Interest Payable (Section 30)
- On non-payment or late payment of tax by an unregistered dealer or dealer who have failed to apply for registration in time: Simple interest @ 1.25% for each month or part thereof from 1st day of April of respective year till the date of payment.
- Late payment of tax by registered dealer: Simple interest @ 1.25% for each month or part thereof from due date till the date of payment. In case of fresh or revised return, for any period, due date of original return shall be considered for differential dues if any.
- Interest on differential dues on assessment of a registered dealer: Simple interest @ 1.25% for each month or part thereof from the next date following the last date of the period/s covered by assessment order till the date of assessment order.
- Interest on Additional Dues: A penal rate of interest @ 25% of the additional amount of tax payable on filing a revised return for any particular period (whether by a registered dealer or unregistered dealer), under any of the following circumstances:
Additional dues arising in a revised return filed
a. After the commencement of: (i) Audit of the business of the dealer in respect of any period, or (ii) Inspection of the accounts, registers and documents pertaining to any period, kept at any place of business of the dealer, or (iii) Entry and search of any place of business or any other place where the dealer has kept his accounts, registers, documents pertaining to any period or stock of goods,
b. In consequence of any intimation issued under sub-section (7) of section 63
Note: There is no provision for remission of interest, and, no appeal shall lie against orders levying interest under sections 30(2) and 30(4).
Concession in additional interest u/s 30(4): (Refer Trade Circular 15T of 2014 dated 6th August, 2014)
- Wherever the additional tax liability paid as per revised returns on account of audit or investigation proceedings is less than 10% of the tax paid with original returns, then the additional interest of 25% u/s 30(4) shall not be payable.
- Interest u/s. 30 (4) shall not apply, where the additional tax liability arises on account of non-production of declarations. [New proviso Inserted in section 30(4)]
Although, there is no bar on filing appeal against order levying interest u/ss. 30(1) and 30(3), the specific power of Appellate Authority, to either confirm or cancel or modify such order of levying interest, has been removed w.e.f. 1st May 2011.
Interest Receivable (Sections 52 and 53)
A dealer is entitled to receive interest on refunds due to him @ 0.5%, for each month or part thereof, for the period commencing from the next day of the end of the period to which refund relates till the date of sanctioning refund or for a period of 24 months whichever is less.
Such interest is to be granted on the net amount of refund (after adjustment of any dues under the earlier laws, under the MVAT Act and under the CST Act). The interest shall not be granted on any refund/s u/s. 51.
The dealer is also entitled to receive interest @ 0.5%, for each month or part thereof, on delayed refunds for the period commencing the next day after expiry of 90 days from the date of order granting refund till the date of refund.
It has further been provided that the decision of Commissioner of Sales Tax for exclusion of any period, while working out such refund, shall be final.
Penalties (Section 29)
Section
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Offence
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Conditions/Particulars
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Penalties
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29(2A)
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Failure to apply for registration or carrying on business as a dealer
without being registered in contravention of the provisions of this Act.
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Can be imposed on a dealer while or after passing any order under MVAT Act.
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Up to 100% of Tax payable by the dealer for the URD period.
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29(3)
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Concealment OR
Knowingly furnishing inaccurate particulars of transaction liable to tax OR
Knowingly misclassified any transaction liable to tax OR
Knowingly claiming excess set-off.
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Can be imposed on a person or dealer while or after passing any order on Noticing or being brought to Notice.
Presence of Guilty Mind, necessary.
Offences can be of Commission or Omission.
Written order is must.
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Up to 100% of Tax Due because of the given Acts. (Minimum 25% of tax dues).
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29(4)
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Person/Dealer knowingly issues/produces any document which results in
tax being not levied/reducing the tax liability or claiming of incorrect
set off relating to any Sale/Purchase transaction effected by him/any
other person/ dealer.
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Document includes a false bill, cash memorandum, voucher, declaration or certificate.
Offences can be of Commission or Omission.
Written order is must.
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Up to 100% of Tax Due because of the given Acts.
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29(5)
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Purchaser fails to comply with conditions/ restrictions subject to which
exemption was granted & sale was exempt (fully/partly) from tax
due to any provisions of 8(3)/(3A)/(3B)/(5).
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Written order is must.
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Up to 150% of tax which would become due, if exemption was not available on said sale.
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29(6)
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Person/Dealer contravenes the provision of section 86 (issuing Tax Invoice/bill/Cash memorandum) to have tax payable by him under assessed. | Written order is must.
(Note: It is not
necessary to issue a tax invoice/bill or cash memorandum if value of
goods sold in single transaction is Rs. 50/- or less.)
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Greater of 50% of tax that would have been under assessed OR Rs. 1,000/-
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29(7)
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Person/Dealer failed without reasonable cause to comply with any notice in respect of any proceedings.
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Written order is must.
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Rs. 5,000/-
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29(9)(c)
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Dealer has filed a return which is not complete and self-inconsistent.
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This penalty shall be without prejudice to any other penalty imposed under this Act. Written order is must.
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Rs. 1,000/-
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29(10)
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Person/Dealer has collected any sum by way of tax in contravention of the provisions of section 60.
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Commissioner shall hold an enquiry. Written order is must.
Notice of forfeiture shall be published for the information of the persons concerned.
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Not exceeding Rs. 2,000/-(+) Forfeiture of sum collected in contravention of section 60.
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Notes:
- No Order of Penalty under above provisions shall be passed in respect of any period after 8 years from the end of the year containing the said period.
- However, if due to some reasons, assessment is done after 8 years, penalty may be imposed while passing such assessment order. (as per amended provision w.e.f. 26th June, 2014)
- Prior approval of the Deputy Commissioner needed by a Sales Tax Officer or an Assistant Commissioner for issuing order for imposing a penalty under any of the above sub-sections if penalty exceeds Rs. 5 lakhs; (This requirement of prior approval is deleted w.e.f. 26th June, 2014).
- Prior approval of the Joint Commissioner needed by a Deputy Commissioner or a Senior Deputy Commissioner for issuing order for imposing a penalty under any of the above sub-sections if penalty exceeds Rs. 10 lakhs. (This requirement of prior approval is deleted w.e.f. 26th June 2014).
MAINTENANCE OF ACCOUNTS
Section 63(1) requires, every dealer, liable to pay tax under the MVAT Act, and any other dealer who is required to do so by the Commissioner, to maintain a true account of the value of goods sold or purchased by him.
Sections 63(2) and (3) empowers the Commissioner to give direction to any dealer or any class of dealers to maintain accounts and records in such form and in such manner, as may be directed by him in writing.
Section 63(4) requires every dealer to keep all his accounts, registers and documents relating to his stock of goods, purchases, sales, delivery of goods and payments made or received towards purchase or sale of goods, at his place of business.
Section 63(5) requires goods return claims to be made in the period (month, quarter, six months) in which appropriate entries are made in the books of account.
Similarly section 63(6) requires that the effect of all such debit notes or credit notes, which are in the nature of increasing or decreasing either sale price or purchase price of goods, shall be taken in the return for the period in which entries for such debit/ credit notes are taken in the books of account.
Rule 68 requires every registered dealer to preserve all books of account, registers and other documents pertaining to stocks, purchases, dispatches and delivery of goods and payments made towards sale or purchase of goods for a period of not less than eight years from the expiry of year to which they relate.
AUDIT OF ACCOUNTS
Section 61 of MVAT Act requires certain dealers/persons to get their accounts audited by an accountant, within the prescribed period from the end of the year. The report of such audit is required to be furnished in a prescribed format. The provisions contained in the Act and Rules in this regard are reproduced below for the attention of members.
"61(1) every dealer liable to pay tax shall;
For the periods up to 31st March, 2013:
a. If his turnover of sales or, as the case may be, of purchases, exceed or exceeds rupees forty lakhs/sixty lakhs (as the case may be) in any year, or
b. If he is a dealer or person who holds licence in:
- Form P.L.L. under the Maharashtra Distillation of Spirit and Manufacture of Potable Liquor Rules, 1966, or
- Form B-RL under the Maharashtra Manufacture of Beer and Wine Rules, 1966, or
- Form E under the Special Permits and Licence Rules, 1952, or
- Forms FL-I, FL-II, FL-III, FL-IV under the Bombay Foreign Liquor Rules, 1953, or
- Forms Cl-I, CL-II, CL-III, CL/FL/TOD III under the Maharashtra Country Liquor Rules, 1973,
c. if he holds an Entitlement Certificate in respect of any Package Scheme of Incentives, granted under this Act or, as the case may be, under the Bombay Sales Tax Act, 1959. (applicable from 1-5-2010)
For periods commencing on or after 1st April 2013:
a. If the,
- Aggregate of his turnover of sales and the value of goods transferred to any of his place of business or of his agent or principal situated outside the State, not by reason of sale, or
- Turnover of purchases, exceeds rupees one crore in any year
b. (deleted)
c. if he holds an Entitlement Certificate in respect of any Package Scheme of Incentives, granted under this Act or, as the case may be, under the Bombay Sales Tax Act, 1959.
Get his accounts in respect of such year audited by an Accountant, within the prescribed period from the end of that year, and furnish within that period a complete report of such audit, in the prescribed form, duly signed and verified by such accountant and setting forth such particulars and certificates as may be prescribed.
Explanation: For the purposes of this section, "Accountant" means a Chartered Accountant within the meaning of the Chartered Accountants Act, 1949 or (w.e.f. 15-8-2007) a Cost Accountant within the meaning of Cost & Works Accountants Act, 1959).
(2) If any dealer liable to get his accounts audited under sub-section (1) fails to furnish a complete report of such audit within the time as aforesaid, the Commissioner may, after giving the dealer a reasonable opportunity of being heard, impose on him, in addition to any tax payable, a sum by way of penalty equal to one-tenth per cent of the total sales.
Provided that the dealer fails to furnish such report within the aforesaid period but files it within one month of the end of the aforesaid period and the dealer proves to the satisfaction of the Commissioner that the delay was on account of factors beyond his control, then the Commissioner may condone the delay. (This proviso is deleted w.e.f. 26th June, 2014).
Explanation: Explanation-II (w.e.f. 1st May, 2011) provides that for the purposes of section 61, an audit report shall be deemed to be complete audit report only if all the items, certification, tables, schedules and annexures are filled appropriately and are arithmetically self-consistent.
Sub-section 2A (inserted w.e.f. 1st May, 2011) further provides that where a dealer, liable to file audit report u/s. 61, knowingly furnished the audit report which is not complete, then the Commissioner may, after giving a reasonable opportunity of being heard, impose on him, in addition to any tax payable or any other penalty leviable under section 61, a sum by way of penalty equal to one-tenth per cent of the total sales.
(3) Nothing in sub-sections (1) and (2) shall apply to Departments of Union Government, any department of any State Government, local authorities, the railway administration as defined under the Indian Railways Act, 1989, the Konkan Railway Corporation Limited and the Maharashtra State Road Transport Corporation constituted under the Road Transport Corporation Act, 1950."
"Rule 65. The report of audit under section 61 shall be in Form 704." The auditor is required to download latest version of Form 704 from the website.
"Rule 66. The report of the audit under section 61 shall be submitted electronically within nine months and fifteen days from the end of the year to which the report relates." The due date for uploading audit report, in Form 704, for the financial year 2014-15 shall be 15th January, 2016.
Submission of Form 704
i. The dealer is required to submit "Statement of submission of Audit Report in Form 704" along with this statement, the dealer is also required to submit the following documents:
- A copy duly signed by VAT auditor as well as dealer, of an acknowledgment generated after uploading of Form 704.
- Part I of the Audit Report along with certification duly signed by the Auditor.
(Copy of Balance Sheet, Profit & Loss Account, Trial Balance, other Audit Reports, etc. not required to be submitted)
ii. The aforesaid documents shall be submitted:
- To the concerned LTU Officer, if the dealer is Large Tax Payer;
- To the "Desk Audit Cell" in the Office of the Joint Commissioner of Sales Tax (Business Audit) in Mumbai if the dealer is not Large Tax-payer.
- In the rest of the State to the concerned LTU Officer, if the dealer is Large Tax-payer, and in any other case to the Joint Commissioner of Sales Tax, VAT (ADM).
(Please refer Trade Circular No. 27T of 2009, dated 1-10-2009.)
In order to ascertain whether any person or dealer is required to get his books of account audited under the MVAT Act, the following will have to be examined/determined:
I. For clause (1)(a):
- Whether the person is a dealer within the meaning of section 2(8) of MVAT Act.
- If a dealer, then whether he is liable to pay tax under the provisions of MVAT Act. A useful reference may be made to section 3 of MVAT Act in this regard.
- If the dealer is covered by the provisions of section 2(8) as well as section 3, then it is immaterial whether the dealer has taken registration or not. Thus even an unregistered dealer may also be liable to get his books of account audited. The only criteria to be checked are whether the turnover either of sales or purchases exceeds the limit of Rs. 40 lakhs, Rs. 60 lakhs or Rs. 1 crore (as the case may be) during a financial year.
If all the three criteria discussed above are fulfilled then such a dealer shall get his books of account audited as per the provisions of section 61 and shall submit the report of audit accordingly. It may be noted that for the purposes of section 61 the term 'Turnover of Sales and 'Turnover of Purchases' have to be examined carefully. The same are defined u/ss. 2(33) and 2(32) respectively. A useful reference may also be made to the definition of 'Sale' Sale Price and Purchase Price as given u/ s. 2(24), 2(25) and 2(20) respectively.It may also be noted that for the purposes of section 61Turnover of Purchases will include all purchases of goods within the State of Maharashtra whether it is trading goods, raw material, packing material, fuel, consumables, capital assets and/or purchase of goods in any other form say by way of expenses debited to Profit and Loss A/c. such as Printing & Stationery, Repairs and Maintenance, etc. Likewise 'Turnover of Sales' shall also include, apart from normal sales, any sale or disposal of capital assets, scraps etc.
II. Clause (1)(b) of section 61, before its deletion, required every person, whether a dealer or not, holding Liquor Licence of any of the categories as described in (i) to (v) above to get his books of account audited. Thus all such persons were required to comply with the provisions of this section, irrespective of the amount of turnover of purchase or sales during a year. However, now from financial year 2013-14 and onwards such persons/ dealers will be required to get their accounts audited if their turnover exceeds the prescribed limit.
III. Clause (1)(c) has been inserted, w.e.f. 1st May, 2010, providing for compulsory audit of accounts of all those dealers who are holding Entitlement Certificate in respect of any Package Scheme of Incentives of the Government of Maharashtra, irrespective of their turnover of sales or purchase during a financial year. (This clause is applicable for audit of accounts for financial year 2010-11 and onwards.)
