500/- only).

In addition to payment of fees, as mentioned above, a dealer seeking Voluntary Registration, on

or after 16th August 2007, has to be make an advance payment of Rs. 25,000/-. This advance

may be adjusted by the dealer against tax, interest or penalty, if any, payable during the year of

registration or in the immediate succeeding year. Any amount remaining unadjusted after the end

of the 2nd year shall be refunded

[For the time being, the amount of fees as well as the amount of advance payment has to be made

by way of bank draft to be deposited with the registering authority along with the application for

registration]

RATE OF TAX: [SECS. 5 & 6] AS PER SCHEDULES

Schedule A- Essential Commodities (tax free) Nil

Schedule B- Gold,Sliver , Precious Stones ,Pearls Etc. 1%

Schedule C-Declared goods and other specified goods 4%

Other goods 5%

Schedule D-Foreign Liquor, Country Liquor, motor spirit Etc. At specified rate
 11

Schedule E- All Other Goods 12.5%

Tax payable by a dealer: [Sec. 4]

A dealer is liable to pay tax on the turnover of sales of goods, within the State, as per the rates

specified in the schedules. The tax so payable for any tax period shall be reduced by the amount

of input tax credit (set off) for which the dealer is eligible during the same tax period.

Tax Period

Tax Period in relation to a dealer may be a calendar month, quarter (a period of three months;

i.e., Apr. to June, July to Sep., Oct. to Dec. and Jan. to Mar.) or six months (prescribed period of

six months; i.e., April to September and October to March).

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Declared goods

Article 286(3)(a) of Constitution of India authorises Parliament to declare some goods as of

special importance and to impose restrictions and conditions in regard to power of States in

regard to levy, rates and other incidence of tax on such goods. Parliament can restrict powers of

State Government to tax such declared goods. Section 2(c) of CST Act defines Declared

Goods as those declared under section 14 of CST Act as goods of special importance in Inter

State Trade or commerce. Section 14 of CST Act gives a list of such goods and section 15

specifies restrictions on power of States to tax such goods. ADDITIONAL EXCISE IN LIEU OF

SALES TAX - Industries urged that central excise duty and sales tax should be collected at one

stage itself so that multiple taxation is avoided. Central Government and State Governments
 13

agreed to replace sales tax on some commodities with excise duty. With this in view, Additional

Excise Duty was imposed on some goods under the Act Additional Duty of Excise (Goods of

Special Importance) Act, 1957. Additional excise duty is levied on textile fabrics, sugar and

tobacco products under this Act. These three items are also Declared Goods under CST. This

list could not be widened much later, due to difference of opinions between State Governments

and Central Government.

Restrictions on State taxation on declared goods

Section 15 of CST Act places following restrictions and conditions in regard to powers of State

Governments to tax declared goods inside the State.

Tax on declared goods not to exceed 4% - Tax on declared goods within a State cannot exceed

4%. [section 15(a)].

As per provision in section 15(1) upto 11-5-2002, tax on declared goods could be imposed only

at one stage. Now, this restriction has been removed w.e.f. 11th May 2002, as such restriction

was against principles of VAT.

Normally, such tax was imposed by States at first stage for convenience and control. After that,

subsequent sales within State were exempt from tax. Now, there is no such restriction on

imposing local/Central sales tax on subsequent sale. However, such tax will not be automatic.

Each State will have to suitably amend their sales tax laws to impose the tax on re-sale.
 14

Tax Payers, Returns And Methods Of Computation

Return Forms and Payment of Tax

From 1st April 2009, all dealers, whether required to file monthly, quarterly or six monthly

returns, have to submit their returns in electronic format only.

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There are separate return forms prescribed for various categories of dealers, i.e., Form Nos. 231

to 235. A dealer has to use appropriate form as may be applicable to him. All these forms have to

be submitted electronically within the prescribed due date.

A dealer shall first make payment of tax due in to the Government treasury through challan Form

No. 210, (Form MTR-6 for payment of CST dues), and thereafter upload the return in

appropriate form as may be applicable. A grace period of 10 days has been permitted for

uploading of e-returns but the tax due, if any, has to be paid within the prescribed due date.

It may further be noted that from 1st June, 2010 it is now mandatory for the dealers required to

file monthly returns to make payment of taxes electronically.

In case of delayed payments, interest is payable @ 15% p.a. Such interest is mandatory and shall

be paid before filing of return.

Refunds of any period can be adjusted in the return/s for subsequent or any other period/s within

the same financial year. As per the provisions of MVAT, refund cannot be adjusted against

liability of the subsequent year; i.e., refund cannot be carried forward to the next financial year.

However, for refunds relating to financial years 2005-06 as well as for 2006-07, the

Commissioner has issued Trade Circulars whereby the refund for these financial years could be

carried forward to the subsequent year.

The Commissioner of Sales Tax has also issued a Trade Circular (No. 15T of 2010 dated 15-4-

2010) whereby the dealers have been permitted to adjust the refund due for financial year

2009-10 against tax payable for the current year; i.e., financial year 2010-11, provided that the
 16

refund due as per return for the period ended 31st March 2010 is less than rupees one lakh and

the dealer has not filed an application for refund (in Form 501) for such refund.

Revised Returns

Revised return, for any period, can be filed within 9 months from the end of the year in which

such tax period falls or before receipt of notice for assessment, whichever is earlier. [Sec. 20(4)
 17

CALCULATION OF VAT PAYBLE

INPUT TAX CREDIT (ITC) (SET OFF): [Sec. 48, Rules 51 to 56]

Eligibility: All registered dealers, whether manufacturer or traders, are eligible to take full set

off of the taxes paid on inputs; i.e., Value Added Tax paid, within the State of Maharashtra, on

purchases of Raw Material, Finished Goods and Packing Material, or any goods debited to profit

and loss account.

Entry Tax: The amount of entry tax, paid by a registered dealer on the goods the sale of which

is liable for VAT under MVAT, will be eligible for full set off.

ITC on Capital Goods: Tax paid on certain items of capital goods (defined) such as machinery,

components, parts and spares etc. are also eligible for full set off. (On certain other items of

capital assets such as furniture and fixtures, office equipments, etc. set off is admissible, subject

to retention @ 3%, w.e.f. 8-9-2006)

ITC on Miscellaneous Goods: The amount of Vat paid on purchase of miscellaneous goods,

debited to Profit & Loss A/c. (such as printing and stationery, repairs, sales promotion etc.) also

eligible for full set off.

ITC on Fuel: Tax paid on purchase of goods, which is used as fuel, shall be eligible for set off,

in excess of 3%.
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Reduction in set off: The amount of set off, available to a registered dealer, shall be reduced to

the extent as provided, under the following circumstances: -

i. 3% of the purchase price of respective goods, if taxable goods used as fuel.

ii. 2% of the purchase price of respective goods, if taxable goods used in manufacture of

tax-free goods. [No such reduction, if tax free goods so manufactured (covered by

Schedule 'A) are exported out of India].

iii. 2% of the purchase price of respective packing material used in the packing of tax-free

goods.

(No such reduction, if such tax free goods is covered by Schedule 'A and the same are

exported out of India.)

iv. 2% of the purchase price of respective goods, if taxable goods sent to any other State in

India as Branch Transfer or on Consignment.

(No such reduction if such branch transferred goods is received back in the State within a

period of 6 months whether after processing or otherwise).

v. Specified percentage of set off, if taxable goods used in Works Contract for which the

dealer has chosen to pay tax under the Composition Scheme. (Reduction @ 4% of

purchase price in respect of goods used in notified construction contracts, and, @ 36% of

eligible amount of set off in case of other contracts).

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vi. In case of Liquor, sold by dealers holding Liquor Vendor Licence in Form FL-II, CL-III,

and CL/FL/TOD/III, as per formula, if the actual sale price is less than MRP.

vii. In case of dealers, whose total receipts on account of sale are less than 50% of total gross

receipts of business then set off restricted to corresponding purchases, which are sold

within 6 months from the date of purchase. In case of Hotels and clubs covered by this

Rule, in addition to set off on goods sold as above, the set off will be available on capital

assets and consumables pertaining to kitchen and service of foods and drinks. In case of

Manufacturer of goods (not a job worker) covered by this Rule, set off can be claimed on

plant and machinery & its PCA & packing materials only in respect of period of first 3

years from effective date of certificate of registration.

viii. In case of closure of business, the set off on goods held in stock (other than capital

assets), on the date of closure, to be disallowed and accordingly be reduced fully.

ix. 3% of the purchase price of office equipment, furniture & fixture treated by the claimant

dealer as capital assets. This is not applicable to dealer who leases these goods.

x. 2% of purchase price of goods which are used in the distribution or transmission of

electricity (including the goods treated as capital assets), if the claimant dealer is holding

a licence for transmission or distribution of electricity under the Electricity Act, 2003.

Wherever such reduction in set off is required to be done, it shall be done in the tax period in

which such contingency arises.

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If, for the purpose of reduction of set off, wherever required, it is not possible to identify the

corresponding purchases then proportionate reduction on FIFO basis.

Condition for grant of set off

1. Set off to be allowed only to a registered dealer.

2. A valid Tax Invoice is must to claim set off.

3. Proper maintenance of account of all the purchases in a chronological order stating

therein the date on which the goods so purchased, the name and registration number of

the selling dealer, tax invoice number & date, the amount of purchase price paid and the

amount of tax paid separately.

4. The set off on eligible goods, purchased on or after 1st April 2005, has to be claimed in

the tax period in which the goods has been purchased (entered in the books of account).

5. In case of newly registered dealers, set off can be claimed on the goods (including capital

assets) purchased before the date of registration, within the same financial year, provided

that the goods so purchased is not sold or disposed of before the date of registration.

(Effective from 8-9-2006)

6. Tax on earlier transaction is received in Government Treasury.

No set off:- No set off, under any Rule shall be admissible in respect of;
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a. Purchase of passenger motor vehicles and parts components and accessories thereof

unless the dealer is engaged in the business of trading in motor vehicles or transferring

the Right to Use (Leasing).

b. Purchase of motor spirit by any dealer other than a dealer in motor spirit.

c. Purchase of Crude Oil, used by an oil refinery for refining.

d. Any purchase of consumables or capital assets by a job worker (pure labour job), whose

only sales are waste or scrap of goods obtained from such labour job.

e. Any purchase made by a dealer holding Entitlement Certificate under a Package Scheme

of Incentives. (Such units are entitled for refund of tax paid on purchases).

f. Any purchase of goods of incorporeal or intangible nature other than:

i. Import Licences, Export Permits/licences or Quota, DEPB, SIM Cards and DFRC.

ii. Soft wares in the hands of a trader in Soft wares.

iii. Copyrights, if resold within 12 months from the date of purchase.

Except above, all other intangible goods are debarred from set off.

g. Tax paid by way of works contracts in the erection of immovable property (other than

plant & machinery).

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h. Purchases of building material used in the erection of immovable property (other than

plant & machinery). However, a contractor, who undertakes construction of immovable

property by way of works contracts, is eligible to claim setoff on purchase of such goods.

i. Office Equipments, Furniture & Fixtures, Electric Installations, etc., (treated as capital

assets), purchased during the period from 1-4-2005 to 7-9-2006. (Such assets, if

purchased on or after 8-9-2006, are eligible for set off subject to retention @ 4% or 3% as

the case may be).

It may further be noted that

j. Small dealers/retailers, hoteliers, caterers, bakers, mandap decorators etc., opting for

Composition Scheme, u/ss. 42(1), 42(2) and 42(4) of MVAT Act, are not entitled for any

set off.

k. There is no set off of CST paid on inter-state purchases.

l. There is no set off for any other taxes paid such as excise duty, import duty, service tax,

octroi or such other levy or levies.

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m. In case of hotelier, the set off on capital assets is prohibited where such capital assets are

not pertaining to sale or service of food/drinks.

Credit C/f and Credit B/f: If during a tax period (month/quarter/six months) the tax on total

turnover of sales is less than the amount of input tax credit, then such excess amount of credit

may either be adjusted by the dealer against his tax liability under the CST Act for the same

period or may be c/f to the next period. The unadjusted credit c/f of one period shall become the

credit b/f for the next period. The excess credit may be carried forward in this manner till the end

of the accounting year. The balance, if any, thereafter shall be claimed as a refund in Form 501

from the department, within a period of three years from the end of the year for which it relates.

Goods Return, Debit/Credit Notes: Section 63(5) and (6) of the MVAT Act provides that the

amount of goods returned during any period shall be reduced from the total turnover of

sales/purchase of that period in which the goods returned, provided that the goods has been

returned within a period of six months from the date of sale or purchase thereof as the case my

be. Similarly other debit and credit notes, which are in the nature of increasing or reducing the

sale price and/or the purchase price shall be given effect in the month in which such debit/credit

note has been entered in the books of account of the dealer. Thus the amount of set off, for that

period, shall get increased or reduced to the extent it related to purchase return and debit/credit

notes having impact on the purchase price of goods.

Exports: Exports are treated as zero-rated. Thus no tax is payable on export of goods out of

India. However full set off is available of input tax paid on purchases, from within the state of

Maharashtra, used in such exports. As there are no concessional forms under MVAT, the

exporters may have to claim refund of the VAT paid on their purchases (inputs).
 24

However, the trading exporters (who were earlier purchasing goods against Form 14B), may

purchase such goods against Form H of CST Act, provided all other conditions of section 5(3) of

CST Act are fulfilled.

Inter-State Sales: The transactions of inter-state sales and inter-state movement of goods are

governed by the CST Act. Thus the tax on such sale is levied according to the provisions of CST

Act. Such transactions are not liable for VAT. However full input tax credit is available for the

value added tax paid in Maharashtra. (Except in case of branch transfers/consignments, where

there will be retention @ 4% or 3% or 2% as the case may be).

TAX INVOICE

Essential ingredients of a Tax Invoice: Under the scheme of VAT, the most important document

is tax invoice. A registered dealer is entitled to claim set off only on the basis of a valid tax

invoice. Set off is not available on purchases affected through a bill or cash memorandum. A 'Tax

Invoice is must to claim input tax credit (set off). To be a valid tax invoice, section 86(2)

provides that it shall contain the following particulars:

i. The word Tax Invoice in bold letter at the top or at a prominent place.

ii. Name, Address and Registration Number of Selling Dealer.

iii. Name, Address and Registration Number of the Purchasing Dealer.

iv. Serial Number and Date.

v. Description, Quantity and Price of the Goods sold.

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vi. The amount of tax charged, to be shown separately.

vii. Signed by the selling dealer or a person authorized by him.

viii. A declaration u/r. 77(1).

BILL OR CASH MEMORANDUM

Section 86(6) requires every registered dealer to issue, at his option, either a Tax Invoice or

Bill/Cash Memorandum, for every sale made by him.

(Issue of bill/cash memorandum or Tax Invoice, as the case may be, is mandatory for each

transaction of sale exceeding Rs. 50/-).

The dealer, choosing to issue Tax Invoice must comply with the requirements prescribed in sec.

86(2), enumerated above.

The dealers, who have opted for Composition Scheme u/ss. 42(1), 42(2) or 42(4), are not entitled

to issue a Tax Invoice. Such dealers shall issue a Bill or Cash Memorandum.

A bill or cash memorandum should be serially numbered, dated and signed by the dealer or his

servant or manager. Such bill or cash memorandum shall contain such particulars as may be

required/as may be prescribed. It shall also contain a declaration as provided u/r. 77(3).

A duplicate copy of all such bills/cash memorandum or Tax Invoice is required to be preserved

for a period of three years from the end of the year in which sale took place.

COMPOSITION SCHEMES
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Section 42 provides for Composition Schemes for various classes of dealers, as may be notified

by the State Government from time to time. The dealers opting for such composition schemes

shall pay tax at such rates, with such conditions, as may be prescribed in the scheme.

Accordingly, the Government of Maharashtra has notified different types of composition

schemes for following classes of dealers:

(1) Restaurants, Clubs, Hotels and Caterers (2) Bakers (3) Retailers and (4) Dealers in 2nd Hand

Motor Vehicles and (5) Dealers, who are in the business of giving on hire (leasing) of mandap,

shamiana, tarpaulins, etc.

WORKS CONTRACTS

There is no separate Act governing works contract transactions, all such transactions are now

taxable as deemed sales under the MVAT Act. The rate of tax, on such deemed sales of goods,

used in the execution of works contract, shall remain same as prescribed in the aforesaid

schedules to the respective goods. However the sale price of such goods has to be determined in

accordance with the provisions contained in Rule 58 of the Maharashtra Value Added Tax Rules,

2005.

Accordingly the value of the goods, at the time of the transfer of property in the goods (whether

as goods or in some other form) involved in the execution of works contract, has to be

determined by effecting the following deductions from the value of entire contract in so far as the

amounts relating to the deduction pertain to the said works contract:

i. Labour and service charges for the execution of the works contract.
 27

ii. Amounts paid by way of price for sub-contract, if any, to sub-contractors.

iii. Charges for planning, designing and architects fees.

iv. Charges for obtaining on hire or otherwise, machinery and tools for the execution of the

works contract.

v. Cost of consumables such as water, electricity, fuel used in the execution of works

contract, the property in which is not transferred in the course of execution of the works

contract.

vi. Cost of establishment of the contractor to the extent to which it is relatable to supply of

the said labour and services.

vii. Other similar expenses relatable to the said supply of labour and services, where the

labour and services are subsequent to the said transfer of property.

viii. Profit earned by the contractor to the extent it is relatable to the supply of said labour and

services.

AUDIT OF ACCOUNTS

Section 61 of MVAT Act requires certain dealers/persons to get their accounts audited by an

accountant, within the prescribed period from the end of the year. The report of such audit is

required to be furnished in a prescribed format. The provisions contained in the Act and Rules in

this regard are reproduced below for the attention of members.

"61(1) every dealer liable to pay tax shall;

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a. If his turnover of sales or, as the case may be, of purchases, exceed or

exceeds rupees forty lakhs (sixty lakhs w.e.f. 1/5/2010) in any year, or

b. If he is a dealer or person who holds licence in: -

i. Form P.L.L. under the Maharashtra Distillation of Spirit and Manufacture of Potable

Liquor Rules, 1966, or

ii. Form B-RL under the Maharashtra Manufacture of Beer and Wine Rules, 1966, or

iii. Form E under the Special Permits and Licence Rules, 1952, or

iv. Forms FL-I, FL-II, FL-III, FL-IV under the Bombay Foreign Liquor Rules, 1953, or

v. Forms Cl-I, CL-II, CL-III, CL/FL/TOD III under the Maharashtra Country Liquor Rules,

1973,

vi. PSI unit holding certificate of entitlement (from 1-5-2010)

Get his accounts in respect of such year audited by an Accountant, within the prescribed period

from the end of that year, and furnish within that period the report of such audit, in the prescribed

form, duly signed and verified by such accountant and setting forth such particulars and

certificates as may be prescribed.

Explanation: For the purposes of this section, "Accountant" means a Chartered Accountant

within the meaning of the Chartered Accountants Act, 1949 or (w.e.f. 15-8-2007) a Cost

Accountant within the meaning of Cost & Works Accountants Act, 1959).
 29

(2) If any dealer liable to get his accounts audited under sub-section (1) fails to furnish a copy of

such report within the time as aforesaid, the Commissioner may, after giving the dealer a

reasonable opportunity of being heard, impose on him, in addition to any tax payable, a sum by

way of penalty equal to one-tenth per cent of the total sales.

Provided that the dealer fails to furnish a copy of such report within the aforesaid period but files

it within one month of the end of the said period and the dealer proves to the satisfaction of the

Commissioner that the delay was on account of factors beyond his control, then the

Commissioner may condone the delay.

(3) Nothing in sub-section (1) and (2) shall apply to Departments of Union Government, any

department of any State Government, local authorities, the railway administration as defined

under the Indian Railways Act, 1989, the Konkan Railway Corporation Limited and the

Maharashtra State Road Transport Corporation constituted under the Road Transport Corporation

Act, 1950."

"Rule 65. The report of audit under section 61 shall be in Form 704." The auditor is required to

download latest version of Form 704 from the website.

"Rule 66. The report of the audit under section 61 shall be submitted electronically within ten

months of the end of the year to which the report relates." The due date for filing audit report, in

Form 704, for the financial year 2009-10 shall be 31st January 2011.
 30

Appeal Under MVAT

The Provisions Relating appeals under MVAT Act 2002, which in is force in Maharashtra state,

are discussed in the article N.T.Nirale, Advocate In a leading case of Hoosier Kamas Dada the

Supreme Court has pointed out that the right to appeal is not merely a matter of procedure; it is a

matter of substantive right. [4 STC 114]. Right to appeal is vested in a dealer when the return is

filed or on the date, the return was due. In case of 9ay Parsed [72 STC 324 SC]. Hon Justice

Sabyacachi Kukri has said, -Right to appeal is neither an absolute. right nor an ingredient of

Natural Justice. Right to appeal is a statuary right which is circumscribed by the conffitions of

grant, VAT drafters are very Itind that they have provided for right of appeal under section 26 and

27 of VAT Act The provisions of section 26 govern the right of appeal under VAT Act, which is

similar to old section 55 of BST Act If Co order is passed by the STO or AC the appeal can be
 31

filed to the Deputy .mmissioner of Sales Tax. If it is passed by the 66 141 Sr. DC then the appeal

out lie to Joint Commissioner. If the order is passed by the Jet. Commissioner, Addle

Commissioner or the Commissioner then it will lie to the Tribunal. [The copy of the nofification

changing the designations of the Sales Tax authorities is not yet available with the PRO of the

Sales Tax dept. It is said that all Class I STOs .11 be designated as ACs, an A. .1 be designated as

DCs and all DCs will be designated as Jet Commissioners. After introduction of VAT, one has not

yet experienced the increase in transparency, but there is certainly increase in the nominal

structure of the authorities due to introduction of VAT.] The second appeal against t. order passed

in appeal by the DC or IT. .mmissioner will lie to the Tribunal. Unlike to old provision giving

opfion to file second appeal either to Commissioner or to the Tribunal, new provision of section

26[2] provides the second appeal only to the Tribtmal.

Non-appeable Orders:

All orders are not appeable but section 85[2] bars filing of appeal against certain notices and

order viz. --

1, Any not ice

 32

CONCLUSION

The system of Value Added Tax (VAT) has been implemented, in the State of Maharashtra, w.e.f.

1st April, 2005. As per the provisions of MVAT, a dealer is liable to pay tax on the basis of

turnover of sales within the State.

MVAT, a dealer is liable to tax on the basis of turnover of sales within the State. The term dealer

has been defined u/s. 2(8) of the Act. It includes all person or persons who buys or sell goods in

the State whether for commission, remuneration or otherwise in the course of their business or in

connection with or incidental to or consequential to engagement in such business. The term

 33

includes a Broker, Commission Agent, Auctioneer, Public Charitable Trusts, Clubs, Association

of Persons. Draft model of VAT legislation has been prepared by the National

Institute of Public Finance and Policy. The circulation of papers on VAT .Will certainly be

creating the atmosphere towards readiness to accept VAT.

Every dealer, who becomes liable to pay tax under the provisions of MVAT, shall apply

electronically for registration to the prescribed authority, in Form 101, within 30 days from the

date of such liability.

The provisions relating appeals under MVAT Act 2, which is in force in Maharashtra State, are

discussed in the article N.T.Nirale, Advocate In a leading case of Hoosier Kamas Dada the

Supreme Court has pointed out that the right to appeal is not merely a matter of procedure; it is a

matter of substantive right. [4 SIC 114]. Right to appeal is vested in a dealer when the return is

filed or on the date, the return was due.

BIBLOGRAPHY

Internet

www.mahavat.gov.in

www.wikipedia.com

www.indiataxes.com
 34

www.revenue.com

Text Book

All India VAT Manual - Balram sangal & Jagdish Rai Goel

All India Taxes (A Ready Reference ) CA Alok Agrawal & CA Shailendra Mishra

https://www.slideshare.net/jeenaldipak/mvat-33209595