Downloaded from a2zmba.blogspot.

com

CONTENT Sr. No. Topics Covered 1 Section I Introduction to Value Added Tax. 2 Section II Value Added Tax in a!aras!tra. A. Introduction. #. $egistration under Value Added Tax. C. Explaining Value Added Tax. %. Calculating Tax &ia'ilit(. E. )iling o* $eturn and Pa(ing Tax. ). $ecords and Accounts. +. #usiness Audit. ,. Appeals. I. " / 3 Tax Pa(er Service. -. $ecover(. O**ences and Penalties. Section III Appendix. Section IV Conclusion. Section V #i'liograp!(. Page No. 1 12 1" 1/ 10 11 21 22 21 22 "0 "1 // /3 /2 /4 31 32 30 31 01 02 00 01 04 15 11

Value Added Tax in 6,AT IS VA&7E A%%E% TA89

a!aras!tra

Value Added Tax is a broad-based commodity tax that is levied at multiple stages of production. The concept is akin to excise duty paid by the manufacturer who, in turn, claims a credit on input taxes paid. Excise duty is on manufacture, while VAT is on sale and both work in the same manner, according to the white paper on VAT released by finance minister hidambaram. The document was drawn up after all states, barring !", were prepared to implement VAT from April. #t is usually intended to be a tax on consumption, hence the provision of a mechanism enabling producers to offset the tax they have paid on their inputs against that charged on their sales of goods and services. !nder VAT revenue is collected throughout the production process without distorting any production decisions.

6,: VAT IS P$E)E$$E% OVE$ SA&ES TA89

$hile theoretically the amount of revenue collected through VAT is e%uivalent to sales tax collections at a similar rate, in practice VAT is likely to generate more revenue for government than sales tax since it is administered on various stages on the production & distribution chain. $ith sales tax, if final sales are not covered by the tax system e.g. due to difficulty of covering all the retailers, particular commodities may not yield any tax. 'owever, with VAT some revenue would have been collected through taxation of earlier transactions, even if final retailers evade the tax net. There is also in-built pressure for compliance and auditing under VAT since it will be in the interest of all who pay taxes to ensure that their eligibility for tax credits can be demonstrated. VAT is also a fairer tax than sales tax as it minimi(es or eliminates the problem of tax cascading, which often occurs with sales tax. These are facilitated by the fact that VAT operates through a credit system so that tax is only applied on value added at each stage in the production & distribution chain. At each intermediate stage credit will be given for taxes paid on purchases to set against taxes due on sales. )nly -2-

Value Added Tax in

a!aras!tra

at consumption stage where there are no further transactions will there be no tax credits. *ack of input credit facility in sales tax often results in tax on inputs becoming a cost to businesses which are often passed on to consumers. +ales tax is often applied again to the sales tax element of the cost, thus there is a problem of tax on tax. This is not the case with VAT, which makes it a neutral tax as it provides the least disturbance to patterns of production and the generation and use of income. #n addition, the audit trail that exists under the VAT system makes it a more effective tax in administration terms than sales tax as it helps with the verification of VAT amounts declared as due. This is made possible by the fact that one person,s output is another,s input. As with sales tax imports are treated the same way as local goods while exports are (ero- rated to avoid anti-export bias. -otwithstanding the advantages mentioned above, it is worth noting that VAT is a considerably complex tax to administer compared with sales tax. #t may be difficult to apply to small companies due to difficulties of record keeping and its coverage in agriculture and the services sector may be limited. To cover the high administration costs, VAT rates of ./-0/ per cent are generally recommended. The e%uity impact of the relatively high rates have been a cause for concern as it is possible that the poor spend relatively high proportions of their incomes on goods sub1ect to VAT. Thus the concept of (ero VAT rate on some items has been introduced.

-3-

Value Added Tax in %I))E$ENCE #ET6EEN VAT AN% CST

!nder the

a!aras!tra

+T Act, the tax is collected at one stage of purchase or sale of goods.

Therefore, the burden of the full tax bond is borne by only one dealer, either the first or the last dealer. 'owever, under the VAT system, the tax burden would be shared by all the dealers from first to last. Then, such tax would be passed upon the final consumers. !nder the +T Act, the tax is levied at a single point. !nder the VAT system, the retailers are not sub1ect to tax except for the retail tax. !nder the +T Act, general and specific exemptions are granted on certain goods while +T law, concessional rates are

VAT does not permit such exemptions. !nder the

provided on certain taxes. The VAT regime will do away with such concessions as it would provide the full credit on the tax that has been paid earlier. !nder VAT law, first, the dealer pays tax on the sale or purchase of goods. The subse%uent dealer pays tax on the portion of the value added upon such goods. Thus, the tax burden is shared e%ually by the last dealer. To illustrate the whole procedure of VAT, an example is as follows2 At the first point of sale, the value of goods is 3s..//. The tax on this is .0.45. Therefore, the net VAT would be .0.45. At the second change of sale, the sale value is 3s..0/ and the tax thereon is .45. The tax that is to be paid at every point is .45. The input tax is .45. The dealer will get a credit for first change in sale of 0.45-- i.e. .45 -.0.45. Therefore, 0.45 will be the net rate. At the third change of sale, the sale value is 3s..4/ and the tax on this is .6.745. At the last stage, the tax paid is .6.745. The #nput Tax is .6.745. 8ealer,s get a credit for second change in sale9 i.e. .6.745 -.45 : ;.745. Therefore, ;.745 would be the net VAT. This means that VAT is paid in the last point tax under the sale tax regime.

-4-

Value Added Tax in 6,O +AINS9

+tate and

a!aras!tra

entral governments gain in terms of revenue. VAT has in-built incentives for

tax compliance < only by collecting taxes and remitting them to the government can a seller claim the offset that is due to him on his purchases. Everyone has an incentive to buy only from registered dealers < purchases from others will not provide the benefit of credit for the taxes paid at the time of purchase. This transparency and in-built incentive for compliance would increase revenues. #ndustry and trade gain from transparency and reduced need to interact with the tax personnel. =or those who have been complying with taxes, VAT would be a boon that reduces the cost of the product to the consumer and boosts competitiveness. VAT would be ma1or blow for tax evaders, both manufacturers who evade excise duty payments and traders who evade sales-tax.

6,AT;&& #E T,E TA8 #7$%EN9

The overall tax burden will be rationali(ed as it,ll be shared by all dealers, and prices, in general, will fall. >oreover, VAT will replace the existing system of inspection by a system of built-in self-assessment by traders and manufacturers. The tax structure will become simple and more transparent and tax compliance will improve significantly. #t will also be simpler and offer easy computation and easy compliance. VAT will prevent cascading effect through input rebate and help avoid distortions in trade and economy by ensuring uniform tax rates.

6,O PA:S9
All dealers registered under VAT and all dealers with an annual turnover of more than 3s 4 lakh will have to register. 8ealers with turnovers less than 3s 4 lakh may register voluntarily.

-5-

Value Added Tax in ,O6 TO PA:9

VAT will be paid along with monthly returns.

a!aras!tra

redit will be given within the same month redit thus

for entire VAT paid within the state on purchase of inputs and goods.

accumulated over any month will be utili(ed to deduct from the tax collected by the dealer during that month. #f the tax credit exceeds the tax collected during a month on sale within the state, the excess credit will be carried forward to the next month.

6,IC, +OO%S 6I&& #E TA8A#&E 7N%E$ VAT9

All goods except those specifically exempt. #n fact, over 44/ items will be covered under the new tax regime, of which ?@ natural and unprocessed local products would be exempt from VAT. About 07/ items, including drugs and medicines, all agricultural and industrial inputs, capital goods and declared goods would attract ?5 VAT. Aut, following opposition from some states, it was decided that states would have option to either levy ?5 or totally exempt food grains from VAT but it would be reviewed after one year. Three items < sugar, textile, tobacco < under additional excise duties will not be under VAT regime for one year but existing arrangement would continue.

OT,E$ CONSI%E$ATIONS
#t is imperative that policy makers in considering adoption of VAT should be interested in the economy wide impact of this tax. +pecial emphasis is often placed on its effect on e%uity, prices and economic growth. This is particularly important because of the potential effects on consumption of certain commodities that have a direct or indirect effect on labour productivity.

-6-

Value Added Tax in VAT E))ECT ON IN)&ATION

a!aras!tra

#n considering the introduction of VAT, countries are often concerned that it would cause an inflationary spiral. 'owever there is no evidence to suggest that this is true. A survey of )E 8 countries that introduced VAT indicated that VAT had little or no effect on prices. #n cases where there was an effect it was a one time effect that simply shifted the trend line of the consumer price index B "#C. To guard against any unforeseen price effects the authorities may consider a tighter monetary policy stance at the introduction of VAT.

%IST$I#7TION E))ECTS O) VAT

Value added tax is widely critici(ed as being regressive with respect to income that is its burden falls heavily on the poor than on the rich. This emanates from the fact that consumption as a share of income falls as income rises. 'ence a uniform VAT rate falls heavily on the poor than the rich. This criticism is valid when VAT payments are expressed as a proportion of current income. 'owever if, following the premise that welfare is demonstrated by the level of consumption rather than income, consumption is used as the denominator the impact of VAT would be proportional. A proportional burden would also be demonstrated if lifetime income rather than current income is used. A lifetime income concept considers the fact that many income recipients are only temporarily at lower income brackets as their earnings increase. #n order to address the regressivity of VAT the following measures can be taken2 D The VAT itself can be used to differentiate taxation of consumer items that are

consumed primarily by the poor such that they pay less or at (ero rate or to tax luxury goods at a higher than standard rate. D VAT exemptions may also be granted on goods and services that are consumed

mostly by the poor.

-7-

Value Added Tax in

D

a!aras!tra

E%uity concerns may also be addressed through other ways, outside the VAT

system, such as other tax and spending instruments of government. This could be in the form of lower basic income tax rates on the poor or some pro-poor expenditures of government. The use of multiple rates of VAT has however been widely discouraged for various reasons. These include2 D The fact that sometimes it is almost impossible to differentiate between

higher %uality expensive products & e.g. food, consumed by the rich and ordinary products consumed by the poor. Thus any concessions extended may tend to benefit the rich much more than the poor. D #ncreased costs of VAT administration as a differentiated rate structure

brings with it problems of delineating products and interpreting the rules on which rate to use. D significantly increased costs of tax compliance for small firms, which are usually This

unable to keep separate recordsEaccounts for sales of differently taxed items.

results in the use of presumptive methods of determining the tax liability, which leads to more difficulties in monitoring the compliance. The higher compliance cost resultant from differentiation of VAT rates may also be regressive with respect to income since smaller firms with lower income tend to bear proportionately more of the burden than do larger firms. Exemptions refer to situations where output is not taxed but taxes paid on inputs are not recoverable. follows2 D falling of revenues & exemptions break the VAT chain. #f exemptions are granted The rationale behind exemptions is to reduce negative distributional effects of tax through the effect on incomes. The effects of exemption may be as

at prior to the final sale, it results in a loss of revenue since value added at the final stage escapes tax.

-8-

Value Added Tax in

a!aras!tra

!n-recovered taxation of some intermediate goods may lead to producers

substituting away from such inputs thus distorting the input choices of the said producers. D Exemptions may create incentives to Fself supplyG i.e. tax avoidance by vertical

integration. D Exemptions tend to feed on each other giving rise to a phenomenon called This arises from the fact that each exemption gives rise to

Fexemption creepG.

pressures on further exemption. =or example creating an exemption to reduce the tax burden on a particular commodity or goods may lead to increased pressure for exemption or (ero rating of inputs used for the production of such a commodity. Aased on the above, it is important that care is taken when introducing exemptions in order to avoid distortions in the production process as well as to minimi(e revenue loss resulting from such distortions. Hiven the fact that the primary purpose of VAT is to raise government revenue in an efficient manner and with as little distortions of economic activity as possible, distribution effects are perhaps better addressed by other forms of tax and government expenditure policies which can often be better targeted at these aims.

-9-

Value Added Tax in VAT E))ECT ON ECONO IC +$O6T,

a!aras!tra

Economic growth can be facilitated through investment by both government and the private sector. +avings by both parties are re%uired in order to finance investment in a non-inflationary manner. ompared to other broadly based taxes such as income tax VAT is neutral with respect to choices on whether to consume now or save for future consumption. Although VAT reduces the absolute return on saving it does not reduce the net rate of return on saving. #ncome tax reduces the net rate of return as both the amount saved as well as the return on that saving are sub1ect to tax. #n this regard VAT may be said to be a superior tax in promoting economic growth than income tax. +ince VAT does not influence investment decisions on firms, by increasing their costs, its effects on investment can be said to be neutral.

)EAT7$ES O) VAT
.. 3ate of Tax VAT proposes to impose two types of rate of tax mainly2 a. ?5 on declared goods or the goods commonly used. b. ./-.05 on goods called 3evenue -eutral 3ates B3-3C. There would be no fall in such remaining goods. c. Two special rates will be imposed-- .5 on silver or gold and 0/5 on li%uor. Tax on petrol, diesel or aviation turbine fuel are proposed to be kept out from the VAT system as they would be continued to be taxed, as presently applicable by the +T Act. 0. !niform 3ates in the VAT system, certain commodities are exempted from tax. The taxable commodities are listed in the respective schedule with the rates. VAT proposes to keep these rates uniform in all the states so the goods sold or purchased across the country would suffer the same tax rate. 8iscretion has been given to the states when it comes to finali(ing the 3-3 along with the restrictions. This rate must not be less than ./5. This will ensure Ay doing this that there will be level playing fields to avoid the trade diversion in connection with the different states, particularly in neighboring states - 10 -

Value Added Tax in

;. -o concession to new industries Tax

a!aras!tra
oncessions to new industries is done

away with in the new VAT system. This was done as it creates discrepancy in investment decision. !nder the new VAT system, the tax would be fair and e%uitable to all. ?. Ad1ustment of the tax paid on the goods purchased from the tax payable on the goods of sale All the tax, paid on the goods purchased within the state, would be ad1usted against the tax, payable on the sale, whether within the state or in the course of interstate. #n case of export, the tax, paid on purchase outside #ndia, would be refunded. #n case of the branch transfer or consignment of sale outside the state, no refund would be provided. 4. ollection of tax by sellerEdealer at each stage. The sellerEdealer would collect the tax on the full price of the goods sold and shows separately in the sell invoice issued by him @. VAT is not cascading or additive though the tax on the goods sold is collected at each stage, it is not cascading or additive because the net effect would be as follows2 - the tax, previously paid on the sale of goods, would be fully ad1usted. #t will be like levying tax on goods, sold in the last state or at retail stage.

- 11 -

Value Added Tax in 6,AT;S T,E #I++EST A%VANTA+E9

a!aras!tra

The biggest benefit of VAT is that it could unite #ndia into a large common market. This will translate to better business policy. ompanies can start optimi(ing purely on logistics of their operations, and not on based on tax-minimi(ation. *orries need not wait at check-points for daysI they can (oom down the highways to their destinations. 3educed transit times and lower inventory levels will boost corporate earnings. =ollowing are the some more advantage of VAT2 .. Si<pli*ication !nder the +T Act, there are 6 types of tax rates- .5, 05, ?5, 65, ./5, .05, 0/5 and 045. 'owever, under the present VAT system, there would only be 0 types of taxes ?5 on declared goods and ./-.05 on 3-3. This will eliminate any disputes that relate to rates of tax and classification of goods as this is the most usual cause of litigation. #t also helps to determine the relevant stage of the tax. This is necessary as the the first stage or the last stage differ. +T Act stipulates that the tax levies at onse%uently, the %uestion of which stage

of tax it falls under becomes another reason for litigation. !nder the VAT system, tax would be levied at each stage of the goods of sale or purchase. 0. Ad=ust<ent o* tax paid on purc!ased goods !nder the present system, the tax paid on the manufactured goods would be ad1usted against the tax payable on the manufactured goods. +uch ad1ustment is conditional as such goods must either be manufactured or sold. VAT is free from such conditions. ;. )urt!er suc! ad=ust<ent of the purchased goods would depend on the amount of tax that is payable. VAT would not have such restrictions. +T would not have the provisions on refund or carry over upon such goods except in case of export goods or goods, manufactured out of the country or sale to registered dealer. +imilarly, on interstate sale on tax-paid goods, no refund would be admissible.

- 12 -

Value Added Tax in

a!aras!tra

?. Transparenc( The tax that is levied at the first stage on the goods or sale or purchase is not transparent. This is because the amount of tax, which the goods have suffered, is not known at the subse%uent stage. #n the VAT system, the amount of tax would be known at each and every stage of goods of sale or purchase. 4. )air and E>uita'le VAT introduces the uniform tax rates across the state so that unfair advantages cannot be taken while levying the tax. @. Procedure o* si<pli*ication "rocedures, relating to filing of returns, payment of tax, furnishing declaration and assessment are simplified under the VAT system so as to minimi(e any interface between the tax payer and the tax collector. 7. ini<i?e t!e %iscretion the VAT system proposes to minimi(e the discretion with the assessing officer so that every person is treated alike. =or example, there would be no discretion involved in the imposition of penalty, late filing of returns, non-filing of returns, late payment of tax or non payment of tax or in case of tax evasion. +uch system would be free from all these harassment 6. Co<puteri?ation the VAT proposes computeri(ation which would focus on the tax evaders by generating Exception 3eport. #n a large number of cases, no processing or scrutiny of returns would be re%uired as it would free the tax compliant dealers from all the harassment which is so much a part of assessment. The management information system, which would form a part of integral computeri(ation, would make the tax department more efficient and responsive.

- 13 -

Value Added Tax in

a!aras!tra

VA&7E A%%E% TA8 IN

@uicA )las! #acA

A,A$AS,T$A

+ales tax was first introduced in #ndia in the then Aombay "rovince as early as >arch .J;6 where a tax was imposed on sale of tobacco within certain urban and suburban areas. #n the year .J?@, a general sales tax was introduced levying sales tax at the last stage of sale of goods. The Aombay +ales Tax Act, .J4J introduced in .J4J underwent many changes thereafter and in Kuly .J6., first point tax was introduced wherein goods were classified into three main schedules, broadly covering tax free goods, intermediate products and finished goods. The A+T Act was repealed and >aharashtra Value Added Tax Act, 0//0 came into force w.e.f. .st April, 0//4 to usher in the progressive value added tax system in place of the old sales tax system. VAT is a progressive and transparent system of taxation which eliminates the cascading impact of multiple taxation through a multipoint taxation and set-off principle. #t promotes transparency, compliance and e%uity and therefore, is both dealer friendly and consumer friendly. VAT being a multi point tax, envisages an increase in the number of dealers and is based on the concept of self-assessment and self-compliance. #t is therefore, inevitable that the +ales Tax 8epartment transforms itself into a dealer friendly, focused and dynamic department to cater to the ever increasing expectations of both the Hovernment and the Trade L #ndustry. +ales Tax 8epartment has taken up the challenge to transform their selves and be available for assisting the dealers in complying with the provisions of the law. They are in the process of installing a state-wide networked #T system to computerise entire tax administration and hope to provide online service to the dealers in due course. They are also realigning their organisational structure to meet the challenges of the new system and stakeholdersM expectations.

- 14 -

Value Added Tax in Part1 B Introduction

#acAground

a!aras!tra

>aharashtra is one of the 0. +tates which have introduced the Value Added Tax BVATC system of taxation from .st April 0//4. $ith the introduction of VAT, the +ales Tax 8epartment has moved to a globally recogni(ed sales taxation system that has been adopted by more than .;/ countries. The design of >aharashtra +tate VAT is generally guided by the best international practices with regard to legal framework, as well as operating procedures. Another key factor in preparation of the design of +tate level VAT is the national consensus on certain issues. The consensus has been arrived at through the discussions in the Empowered VAT. )n .st April 0//4, VAT replaced the single point sales tax. +ingle point sales tax had a number of disadvantages, primarily that of double taxation. VAT is a modern and progressive taxation system that avoids double taxation. #n addition to offering the possibility of a set-off of tax paid on purchases, VAT has other advantages for both business and government. #t eliminates cascading impact of double taxation and promotes economic efficiency. #t is primarily a self-policing, self-assessment system with more trust put on dealers. #t provides the potential for a stronger manufacturing base and more competitive export pricing. #t is invoice based, and as a result it offers a better financial system scope for error. #t has an improved control, mechanism resulting in better compliance. - 15 with less ommittee of +tate =inance >inisters on implementation of +tate level

Value Added Tax in

#t widens the, tax base and promotes e%uity.

a!aras!tra

VAT in >aharashtra is levied under a legislation known as the >aharashtra Value Added Tax Act B>VAT ActC, supported by >aharashtra Value Added Tax 3ules B>VAT 3ulesC. VAT is levied on sale of goods including intangible goods. T!e <eaning o* CgoodsD *or VAT purposes FHoodsG means every kind of moveable property including goods of incorporeal and intangible nature but there are some exclusion, such as newspapers, actionable claims, money, shares and securities and lottery tickets. Ausinesses engaged in. the buying and selling of goods within the scope of the VAT law are referred to as dealers. T!e <eaning o* EsaleE *or VAT purposes A transaction of sale can be a2 normal sale of goodsI sale of goods under hire-purchase systemI deemed sale of goods used # supplied in the course of execution of works contractI deemed sale of goods given on lease.

The rate of tax applicable to the goods sold under various classes of sales is uniform. 'owever, in respect of normal sales of goods and deemed sales of goods under works contract and specified deemed sale of goods given on lease, the Act provides for an optional method for discharging tax liability by way of composition. Aeing so, the tax liability has to be determined with reference to the option exercised by the dealer for discharging tax liability.

- 16 -

Value Added Tax in

#usinesses covered '( VAT

a!aras!tra

The VAT system embraces all businesses in the production and supply chain, from manufacture through to retail. VAT is collected at each stage in the chain when value is added to goods. .t applies to al. businesses, including importers, exporters, manufacturers, distributors, wholesalers, retailers, works contractors and lessors.

- 17 -

Value Added Tax in Part 2 B $egistration under VAT

$ules *or registration

a!aras!tra

#f a dealer,s annual turnover exceeds the below mentioned threshold, then it must register with the local office of the +ales Tax 8epartment. All =igures in 3s. ategory Annual Turnover of +ales #mporter )thers .,//,/// 4,//,/// Turnover of sales or purchase of taxable goods not less than ./,/// ./,/// .// .// =ees payable on registration

#f the dealer,s turnover is less than the above threshold, then they are not liable to collect and pay VAT. 'owever, if a dealer wishes to avail the benefits of being a registered dealer, then they may apply for voluntary registration by paying a fee of 3s.4,///E -. #ene*its o* 'eing a registered dealer As a registered dealer, they are entitled to2 collect VAT on the salesI claim set-off of tax Binput tax creditC paid on purchasesI #ssue tax invoices and, be competitive.

- 18 -

Value Added Tax in

E**ective date o* registration

a!aras!tra

The effective date of registration, that is, the date front which a dealer may charge VAT on salesI will depend on the date they first become liable to pay VAT. This date will be determined as follows2 aF NeG 'usinessesH #f a dealer is not registered because their annual turnover is less than the thresholdI their liability to account for VAT starts from the date they cross the threshold. 'F Existing 'usinessesH #f a dealer took over an existing business that is registered for VAT, then they will be liable to pay tax on sales from the date they took over the business. cF Voluntar( registrationH #f a dealer is registered on a voluntary basis, then he will be liable to account for VAT from the date shown on the certificate of registration. dF &ate registrationH #f a dealer,s turnover has exceeded the appropriate threshold but they have applied late for registration, then he can charge VAT on his sales only after they are registered, i.e., from the date shown on the certificate of registration. =urther, having crossed the threshold, it is an offence to be engaged in business as a dealer without a certificate of registration Certi*icate o* registration A dealer should prominently display the certificate and hologram, or a copy of the certificate and hologram, at each place where they carry can on their business. #f a dealer has more than one place of business, then +ales Tax )ffice will provide them, upon their re%uest, one copy of the certificate of registration and hologram for each additional place of business.

- 19 -

Value Added Tax in

a!aras!tra

#f a dealer loses his E her certificate of registration or hologram, or it is accidentally destroyed or defaced, then they may obtain a duplicate copy of the certificate of hologram from their sales tax office. The certificate of registration and hologram is personal to the dealer to whom it is issued and is non-transferable. C!anges to 'usiness circu<stances #f, following dealer register, there are any amendments to the details they can be reported while applying for registration, it must done within @/ days of the change, inform us in writing. $here the amendment involves a2 change in the name of the businessI change in the constitution of the business without dissolution of the firmI change in the trustees of a TrustI change in the guardianship of a wardI change in the Narta of a 'indu !ndivided =amilyI conversion of "rivate limited ompany to a "ublic limited ompanyI

change in the place of businessI addition of new place of businessI formation of a partnership with regard to the business, an application made by a dealer for insolvency or li%uidation of their businessI an application made against dealer,s business for insolvency or li%uidationI opening or closing of a bank accountI

- 20 -

Value Added Tax in

a!aras!tra

A dealer will not need to make a fresh application for registration. 'owever, the communication to the 3egistering Authority concerned should be made within sixty days of the change or occurrence of the event. Cancellation o* registration A dealer will be liable to pay VAT while their registration is effective. #f however, their turnover falls below the threshold, he may choose to apply for cancellation of his registration. 'owever, he should continue to collect and pay VAT in the normal way until his registration is formally cancelled. Alternatively, they may be allowed the registration to continue. #f a dealer2 discontinue the businessI dispose of or sell or transfer the businessI

A dealer must inform the +ales Tax 8epartment within ;/ days of the event. #n case of disposal or sale of business, their successor will need to apply for a fresh registration certificate. =or cancellation of registration a dealer should submit form ./; which is available with the local sales tax office. #t can also be downloaded from the website GGG.vat.<a!aras!tra.gov.in #f the +ales Tax 8epartment cancels the dealer,s registration, they must return the ertificate of 3egistration The cancellation of their certificate does not affect their liability to pay any tax, interest or penalties in respect of any period prior to the date of cancellation of their registration.

- 21 -

Value Added Tax in

T!e o'ligations o* a registered dealer

a!aras!tra

=ollowing are the registration, which dealer,s are obliged to2 display prominently their certificate of registration and hologram in their place of business, and a copy of the certificate and hologram in each of the other places where they carry on their businessI inform their sales tax office of any changes in the details previously reported to the sales tax officeI collect VAT on all sales at appropriate ratesI calculate the tax due and submit correct, complete and self consistent returns and pay the amount of tax due on or before the due datesI issue tax invoice E bill or cash memorandum to all customersI maintain ade%uate records and retain them for a period of five years from the end of the tax year to which they relateI extend co-operation to the officers of the +ales Tax 8epartment at dealer,s business premises and provide all assistance to them to discharge their duties.

- 22 -

Value Added Tax in Part " B Explaining VAT

,oG VAT GorAs

a!aras!tra

$hen a dealer sell goods, the sale price is made up of two elementsI the selling price of the goods and the tax on the sale. The tax is payable to the +tate Hovernment. The tax payable on sales is to be calculated on the selling price. The tax paid on purchases supported by a, valid tax invoice is generally available as set-off Binput, tax creditC while discharging the tax liability on sales. Exa<ple The following example shows how the VAT works through the chain from manufacturer to retailer. Co<pan( A buys iron ore and other consumables and manufactures stainless steel utensilsI Partners!ip *ir< # buys the utensils in bulk from Co<pan( A and polishes themI s!opAeeper C buys some of the utensils and purchases packing, material from vendor %, packages them and sells the packed utensils for the public.

- 23 -

Value Added Tax in

a!aras!tra

BThe sale and purchase figures shown in the example are excluding taxC Particulars Co<pan( A ost of iron are and consumables +ales of unpolished stainless steel utensils Value added ompany A is liable to pay VAT on 3s..,4/,///E- O ?5 *ess +et )ff Net VAT a<ount to pa( Git! t!e $eturn B-ote2 Tax invoice issued by ompany A will show sale price as 3s..,4/,///E- tax as 3s.@,///E-. Therefore, the total invoice value will be 3s..,4@,///E-C Partners!ip # "urchases unpolished stainless steel utensils. +ales polished stainless steel utensils Value added "artnership A is liable to pay V AT on 3s..,6/,/// at ?5 Aut can claim set off of tax paid on purchases Net VAT a<ount to pa( Git! t!e $eturn .,4/,/// .,6/,/// "5.555 7,0// B@,///C 1255 A<ount I$s.F 4/,/// .,4/,/// 1.55.555 @/// B0///C /555 VAT J /K I$s.F 2555

S!opAeeper C "urchases polished stainless steel utensils .,6/,/// "acking material 4,/// Total "urchases .,64,/// +ales 0,04,/// Value added /5.555 +hopkeeper is liable to pay V AT on 3s.0,04,/// O ?5 J,/// +et off of tax paid on purchases B$s.1.255 L $s.255 of 7,?// packing materialC Net VAT a<ount to pa( Git! t!e $eturn Vendor % Tax paid costs +ales Value Added Vendor % is lia'le to pa( VAT on $s.3.555 J /K -il 4,/// 3.555 255 1.055

- 24 -

Value Added Tax in

a!aras!tra
4.555

The VAT due on the value added through the chain, i.e., ?5 on 3s.0,04,/// is 2

The +tate Hovernment received the tax in stages. The payments of tax were as follows2 Particulars +uppliers of ompany A ompany A "artnership A +hopkeeper Vendor 8 Total A<ount I$s.F 0,/// ?,/// .,0// .,@// 0// 4.555

Thus, through a chain of tax on sale price and set off on purchase price, the cascading impact of tax is totally eliminated.

- 25 -

Value Added Tax in

a!aras!tra

+ince set-off of tax on purchases is given only on purchases from registered dealers where tax is collected separately, dealer,s purchases from unregistered dealers, imports, inter-state purchases and purchases from registered dealers without separate tax collection are not entitled to set-off. #n practice, the tax is finally borne by the ultimate consumer, who is not a registered dealer, in this case, people who buy utensils from the shopkeeper . $ates o* value added tax There are two main rates of VAT ?5 and .0.45. The goods are grouped into five schedules as under2 Sc!edul e A A $ate o* tax /5 .5 ?5 0/5 and above .0.45 Illustrative Ite<s Vegetables, milk, eggs, bread "recious metals and precious stones and their 1ewellery 3aw materials, notified industrial inputs, notified information technology products and a few essential items *i%uor, petrol, diesel etc )ther than items specified in schedules A, A, L 8.

8 E

BThe list is illustrative and not exhaustive. "lease refer to the schedules for detailsC

- 26 -

Value Added Tax in

a!aras!tra

%i**erence 'etGeen tax *ree goods and exe<pt sales #t is sometimes confusing to have goods that are tax free and sales that are exempt. Aoth result in no VAT being charged, so what is the difference9 Tax free goods do not attract tax at any stage of sale or in any type of transaction, whereas, exempted sales are certain types of transactions, vi(., export sales which are exempt from tax. Co<position sc!e<es ertain dealers may find it difficult to keep detailed records for claiming set-off. =or such dealers, a simpler and optional method of accounting for VAT has been introduced. This method is the composition scheme. #t may be noted that composition scheme is not meant to be a tax concession scheme but only a simplification of tax calculation and payment system. Tax pa(a'le '( dealers opting *or co<position in lieu o* VAT The following classes of dealers are eligible for option to pay tax under composition2 3esellers selling at retail, i.e., to consumers, 3estaurants, eating houses, hotel Bexcluding hotels having gradation of M=our +tar, and aboveC, refreshment rooms, boarding establishments, clubs and caterers, Aakers, 8ealers in second-hand passenger motor vehicles and $orks contractors 8ealers engaged in the business of providing mandap, pandal, shamiana.

- 27 -

Value Added Tax in

a!aras!tra

Accordingly, if the dealer has opted for payment of tax liability under composition, the tax liability has to be determined in terms of the guidelines given in the relevant -otification in this regard. Apart from the terms and conditions governing each of the composition schemes, the -otification explains the methodology for computation of turnover liable to tax and the rate of composition payable. A dealer can opt for the composition option at the beginning of the financial year and has to continue to be a composition dealer at least till the end of that financial year. #f dealer wishes to switch, over to normal VAT, he can do so only at the beginning of the next financial year. 'owever, a new dealer can opt for composition at the time of registration. #n respect of works contract, the contractor can choose to discharge tax liability under composition option. >oreover, such an option can be exercised by the contractor on contract to contract basis.

- 28 -

Value Added Tax in Part / B Calculating tax lia'ilit(

a!aras!tra

#n, order to calculate how much tax a dealer has to pay, he must, first determine his turnover of sales and turnover of purchases. The second stage is to ascertain the amount of tax due for payment. Calculating turnover o* sales and purc!ases The turnover of sales is the total of the amounts received or receivable Bexcluding VAT charged separatelyC in respect, of the sale of goods, less the amount refunded to a purchaser in respect of goods returned, within six months of the date of the sale. +imilarly, the turnover of purchases is the total of the amounts paid or payable Bexcluding VAT charged separatelyC in respect of the purchase of goods less Bthe amounts repaid to dealer in respect of goods they return, within six months of the date of purchase. Credit notes and de'it notes. #f the sale price, or the purchase price, of any goods is varied and either a credit note or a debit note is issued, then the credit note or the debit note, as the case may be, should show separately, the tax and the price. be accounted for in the period in which the appropriate entries are made in their books of accounts.

- 29 -

Value Added Tax in

Special cases Auctioneers

a!aras!tra

#f dealer is an auctioneer, then they must include in their turnover, the price of the goods they auction for their principal ,otels There are special rules for hotels and other establishments that provide boarding and lodging for an inclusive amount. The rules provide a formula to enable them to calculate their turnover of sales for meals Bfood and beveragesC which they provide. The supply of food in a restaurant also includes an element of service. Aut the full amount charged is the sale price for the purposes of calculating turnover and tax. 6orAs contracts VAT applies only to the sale of goods. +upply of services is not liable to VAT. $orks contracts are deemed sales where both, goods and services are provided in a transaction and cannot be separated. A works contract may involve the creation of immoveable property, e.g. a house, a factory or a bridge. +ome other examples of works contracts are photography, repairs L maintenance etc. To calculate the amount a dealer should include it in their turnover of sales, so that they may deduct it from the total contract price, the costs of labour and service charges. amount paid to sub-contractors. charges for planning and designing, and any architectMs fees. hiring charges for machinery and tools. cost of consumables, such as, water, gas and electricity. 8ealer,s administrative costs relating to labour and services and any other similar expenses. any profit element that relates to the supply of labour and services.

- 30 -

Value Added Tax in

a!aras!tra

Alternatively, in lieu of the deductions as above, a dealer may choose to discharge the liability arising on works contracts by referring to the table prescribed in the rules. #f the dealer finds that it is too complicated to calculate the deductions, then they may opt for a composition scheme for any works contract. Sales and purc!ases not lia'le to tax under VAT The VAT law specifically excludes from value added tax all imports, exports and interstate transactions. These transactions are covered by the +T Act. +imilarly, transactions that take place outside >aharashtra are not within the scope of >VAT Act. Point o* lev( in certain cases ,ire purc!ase $here there is a hire purchase agreement or an agreement for sale by installments, the date of the sale is deemed to be the date of the delivery of goods. This is despite the fact that legal ownership of the goods only passes to the buyer after payment of the final installment. #f the hire-purchase agreement specifies the interest component then in calculating the sales price, dealer should disregard the interest component included in the agreement. Calculating t!e a<ount o* VAT due on sales 8ealer should also make some ad1ustments to the total turnover of sales to arrive at the amount on which tax is due. =rom the total sales one should deduct the total of exports and inter-+tate sales. the total of sales of goods that are tax free, and branch E consignment transfers to locations in >aharashtra as well as other +tates. the tax collected.

To calculate the tax due, dealer should start allocating their turnover of sales in the return period Bnet of the above deductionsC to the rates of tax they have been charged.

- 31 -

Value Added Tax in

a!aras!tra

They should also ensure that the correct tax rates are applied. The information should be readily available from their records. This gives the total of sales tax due. Calculating t!e turnover o* purc!ases 3ecords will provide the total figure, but they may not have paid VAT on all their purchases. They must now deduct the total value of imports from out of #ndia. inter-+tate purchases. purchases of tax free goods. direct purchases from exempted units under the "ackage +cheme of #ncentives. consignment transfers, and local purchased from unregistered dealers. local purchases from registered dealers not supported by tax invoice.

The resulting figure represents purchases against tax invoices from registered dealers. Calculating t!e a<ount o* set o** due IVAT paid on purc!asesF This is the next stage of tax calculation. At this stage VAT is charged on total purchases. 8ealer must, however, make some ad1ustments to this amount for, in certain cases, the full set off of the VAT paid on purchases is not available. Ad=ust<ents to tax availa'le *or set o** #f dealer,s purchases include goods, used o as fuel, or o for the manufacture of any tax-free goods, or o as packaging for tax-free goods, this goods should be sold. Then a dealer must calculate the value of those items and deduct tax O ?5 of the corresponding purchase price from the amount otherwise available for set off. B-ot applicable to "+# dealers other than the -ew "ackage +cheme of #ncentives for Tourism "ro1ects, .JJJ and also to manufacturers of tax-free sugar or fabrics covered by Entry A ?4 and where such goods are sold in the course of export falling under section 4 of the +T Act, .J4@C. - 32 -

Value Added Tax in

a!aras!tra

+imilarly, if the goods are stock transferred by way of branch E consignment transfer to a place outside the +tate, deduct tax O ?5 B. 5 in respect of goods covered by +chedule AC of the corresponding purchase price from the amount otherwise available for set off. 8ealer must also make further ad1ustments as follows2 #f they have been used any goods Bother than capital assetsC as part of a works contract for which they have been opted for payment composition O 65 on the total contract value, they must also deduct ;@5 of the amount from the set off otherwise available B?5 of purchase price in respect of construction contracts for which they have been opted for payment of composition O 45 on total contract valueC. $here a dealer,s sales are less than 4/ 5 of their gross receipts, then they can claim set off only on those purchases of goods or packing materials effected in that year where the corresponding goods are sold within six months of the date of purchase or consigned within the said period to another +tate by way of stock transfers. #n respect of office e%uipment, furniture or fixtures which have been treated as capital assets, a dealer should reduce set-off otherwise entitled by an amount e%ual to ?5 of the purchase price. #f a dealer is the retailer of li%uor vendor and its actual sale prices are less than the >aximum 3etail "rice, there is a special formula for calculating the amount of the ad1ustment. Effectively this means that, if a dealer sells at 745 of the >3" then they can claim set off only to the extent of 745 of the tax paid. A dealer can not claim any set off for the tax paid on any purchases that remain unsold on the date when business discontinues. All this information should be available from their records, including tax invoices and bills or cash memorandum they have issued, and the tax invoices they have received.

- 33 -

Value Added Tax in

Set o** not availa'le

a!aras!tra

There are various items on which set-off is not available such as, goods of incorporeal or intangible character other than those specified, passenger motor vehicles, motor spirits, crude oil, building material used for construction etc. Conditions *or clai<ing set o** A dealer can claim set off only for VAT paid on purchase if they have a valid tax invoice for that transaction and they had maintain account of purchases showing the specified details. Tax pa(a'le The amount of set-off admissible can be ad1usted against tax payable. The amount of net tax payable is the total of sales tax collected on sales less the set-off available. $e*und cases #f the amount of set-off admissible during the period is more than the amount of tax payable, then dealer,s return would reflect a balance refundable to the dealer. The amount of set-off can be more than the tax payable for a variety of reasons, such as #nputs are taxable at higher rate as compared with the rate of tax on output. )utputs are tax-free goods while inputs carry tax. )utputs are export sales. )utputs are +T sales which are taxable at the concessional rate of +T.

>anufactured goods or trading goods are transferred to branches outside the +tate or are sent on consignment transfers.

- 34 -

Value Added Tax in

a!aras!tra

Apart from part of the admissible set-off which can remain unutili(ed, excess credit can be on account of2 unutilised portion of tax deducted at source or refund payment order or ad-hoc payment made is more than tax payable.

$hatever may be the reason for credit in excess of tax due and payable during a tax period, dealers are eligible to claim refund of such excess credit. =or the purpose of granting refund, dealers have been classified under two categories vi(. aC specified class of dealers and bC other dealers $e*und to speci*ied class o* dealers +pecified classes of dealers are 2 Exporters exporting out of the country or dealers selling to an exporter against form '. A unit set-up in +EP or +T" or E'T" or a .//5 E)! unit. These units have to be certified by the ommissioner of +ales Tax. An Entitlement ertificate holder availing of the benefit of incentives under the "ackage +cheme of #ncentives B"+#C. +pecified class of dealers and the dealers who have made a sale in the course of inter+tate trade or commerce and in the return he has shown any amount to be refundable are eligible to claim refund in each of the returns filed by them. =ull amount of excess credit can be claimed as refund due for the return period. The dealer eligible to claim refund has to file refund application in =orm 4/.. The application has to be filed with the 3efund Aranch. The 3efund Aranch may ask for Aank Huarantee and any relevant information for checking correctness of refund claimed. -ormally, refund would be granted within one month from the receipt of Aank

- 35 -

Value Added Tax in

a!aras!tra

Huarantee or within three months from the date of receipt of refund application in =orm 4/., or as the case may be, the date of receipt of the additional information, whichever is later. $e*und to ot!er dealers )ther dealers are not eligible to get refund in each of the return filed. They are re%uired to carry forward excess credit to the next return within the same financial year and claim refund of excess credit in the return for the period ending >arch. The dealer claiming refund in >arch return has to make refund application in =orm 4/.. The application has to be filed with the 3efund +ection. -ormally, refund would be granted within six months of the end of the year to which the return relates. 'owever, refund would be granted within six months to the new dealer,s at the end of the year succeeding the said year. Audit o* re*und clai<s The refund granted to dealer would be sub1ect to audit by the 3efund Audit +ection. The audit may be taken up before granting the refund or after the refund is granted. -ormally, refunds made against Aank Huarantee would be taken up for audit after the refund has been granted. 8uring the course of the audit, the audit team will check dealer,s eligibility to claim refund and the correctness of the amount of refund claimed by them. Interest on dela(ed re*und -o interest is payable on the refund due to a dealer as per returns filed by a dealer. 'owever, if granting of refund is delayed beyond the above mentioned periods, dealer is eligible for interest for delayed payment. +imple interest at the rate of @5 per year would be payable for the period from the due date to the date of refund.

- 36 -

Value Added Tax in

So<e tips *or getting ti<el( re*und

a!aras!tra

8ealer,s claim of refund would be processed faster if2 They had filed the return with the 3eturns branch as per the prescribed time schedule. The return filed by the dealer,s should be correct, complete and self-consistent. They should have claimed refund as per the appropriate periodicity. The amount of refund due to them should be computed correctly. 3efund application in =orm 4/. is filed with the 3efunds branch in time. They should have promptly furnished Aank Huarantee and other details when called for. They should keep ready all the documents and records for audit. They should file the return for a period for which they are re%uired to file.

Thus, if they are re%uired to file a %uarterly return, but they file a monthly return, then the refund would not be granted for the monthly return. #n order to be eligible for refund, they would have to file a %uarterly return.

- 37 -

Value Added Tax in

a!aras!tra

Part 3 B )iling a return and pa(ing t!e tax

VAT is a self-assessment system and dealer,s are expected to make self assessment for a given tax period and declare their VAT liability by filing returns. The returns have to be filed in the prescribed form and by the specified dates. =urther, they are also re%uired to pay the tax due as per the return filed. #n >aharashtra, return form is return-cum-chalan. As such, filing of returns along-with payment of tax on or before the due date at the notified bank would be considered as sufficient compliance. 'owever, where any amount of tax including interest or penalty is due as per a fresh or revised return, then they should first pay such amount in Hovernment Treasury and file the return in the local office of +ales Tax 8epartment along with a self attested copy of the chalan. #f no payment is due or a refund is claimed as per the return, they are also re%uired to file the return in the local office of the +ales Tax 8epartment. $eturn *or<s The return forms prescribed are as follows. )or< No. 00. To #e 7sed #( All VAT dealers other than dealers executing works contract, dealers engaged in leasing business, composition dealers Bincluding dealers opting for composition only for part of the activity of the businessC, "+# 000 dealers and notified )il ompanies. All composition dealers whose entire turnover is under composition Bexcluding works contractors opting for composition and dealers 00; opting for composition only for part of the activity of the businessC. VA T dealers who are also in the business of executing works contracts, leasing and dealers opting for composition only for part of 00? the activity of the business. "+# dealers holding Entitlement ertificate BTransactions by "+#

- 38 -

Value Added Tax in

a!aras!tra
of works contracts,

dealers relating to the business of execution

leasing, frading and composition only for part of the activity of the 004 business to be included in a separate return in =orm 00;C. -otified )il ompanies BTransactions by )#* ompanies relating to the business of execution of works contracts, leasing and composition only for part of the activity of the business to be included in a separate return in =orm 00;C. A dealer can refer to the instructions given in the form before filling the return. "lease ensure that the return for a tax period covers all the transactions of sales, purchases, branch transfers received, branch transfers made etc. =urther, they must ensure that all the columns of the return are duly filled in and are clearly legible. #f a particular column is not relevant, please do not leave it blank but mentionQ not applicableQ. The return filed by them must be correct, complete and self-consistent. Ti<e sc!edule *or *iling returns Periodicit( o* *iling returns is as *olloGsH B 3etailers who have opted for composition should file six-monthly returns. -ewly registered dealers should file %uarterly returns until the end of the year in which they first register. All package scheme dealers should file %uarterly returns.

- 39 -

Value Added Tax in

a!aras!tra

All other dealers should file returns as given below 2o 8ealers whose tax liability in the previous year was less than 3s..,)),)))1- B3s..lakhC or whose entitlement for refund was less than 3s../,)),)))1- B3s../lakhC should file six-monthly returns. o 8ealers whose tax liability in the previous year was more. than 3s../,//,///- B3s../lakhC or whose entitlement for refund was more than 3s.l,//,//,///- B3s.croreC should file monthly returns. o All other dealers should file %uarterly returns.

=iling and payment dates for return-cum-chalan are as follows2 $eturn )re>uenc( >onthly Ruarterly +ix >onthly )iling M Pa(<ent date 0. days from the end of the return period 0. days from the end of the return period 0. days from the end of the return period

Scrutin( o* returns *iled The return filed by the dealer should be correct, complete, and self-consistent in every respect. The +ales Tax )ffice will check the return to ensure that there are no obvious errors in consistencies or contradictions in calculations. #f this check reveals discrepancies, then the dealer,s will be advised and invited to submit a fresh return. The department will issue this defect notice within four months of receiving their return. Then they should file their fresh return within ;/ days of the notice. #f they fail to do so, it will be deemed not to have filed the return within the time allowed, and will so liable to a penalty charge. At the same time, as the department issues the defect notice, dealers will be sent a Mshow causeM notice, explaining that a penalty may be imposed.

- 40 -

Value Added Tax in

a!aras!tra

O**ences relating to *iling o* returns and pa(<ent o* tax The following are the offences liable for interest E penalty E prosecution etc. +hort- payment E non- payment of tax due =ailure to file returns 8elay in filing returns Nnowingly furnishing false returns =iling of incorrect or incomplete or inconsistent returns

Conse>uences *or *iling a return. G!ic! is not correct. co<plete and sel*B consistent Each of the returns filed by them is checked to confirm that the same is correct, complete and self-consistent. #n case the return is defective, a defect notice is issued by the 3eturns Aranch pointing out the error or the omission. )n receipt of the notice, it is re%uired to file fresh return which is correct, complete and self-consistent and should also pay differential tax due, if any. The return filed by them in response to defect notice is termed as =resh 3eturn and the dealer should indicate so on the return in the space provided for the same. =resh return rectifying the defects has to be filed within the time limit specified in the defect notice. =ailure to comply with the notice would be construed as non-filing of return and conse%uently, a unilateral IexBparteF assess<ent order Gould 'e passed .

- 41 -

Value Added Tax in

)ailure to *ile a return

a!aras!tra

#f dealer,s fails to file a return within the time allowed, then they are committing an offence and, in addition to any tax and interest that may be due, which is liable to a penalty. As no return has been filed by them, a unilateral assessment without giving them a notice will be made. This unilateral assessment order is non-appealable. 'owever, they can get this assessment order cancelled only by filing the return and paying the tax and interest due as per the return. =or this purpose they should file application in =orm ;/? and submit to 3eturns Aranch. Pa(ing t!e tax due All the dealer,s or the person must file their return and should pay the tax due, in a bank that is authori(ed to accept the return. #f they are re%uired to file a revised return, and the tax due exceeds the amount which they had paid when submitted earlier form, then they should pay the balance amount which is due now. The bank will give them an acknowledgement of the receipt of their return and payment. #f there is any doubt that where to file the return and pay the tax due, then can ask to their local sales tax office. $evised return +ubse%uent to filing the return, in case dealer notices any error or omission, then they can file a revised return before expiry of eight months from the end of the financial year to which the return relates or before a notice for assessment is served, whichever is earlier. +uch return should be accompanied by payment of tax and interest, if any. #n case the return filed by them is a revised return, then they should indicate it on the return form in the space provided for the same.

- 42 -

Value Added Tax in

a!aras!tra

The various types of returns and their description have been summarised as under2 T(pe O* $eturn )riginal =resh 3evised %escription The return filed by the dealer originally along with the payment in the bank. The return filed by the dealer after the department issues a defect notice. The return filed by them to correct any error or omission.

)iling o* returns in special cases The first return for the newly registered dealer is for the period up to the end of the %uarter containing the date of its registration. Exa<ple 1 The turnover exceeds the threshold on .st -ovember. Then they should apply for registration, which is granted on ;/th -ovember and the date of effect is .st -ovember. The first return is for the %uarter ended ;.st 8ecember covering the period .st, April to ;.st 8ecemberI and the second return is for the %uarter ending following ;.st >arch. Exa<ple 2 #f turnover exceeds the threshold on .st -ovember. Aut dealer apply late for registration i.e. on ./th 8ecember, and the registration is granted on l/th 8ecember, then the date of effect registration is ./th 8ecember i.e., 8ate of application. The first return is due for the %uarter ending on ;.st 8ecember Bcovering. the period ./th 8ecember to ;.st 8ecemberC. .

- 43 -

Value Added Tax in

a!aras!tra

)iling o* return in case o* cancellation o* registration 8ealer,s registration may be cancelled if they discontinue, transfer or sell the business. They may also choose to cancel their registration if their turnover falls below the threshold limit. Exa<ple #f dealer,s file the returns %uarterly and their, last return was for the %uarter ending ;/th +eptember. #f a dealer closes the business on .4th -ovember, then their final return will be for, the period .st )ctober to .4th -ovember. The return should be filed within one month, that is, before .4th 8ecember. %ealer under t!e PacAage Sc!e<e o* Incentives #f dealer,s hold a ertificate of Entitlement granting an exemption from payment of tax or

deferment of payment of tax, it should be for the unit which is eligible for the incentives, file a %uarterly return, in )or< 22/. They must continue to file %uarterly return till the ertificate of Entitlement remains valid. $hen the validity of the ertificate of Entitlement ends, then dealer must file2 -

a %uarterly return, in *or< 22/, for the period from the first day of the %uarter in which the event occurs to the date the ertificate of Entitlement ceases, and a %uarterly return, in *or< 221 or 222 or 22" as the case may be, for the remainder of that financial year. =or succeeding years, the period and fre%uency of the returns will be determined on the basis of the tax liability or entitlement for refund of the preceding financial year.

- 44 -

Value Added Tax in

)iling <ultiple returns

a!aras!tra

8ealers are re%uired to file a single return at its principal place of business for all its businesses or places of business. #f they desire to file separate returns for separate places E divisions, then they must apply for )or< 211 for permission to file multiple returns. 8ealer should ensure that correct, complete and self-consistent returns are filed at all the locations in the +tate. Tax deduction at source '( an e<plo(er in a GorAs contract The works contractor is obliged to pay the tax on the works contracts executed by him. 'owever, the employer i.e. the notified person who has engaged the works contractor is obliged to deduct tax at the specified rate from the amount payable to the works contractor, excluding the amount of tax, if any, separately charged or service tax levied by the contractor.. The tax amount so deducted and paid to the Hovernment treasury #+ considered as a payment made on behalf of the works contractor. The employer is re%uired to deposit this tax and issue a certificate of tax deduction at source in the prescribed format based on which the works contractor is allowed to take the credit of the same while discharging his tax liability.

- 45 -

Value Added Tax in Part 0 B $ecords and accounts

Neeping records

a!aras!tra

"roper records are an essential part of effective management and control of their business. 8ealers are re%uired by law to keep a true and accurate account of the transactions effected by them. This will also help them to correctly %uantify their tax liability or refunds, as the case may be. They should keep all their accounts, registers and documents relating to their stocks of goods, purchases, sales and deliveries of goods, at their place of business. #f they wish to keep them at a different location they may do so, but only if they have the permission of the ommissioner of +ales Tax. Nature o* records -ormally, this department will not expect them to keep any special records for VAT purposes. 'owever, the records that they do keep should have sufficient details to enable them to correctly calculate the amount of VAT due for payment and file their return. #f +ales Tax )ffice happens to find that their records are not properly maintained, then they will issue a notice, informing dealers about what records they must keep. A dealer should maintain the following records2 to identify the nature and value of goods purchased and soldI distinguish between o local sales, interstate sales L exports. o local purchases, interstate purchase L imports.

- 46 -

Value Added Tax in

indicate value of o sale and purchase of tax free goods. o sales exempted from tax. o purchases from !38. o rate-wise purchases L sales.

a!aras!tra

o local purchases from registered dealer with VAT shown separately. record payments for the purchases and sale of goods in cash book E bank book. include a summary of VAT paid separately on purchases, VAT charged on sales, VAT paid to the +tate treasury and VAT refundable E refunded to the dealers. contain ade%uate proof that goods have been exported or importedI be supported by invoices for all goods purchased, and copies of invoices, and bills or cash memoranda, issued for goods sold. Tax invoices and <e<oranda o* sales or purc!ases As a registered dealer, they should issue a tax invoice when they sell goods to another registered dealer and charge VAT. =or sales made to consumers and unregistered dealers, they must issue a tax invoice, or a bill or cash memorandum. 'owever, if a dealer is a composition dealer other than a works contractor, they must issue a bill or cash memorandum only and not a tax invoice. =ailure to issue a tax invoice or a bill or cash memorandum may result in a penalty. The tax invoice must contain2 the words MTax invoiceM, printed in bold letters at the top or at a prominent placeI dealers name, address and registration number BT#-C. the name, address and the registration number of the purchaserI serial number of the invoiceI date of issueI description of the goods, the %uantity and price of the goods soldI

- 47 -

Value Added Tax in

a!aras!tra

rate and the amount of the tax charged and indicated separatelyI prescribed declaration regarding validity of the registration and payment of taxI

And it must also be signed either by dealer or by someone who is authori(ed by the dealer. #f a dealer issues a bill or cash memorandum, it must contain2 words MAill E cash memorandumM, printed in bold letters at the top or at a prominent placeI if a dealer is Ma composition dealer Bother then works contractorC then the words omposition 8ealer at the top of the bill E cash memorandumI dealers name, address and registration number BT#-CI the name and address of the purchaserI serial number of the bill E cash memorandumI date of issueI description of the goods, the %uantity and price of the goods soldI prescribed declarationM regarding validity of the registration and payment of taxI

And it must also be signed either by dealer or by someone who is authori(ed by the dealer. $etention o* records A dealer must keep all their records including tax invoices E bill E cash memorandum, relating to their stock of goods, purchases, sales, deliveries and payments made or received for the purchase or sale of goods for a minimum of five years from the end of the year to which they relate. 'owever, in case any legal proceedings are pendingI the records pertaining to that period should be retained till the proceedings reach finality.

- 48 -

Value Added Tax in

a!aras!tra

- 49 -

Value Added Tax in

a!aras!tra

Independent audit o* accounts '( a C!artered Accountant #f dealers, annual turnover of sales exceeds 3s.?/lakhs, or if they hold a license for the manufacture or sale of li%uor, then they must have their books of accounts audited by a practicing chartered accountant. The hartered AccountantMs audit report, to be made on =orm 7/? and it must be

submitted within 6 months from the end of the financial year. #f they fail to submit the audit report to the +ales Tax 8epartment within the prescribed time, then they may be liable to a penalty. Production and inspection o* accounts and docu<ents #f the concerned sales tax authorities have reason to believe that there may have been attempts to evade the payment of tax, they may re%uire dealer to produce all their books of accounts. #f a dealer fails to comply with such a re%uirement, it may commit an offence and will be liable to a penalty.

- 50 -

Value Added Tax in Part 1 B #usiness Audit

a!aras!tra

Ausiness Audit is a new function of the +ales Tax 8epartment. This will be conducted by the +ales tax officials ordinarily at the dealerMs place of business. This audit is independent from the audit by a hartered Accountant. Ausiness Audit is however, not an activity of enforcement for search and sei(ure at dealersM business premises. O'=ectives o* #usiness Audit The ob1ective of a Ausiness audit is to close any possible gap between the tax declared byM a dealer and the tax legally due. #t aims to ensure optimum revenue collection and voluntary compliance. The aim of Ausiness audit is to encourage the highest possible level of voluntary compliance in a system of self-assessment. Selection *or audit The main purpose of an audit is to ensure tax compliance, cross check of transactions and initiate corrective actions, if necessary. The returns filed by the dealers will be examined for discrepancies. Aased on such examination and pre-determined criteria, some dealers will be selected for audit. Henerally, cases selected for audit will include those dealers & who file its returns late in whose case they have reason to believe that the return may not be correct or a detailed scrutiny is necessary chosen randomly, on the basis of certain criteria.

A dealer who consistently and regularly complies with the VAT law and files correct, complete and self consistent returns will normally not be selected for audit. The selection of audit cases will be by exception rather than as a rule.

- 51 -

Value Added Tax in

T!e #usiness Audit Process

a!aras!tra

#f any of the dealers business is selected for an audit, then +ales Tax )ffice will inform them and then fix a suitable date. The audit officer will inspect the books of accounts and supporting documents. At that time dealer should make available any information or documents that he may re%uire to enable him to carry out the audit effectively and speedily. The audit officer may like to understand dealer,s business process and examine their stocks of goods. 'e may also like to interview the person or its employees for this. The audit officer cannot remove any books of accounts or documents from their premises. 'owever, audit officer can re%uest for copies. $esults o* t!e audit #f the audit shows that the returns filed do not reflect the true picture of the dealers business, then the auditor may discuss the matter with the dealer and will give guidance to them to prevent recurrence and will also explain them about what action should be followed. The audit may result in additional tax demand or a refund.

- 52 -

Value Added Tax in

Additional tax de<and

a!aras!tra

#f any additional tax is due, the auditor will issue a notice explaining the additional demand. #f the dealer accepts the additional demand shown, then they should file a revised return along-with the payment of tax. 'owever, if the dealer disagrees with the findings of the auditor, then they may proceed to assess their case and issue an assessment order unless they are able to provide evidence and convince the audit officer not to assess them for additional demand. The assessment order will also include interest due from the date they should have paid the tax to the date of the assessment. #n addition, they may also impose a penalty. They should pay the dues as per the assessment order or they may prefer an appeal against this order. Ti<e li<it *or audit There is no time limit prescribed for conducting Ausiness Audit. -ormally, they may carry out an audit within two years of filing the return. They may follow the timelines as prescribed for completion of assessments under the >VAT Act and >VAT 3ules. Investigation -ormally, the +ales Tax 8epartment will make Ausiness Audit visits by appointment. 'owever, if the department suspects any tax evasion, it may conduct investigation of the business including search and sei(ure operations at any time without giving notice. +uch investigation will be carried out by a duly authori(ed investigation officer Bnot audit officerC.

- 53 -

Value Added Tax in Part 2 B Appeals

a!aras!tra

A dealer may appeal against an assessment order if they do not agree with the amount assessed. They may also appeal against an order for the charging of interest or the imposition of a penalty. They can also file an appeal against any other order passed in their case. Appeals cannot be filed against certain interlocutory proceedings or orders. Also, they can not appeal against an unilateral assessment order passed as a conse%uence of non filing of returns. There are two appeal bodiesI the first is the departmental appeal officers and the second is the >aharashtra +ales Tax Tribunal BMTribunalMC. Appeal 'odies -ormally, dealer,s appeal will be, in the first instance, to the departmental appellate authority. 'owever, where the designation of the officer.C #f the dealer is not satisfied with the decision of the departmental appellate authority, then they may make a second appeal to the Tribunal. T!e Tri'unal The Tribunal consists of e%ual number of 1udicial and technical members. The latter are ordinarily, senior ex-officers of the +ales Tax 8epartment. ommissioner, or a Koint or Additional ommissioner issues the order, its appeal is directly to the Tribunal. BThe order will show the

- 54 -

Value Added Tax in

)iling an appeal

a!aras!tra

8ealer,s appeal must be made, using =orm ;./, within @/ days of the date of service of the order against which they are appealing. They can get a copy of the form from the local sales tax office or can download it from the +ales Tax 8epartment website GGG.vat.<a!aras!tra.gov.in A dealer must make sure that the form is fully and correctly completed. #f there are any mistakes or omissions, then they will be advised and given an opportunity to correct them. #f again they fail to do so, then their appeal will be re1ected. Aefore making an appeal, dealer must pay a fee through a challan in =orm 0./. #f the amount involved in their appeal is one lakh rupees or more, the fee is one tenth of a percent B/..5C of the amount in dispute, sub1ect to a maximum of 3s..///E-. #n all other cases, the fee is 3s..//E-. Application to sta( t!e order #n case dealers prefer as an appeal against an order of demand, then they may apply for stay an order to the extent of any amount to be paid by the appellant pending disposal of their appeal. 8ealer must make their said application on =orm ;.. which can be simultaneously filed along-with the appeal. Appeal re=ected #f the dealer,s appeal is re1ected on the ground of non-attendance, then they may apply, it again within ;/ days for the restoration of the appeal citing sufficient reasons. The appellate authority will take appropriate decision.

- 55 -

Value Added Tax in

Appeal accepted

a!aras!tra

#f dealer,s appeal is admitted, then the appellate authority will give them a minimum of ./ daysM notice of the date, place and time of the appeal hearing Bunless they re%uest an earlier hearingC. The hearing may be ad1ourned or postponed upon the dealer,s re%uest if deemed fit by the appellate authority. T!e Appeal !earing At the appeal hearing, dealer and legal adviser if any together - will be given an opportunity to explain their reasons for making the appeal and to support their case by producing evidence. After considering their arguments and evidence, the appeal officer will confirm or modify the order under appeal. #f the dealer is not satisfied with the appeal officerMs decision, then they may file a second appeal within @/ days to be heard by the Tribunal Appeal to Tri'unal 8ealer should file their appeal to the Tribunal in =orm ;./, taking care to ensure that they provide all the information relevant to their appeal as re%uired by the form. And they must pay the appropriate fee through a challan in =orm 0./. The proceedings before the Tribunal will be similar to those outlined above. 8ealer may present their case and evidence before the Tribunal through their legal representative. After examining their arguments and evidence, the Tribunal will pass appropriate order confirming or modifying the order under appeal or remanding the case for fresh order to the lower authority with appropriate directions.

- 56 -

Value Added Tax in

a!aras!tra

#n addition, there are two important differences2 .. The Tribunal has the discretionary power to award costs. 0. The decision of the Tribunal is final, especially on points of facts, sub1ect only to an appeal to the 'igh ourt if the case involves a substantial %uestion of law.

#f the dealer fails to attend the hearing by the Tribunal, then they will be liable to such costs as the Tribunal may award. #f the dealer, or the department, are not satisfied with the decision of the Tribunal and believe that the disagreement involves a substantial %uestion of law, an appeal can be filed before the 'igh ourt. 'owever, such filing of an appeal to the high court shall not affect their liability for payment of tax E claim of refund as per the order of the Tribunal. Appeal to t!e ,ig! Court 8ealer may appeal to the 'igh accompany the appeal memo. &ate appeals A late appeal may be admitted provided that they have a good reason for not making the appeal within the time allowed. Aut they must demonstrate that, having become aware that their appeal was late, then they had made the appeal without further delay. ourt within .0/ days of receiving the order from the

Tribunal. A statement setting out in detail the pointBsC of law to be decided must

- 57 -

Value Added Tax in

Priorit( !earings *or senior citi?ens

a!aras!tra

Appeals are normally heard keeping in view the two criteria of the age of the appeal and the stakes involved. 'owever, if the dealer is a senior citi(en aged 74 years and over, then they may apply Busing =orm ;.;C for priority to be given to the hearing of their appeal.

- 58 -

Value Added Tax in Part 4 B Tax Pa(er Services

a!aras!tra

+ales Tax )ffice expects from the dealer to comply with the law and fulfill their obligations to pay their taxes correctly, and timely. +ales Tax )ffice will provide certain services and facilities to help the dealer in this regard. +ome of the important ones are listed below. Advisor( visits #n case of a newly registered dealer, an advisory visit will follow shortly after the dealer receives their new VAT 3egistration ertificate. The +ales Tax 8epartment will then contact them to arrange a visit to the dealer,s place of business at a convenient time. The purpose of the advisory visit is to ensure that the dealer understand how to maintain books of accounts, claim set-off, file their return and pay their tax correctly. 8ealer can also use this opportunity to get their %ueries, doubts clarified. Ay providing such information, the +ales Tax 8epartment is trying to ensure that the dealer do not incur any penalties or interest by failing to comply with the legal re%uirements of being a registered dealer. The advisory visit team will also verify the details submitted by the dealer at the time of registration. 8ealers are expected to make available the necessary information and documents at the time of the visit. The +ales Tax 8epartment would appreciate the dealer,s feedback on the usefulness of the advisory visit. 8ealer,s valued suggestions E input will help the +ales Tax )ffice to improve their system and will serve the dealer better.

- 59 -

Value Added Tax in

a!aras!tra

Central $epositor( *or Issuance o* Statutor( )or<s A entral 3epository has been set up in every +ales Tax )ffice having 3egistration entral 3epository issues various statutory forms prescribed under the +T Act, to the dealers registered within the 1urisdiction of the concerned registration office. 'owever, =orm # will be issued to the +EP units from the office of the +EP. The 8ealer has to submit an application in the prescribed format for supply of statutory forms along with the M+tatement of 3e%uirementM which is available in every +ales Tax )ffice or can be downloaded from the +ales Tax )ffice website GGG.vat.<a!aras!tra.gov.in 8ealers will be issued the re%uisite number of forms on payment of the following fees by way of court fee stamps only2 S$.No. . 0 ; ? 4 T(pe o* )or< = ' E-# E-## ;.// ;.// ;.// ..// ..// )ee per *or< I$s.F ommissioner of

branch. Each

The statutory forms will be issued on a %uarterly basis only after the transactions of the said %uarter are completed. 'owever, form = will be issued on a monthly basis.

- 60 -

Value Added Tax in

TIN8S:S

a!aras!tra

Tax #nformation Exchange +ystem BT#-S+T+C is a centrali(ed exchange of all used by any dealer to verify authenticity of his counter part dealer in any other +tate.

+T

dealers spread across various +tates and !nion territories of #ndia. T#-S+T+ can be

The T#-S+T+ will also help the +tates in cross checking the interstate transactions on a real time basis. The pilot phase of T#-S+T+ has commenced and the >aharashtra +ales Tax 8epartment is an active partner in the system. %eter<ination o* disputed >uestions #f the dealer wants to find out the correct interpretation on certain issues related to the taxation matter, also dealer may apply to the commissioner for determination of the particular %uestion. An illustrative list of such %uestions is given below2 whether a person is liable to be registered as dealer. what is the rate of tax on a particular commodity. whether a particular transaction is a sale. the price on which tax is payable. whether set off can be claimed in a particular transaction. ommissioner

8ealer will be given an opportunity to present their case before the appeal to the Tribunal against the order.

makes an order. #f the dealer disagrees with the commissionerMs ruling, then they may

'owever, if the +ales Tax 8epartment has commenced assessment proceedings or if the case is pending in appeal, dealer can not apply for determination of disputed, %uestion.

- 61 -

Value Added Tax in

a!aras!tra

Tax clearance certi*icates #f dealer wishes to apply for a tax clearance certificate, +ales Tax )ffice will provide the same within .4 days of their re%uest. +ales Tax )ffice will issue the certificate based on the dealer,s record. #t will show the periods for which dealer have filed returns. periods for which dealer has not filed a return. periods for which +ales Tax )ffice have made al. assessment. status of any pending proceedings, and any amounts of tax outstanding and due for payment.

8ealer should apply for a certificate using =orm ?.?. Service Cell The service cell meetings are held at the 'ead Ruarters in >umbai once in every %uarter. 8ealer can actively participate and can provide their valuable feedback E suggestions during these meetings. T!e 6e'site IGGG.vat.<a!aras!tra.gov.inF +ales Tax )ffice has developed a $ebsite for serving all the dealers or person in a more efficient and faster way. The website has been divided into five sections as under2 6!atEs neG9 8ealer will get all the latest notifications E circulars that are issued by the +ales Tax 8epartment in this section.

- 62 -

Value Added Tax in

+eneral In*or<ation

a!aras!tra

This section, contains general information on the +ales Tax 8epartment such as statistical information with regard to the, tax collection location of all their offices in the +tate. NnoGledge Center This section is a repository of the >VAT Act L >VAT 3ules and, also includes the notifications and irculars issued under the >V AT Acts as well as earlier Acts. Tax Pa(er Services This section contains the soft copies Bdownloadable formatC of the forms that have been prescribed. This section also contains the information as re%uired by the 3ight to #nformation Act. 8ealer can find out their Tax #dentification -umber BT#-C and also T#of other dealers by using various search criterion. 8ealer can also obtain various declaration forms as prescribed under the entral +ales Tax Act, through online re%uisition of these forms. The web links menu of this section connects dealers to the relevant important websites including the websites of other +tates +ales Tax 8epartment. Co<<unication Centre This section facilitates the communication process wherein dealer can post their %ueries. 8ealer may also be able to post their valuable feedback E suggestions.

- 63 -

Value Added Tax in

a!aras!tra

Part 15 B $ecover(. O**ences and Penalties

$ecover( o* unpaid tax VAT is a self-assessed tax. #n order to operate effectively, the self-assessment system relies on the expectation that every dealer will deal with his tax matters promptly and honestly. Aut there will be occasions when a dealer does not pay the tax that is due. And so, there is a system designed to recover unpaid tax and to deter dealers from trying to avoid paying tax. The self-assessment return re%uires the dealer to pay the tax due at the time of submission of the return. #f this dealer does not pay the tax that he has declared, or if only pays a part of the tax due, interest is payable in addition to the tax due. Attac!<ent o* #anA Account $here any tax, interest or penalties remain unpaid, the department may issue an attachment notice to the dealerMs bank and to his debtors. #f necessary, officials of the +ales Tax 8epartment may call for the records from the defaulting dealer to examine and obtain the necessary details. Attac!<ent proceedings The department may also recover the amounts due by attaching the defaulting dealerMs moveable or immoveable property under the provisions of >aharashtra *and 3evenue ode.

- 64 -

Value Added Tax in

a!aras!tra

#f the department is still unable to recover the amounts of tax, interest and penalties plus any costs incurred in the attachment proceedings, it will initiate prosecution proceedings through police. The VAT law outlines a number of offences and the financial and other conse%uences that follow. #n addition, interest will be charged on any tax paid late at the rate of .45 per year. O**ences The principal offences, each of which has been referred to in the text of this guide, are as follows2 #f a person poses as a registered dealer when they not registered. files a false return. keeps false account of the value of goods bought or sold. produces false accounts, registers or documents or provides false information. issues any document Bincluding bills, cash memoranda, vouchers or any other certificate or declarationC which the dealer knows or has reason to believe is false. 'e may be liable for criminal proceedings including imposition of fine

- 65 -

Value Added Tax in

a!aras!tra

#n addition, dealer is committing an offence and if he fails to register when his turnover exceeds the, threshold. provides information about changes to his business. declares the name of the manager. provides to +ales Tax 8epartment the "A- allotted to the business. files a return. get his accounts audited, when re%uired. keeps proper accounts, when re%uired to do so by the +ales Tax authorities because the existing records are inade%uate. produce his accounts for inspection, when re%uired issues a tax invoice, bill or cash memorandum.

#n these circumstances, the dealer may be prosecuted and a fine may also be imposed. There are two other events that may also give rise to a penalty. #f the dealer2 transfers any assets of his business with the intention of not paying tax, or fails to respond to a notice re%uiring him to provide statistical information.

8ealer will be liable to a fine and may also face prosecution. )inancial penalties or *ines There are various financial penalties, each depending on the nature of the offence2

- 66 -

Value Added Tax in

Tax related

a!aras!tra

+ome offences attract a maximum penalty in proportion to the amount of tax due. #f the dealer2 conceals or misclassifies any transaction or provides inaccurate information or claims a set off in excess of the amount due or, issues or produces a documents, including tax invoice, bill or cash memorandum, that results in a person or dealer not paying the correct amount of tax The penalty is an amount e%ual to the tax due. #f the dealer avoids paying the correct amount of tax as a result of issuing bogus, false tax invoices, the maximum penalty is an amount e%ual to half of the tax under assessed or 3s..//E-, whichever is higher. Non Tax $elated Penalties #f the dealer fails to file a return, within the time allowed, the penalty is 3s.0,///E-. #f dealer files the return late but before any penalty proceedings have started, the penalty will be reduced to 3s.,///E-. #f the dealer,s return is not correct, complete and self-consistent, the penalty is 3s.,///E-, but this is without pre1udice to any other penalties that may be imposed. #f, after the issue of summons, the dealer fails to attend any proceedings or to produce books of account, registers or documents, the Tribunal or the +ales Tax authorities may impose a fine, not exceeding 3s.4,///E-. >ost other offences attract a penalty of 3s..,///E- although there is also a provision for some offences to attract a penalty of 3s.0,///E- plus a continuing daily penalty of 3s..//E-

- 67 -

Value Added Tax in

Pa(<ent o* Penalt( or )ine

a!aras!tra

As a result of proceedings, such as audit, investigation, assessment etc., +ales Tax Authority may issue a demand notice containing details of tax, interest and penalties, if any, that are imposed. The dealer should pay the amount due within ;/ days of the date of the order. 8ealer should make the payment using =orm 0./ through the bank where he normally files his return.

- 68 -

Value Added Tax in

a!aras!tra

Appendix 1

*ist of important forms referred to in the Huide Sr. )or< Su'=ect Application for 3egistration under the >V AT Act, 0//0. Application for cancellation of 3egistration ertificate. halan in respect of payment made otherwise than with return by a dealer under the >VAT Act, 0//0 3eturn-cum-chalan for all VAT dealers other than dealers executing works contract, dealers engaged in leasing business, composition dealers Bincluding dealers opting for composition only for part of the activity of the businessC, "+# dealers and 4 000 notified )il ompanies. 3eturn-cum-chalan for all composition dealers whose entire turnover is under composition Bexcluding works contractors opting for composition and dealers opting for composition only @ 00; for part of the activity of the businessC. 3eturn-cum-chalan for VAT dealers who are also in the business of executing works contracts, leasing and dealers opting for composition only for part of the activity of the 7 00? business. 3eturn-cum-chalan for "+# dealers holding Entitlement

No. Nu<'er . ./. 0 ./; ; 0./ ? 00.

ertificate. BTransactions by "+# dealers relating to the business of execution of works contracts, leasing, trading and composition only for part of the activity of the business to be 6 004 included in a separate return in =orm 00;C. 3eturn-cum-chalan for -otified )il ompanies. BTransactions by )#* ompanies relating to the business of execution of works contracts, leasing and composition only for part of the

- 69 -

Value Added Tax in

a!aras!tra

activity of the business, to be inc.uded in a separate return in J ;/? =orm 00;C. Application for cancellation of assessment order under section B.C of section 0; of the >aharashtra Value Added Tax Act, ./ .. .0 .; .? ;./ ;.. ?.? 4/. 7/? 0//0. Appeal against an order of assessment, interest, penalty or fine. Application for grant of stay against order of assessment, penalty, interest or fine Application for tax clearance certificate. Application for refund under sub-section B.C of section 4. of the >aharashtra Value Added Tax Act, 0//0. Audit report under section @. of the >aharashtra Value Added Tax Act, 0//0.

- 70 -

Value Added Tax in

a!aras!tra

&ist o* Sales Tax O**ices in t!e State o*

a!aras!tra

There are total /5 Sales Tax O**ice located all over the >aharashtra. )ut which some of them are in2 u<'ai B'ead RuartersC, Aandra, 3aigad B8ivisionC, Thane B8ivisionC, Nalyan, -alasopara, "alghar, "une B8ivisionC, +olapur, Nolhapur B8ivisionC, +atara, +angli, 3atnagiri, -asik B8ivisionC, Ahmednagar, Aurangabad B8ivisionC, -agpur B8ivisionC, $ardha, Amaravati B8ivisionC, Akola, and many moreU

- 71 -

Value Added Tax in

a!aras!tra

Conclusion

- 72 -

Value Added Tax in #i'liograp!(

a!aras!tra

1. Value Added Tax #( Sales Tax %epart<ent. 2. GGG.google.co< ". GGG.tax/india.co< /. GGG.vat.<a!aras!tra.gov.in

- 73 -