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«VAT ISSUES 1) Return Branch: If the dealer has mistakenly punched wrong period while making VAT or CST payment then the dealer as per circular 17T ...»

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1) Return Branch:

If the dealer has mistakenly punched wrong period while making VAT or CST

payment then the dealer as per circular 17T files a letter along with tax paid

chalan to the return branch intimating the mistake and to rectify the same in the

departments records.

But, there is a delay in updating from return branch officer. There are lots of

applications still pending before return branch officer.

Due to not taking action from the return branch:

(i) An application for declaration forms is getting rejected by repository cell.

(ii) Claim of payment is getting rejected in assessment, resulting in demand along with interest and penalty.

(iii) The case is getting transferred in recovery branch for recovery of dues, which are actually already paid.

2) Repository Branch:

When there is no CST turnover for the period, the dealer is not required to file the CST returns. In such cases also the repository branch issues defect memo stating CST return not filed for the period and the dealer is unable to get applied declaration forms. The system should trace the CST NIL turnover from the VAT returns. There should be mechanism to locate such type of transaction.

In case where the dealer purchases goods against Form H, he has to issue Form H to the supplier. While making an online application for form H, he has to submit the details of export. If the applicant has effected export in two to three lots, he is facing problems as the system is not accepting details of multiple exports sales against a single purchase. Sufficient space is not provided in the application form to incorporate for such multiple export details.

The system does not pick up revised figures via Annual Return filed after VAT audit. There should be mechanism to pick the said figures and finalise details which will avoid issuance of defect memo.

New ‘Telangana’ State is not incorporated in the system, so the dealers are not able to issue declaration forms to the dealers in Telangana State.

1|Page Many of the applications are rejected due to non payment of tax in a particular period. In many cases, actually tax is paid, but it might have been paid mentioning wrong period or might have been paid under wrong Act. Even after making an application to the return branch, it is taking too long time to correct the error. In such cases, the repository branch should issue the declaration forms, if an application has already submitted to the return branch for correction of mistake.

Upto 30th April, 2011, credit of an advance payment of Rs. 25000/- made at the time of registration under VRS scheme was allowed to be adjusted against the tax payable as per returns for the first and second year. In most of the cases, credit of such VRS payment is taken in the returns and copy of chalan is available with the dealers. However, mahavikas system has not given the credit of this payment and an amount of 25,000 is appearing as outstanding. Most of the officers in return branch do not issue notice as they are aware of this problem. However, applications for declaration forms are held up. It is requested that applications should not be kept on hold for such VRS payments of Rs.


After uploading the application for declaration forms, sometimes we get the defect memo and asked to cure the defect within 15 days. After the defect is cured and intimated, we receive the declaration forms. But, many times it happens that even after the defect is cured the application is rejected, if the correction of defect is not communicated by the dealer to the Repository Branch.

Therefore, it is requested that before rejecting the application on 15th day, the concerned officer should check in the system whether defect is cured or not.

This will reduce the quantum of rejections.

Cancellation of declaration forms: The applications for cancellation of declaration forms are accepted only once in week (i.e. only on Friday). In the past, the applications for declaration forms were not online. Therefore, to maintain discipline and to avoid pressure of work, the applications for cancellation were accepted only on Friday. Now, the applications are compulsorily online. Therefore, there is no physical rush in the repository branch. In view of this, it is requested to allow us to submit the applications for cancellation for declarations to be accepted on all the days. Further, repository 2|Page branch is taking 45 days to cancel the declaration forms from the system. The time of 45 days may be curtailed.

3) Administrative Relief:

In case of takeover, amalgamation and merger and demerger of the companies, the new company which take over the existing company or demerged company is required to apply for new TIN. Maharashtra VAT Act considers date of order of High Court as the date of effect of new registration certificate. However, it takes a long time to get copy of the order from the High Court after it is being passed. Therefore, in most of the cases, an application for vat registration if getting delayed. Particularly, the demerged company has to apply for new Certificate of Incorporation from the Registrar of Companies after obtaining order from the High Court. After getting copy of new Certificate of Incorporation, it can apply for Income Tax PAN and, thereafter for new VAT TIN.

Therefore, there is a need to give administrative relief in all such cases for delay in application for new VAT TIN.

Further, VAT Act is also required to be amended to avoid delay in application for registration. In case of amalgamation or merger, date of submission of High Court order to the Registrar of Companies may be treated as the date of effect of TIN. In case of demerger, date of receipt of new Certificate of Incorporation may be treated as the date of effect of TIN.

In the case of builders and developers, the orders of condonation of delay may please be expedited.

4) Periodicity covered in declaration forms:

As per the provisions of the CST Act, declaration in Form C or H is to be issued on a quarterly basis and declaration in Form F is required to be issued on a monthly basis. However, considering the genuine difficulties faced by dealers, Trade Circular No. 70T of 2007 is issued on 6th December, 2007. If a declaration covers the transaction of purchase or sales of a subsequent quarter or month, then the same is allowable, provided the customer has received the goods in subsequent month or quarter. However, such type of relaxation is not given by 3|Page the Commissioners of other States. So, as a Commissioner of Maharashtra, if your good self take a lead and Commissioners of other States also issue such type of Circulars, then it will give relief to the dealers of Maharashtra State.

Recently, Calcutta High Court in case of CIPLA LTD has allowed the interstate transactions done though single yearly F form. Even, Gujarat Sales Tax Tribunal has also allowed one single C form declaration as valid. Considering this, single declaration form for two or more quarters/ months should be allowed to the dealers as per the decisions given by the Calcutta High Court and Gujarat Sales Tax Tribunal.

5) Corrections in Return Forms: In the VAT return, there is a column to carry forward excess tax or set off to succeeding periods within the same financial year. However, there is no column to adjust the refund of subsequent period to the preceding period within the same financial year. It sometimes happens that tax is paid in excess in the last month or the last quarter and there is a payment in the earlier periods return then backward adjustment of the such excess tax paid column is not available in return form. Therefore, the form of return needs to be modified and one column be provided for carry backward of excess payment.

As per the provisions of the VAT Act, while making payment towards works contract transaction, VAT TDS is required to be deducted and supplier gets credit of the TDS while making his payment of tax. Many times, customers deduct VAT TDS even though sales transaction is not works contract transaction. But the supplier is not able to get the credit of this VAT TDS, because there is no column in return Form No. 231 to get the credit of this VAT TDS. It is, therefore, requested to provide one column to get the credit of VAT TDS.

6) Claim of Set off:

In many cases the Assessing Officers are not ready to allow input credit to the customer, if the supplier has not submitted vat audit report in Form 704 or not paid the sales tax, even he has uploaded the VAT returns and ledger 4|Page confirmation are available with the claimant dealer. In this situation the customer should not be penalized and the set off should be granted.

In many cases the customer’s claim of set off is not granted because his supplier has opted for retail composition scheme. It is found that the supplier has collected tax and issued tax invoice wrongly. In all such cases, the department should catch those retailers and forfeit the tax and grant refund to the claimant dealers. Further, the department should mention on web page of every dealer whether he is covered under any composition or not.

Right now the details filled up in Annexure J1/J2 are not allowed to be revised.

The same should be allowed to be revised at least once. Even VAT & CST periodical returns are also allowed to be revised once. Send Annexure J1/J2 mismatch to all dealers, by email for financial years 2011-12 & 2012-13 and allow revised J1/J2 at least once, so that number of mismatch and number of assessment will come down.

7) Annexure J1/J2 New Templates:

With effect from 01.04.2014 all the dealers are required to submit supplier wise purchase in Annexure J-2 and customerwise sales in Annexure J-1 along with submission of periodical returns. Here, we give some suggestions.

Submission of Annexure J-1 and J-2 should be made on quarterly basis for all dealers. This is because, for the dealers who are liable to file return on monthly basis, it is adding lots of burden to gather the data every month and upload the same in the short stipulated time. Chances of errors are very high. If we analyze the periodicity of filing of returns of all Maharashtra dealers, you will find that at least 80% dealers are filing returns on six monthly basis. Therefore, submissions of Annexure by monthly dealers have no use until six monthly dealers submit their Annexure. Matching/ mismatching/ cross checking of the data will not be started till those 80% dealers submit their Annexure. At present, the J-1/J-2 data on website will not be available till the due date of filing of six monthly returns is over. If all the dealers (including dealers who are liable to file returns on monthly basis) submit the Annexure on quarterly basis, then it will be easy to match the data.

5|Page Further, all the dealers should be asked to submit their VAT & CST returns on quarterly basis, irrespective of tax liability. This will ease in comparing the figures of interstate purchase figures with the corresponding figures in C forms application. Further, if small dealers will also be able to apply for declaration forms on quarterly basis. Right now, they have to wait till they file their six monthly returns. However, the payment of tax for dealers who are paying of more than Rs. 10 lacs should continue to be kept on monthly basis.

8) Recent Budget Amendment: In the budget speech, the Finance Minister announced new 1% / 1.5% retail composition scheme. However, Notification to that effect is not yet issued. The Scheme should be made operative quickly as the due date for filing six monthly returns is approaching. Further, the existing dealers should be given option to withdraw from the scheme and any new dealer who is not under composition scheme should be given chance to join the scheme.

9) Appeals: At present lots of appeals are piling with the Appellate Deputy Commissioners and Joint Commissioners They are not able to take up the final hearing of appeals due to number of new appeals continuously being filed. Even, stay hearing matters are also getting delayed. There is a need to increase the number of posts of Appellate Deputy Commissioners and Joint Commissioners.

Further the vacant posts should be filled up immediately.

10) Assessments:

In the last one and half year, assessments have been taken up and are completed very quickly. The assessments for the year 2005-06 and 2008-09 were completed during the period January, 2013 to June, 2013. Assessments for the year 2006-07 and 2009-10 were completed during the period July, 2013 to March, 2014. Assessments for the year 2010-11 were completed during the period April, 2014 to July, 2014. Now, the assessments for the year 2007-08 and 2011-12 are planned to be completed on or before 31st December, 2014 and the 6|Page assessments for the year 2012-13 are planned to be completed on or before 31st March, 2015.

Our humble request is not to complete the assessment so quickly. In a zeal to finish the backlog, more than 50% assessments are been passed ex-parte. We are getting frightened with the fantastic figures in the ex-parte orders. We are finding it difficult to compile and submit the details for the old periods. There will be difficulty in completing the assessments for 2007-08, 2011-12 and 2012in next 7 months. It is difficult to gather the declaration forms from customers. It is also difficult to compile the data, as we have to carry out Income Tax audit, Companies Act audit and VAT audit during this period. The tax audit report under Income Tax audit is completely redrafted and Income Tax Department is not yet able to provide new version for uploading and submission.

At the same time the Indian Companies Act, 1956 is completely replaced by new Companies Act, 2013. It is still under the process of modifications and corrections. Under this situation it is requested not to go so quickly to complete assessments of 3 years in next seven months. If we, our accountants, our consultants and your officers will get some spare time, then we have lots of pending appeals and rectifications applications for the past years. The carrying out of pending appeals and rectification applications will also lead to completion of backlogs.

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