After Correction Copy of New Analysis Final Writing Page With Logo

8/2/2019 After Correction Copy of New Analysis Final Writing Page With Logo

1/72

EXECUTIVE SUMMARY

Klaus Multiparking System Private Limited is Germanys leading car parking

System Company. KLAUS multiparking Systems Pvt Ltd is a Joint Venture between

AUTOMAG -India and KLAUS Germany. It is manufacturer of various type of car peaking

System which used in Malls, and where in Big Project of Architecture is done. Klaus

Multiparking System continually delivering car parking system in all over India.

This project is based on study and analysis of VAT. Financial analysis has gained

lots of knowledge about the taxation system of the company. In India there are two types

of taxes they are as follow.

1. Direct tax

2. Indirect Tax

The Direct tax is paid directly by the concern person. Direct taxes are those which

are paid after the income reaches hands of taxpayers. In case of Indirect taxes, one person

pays them, but he recovers the same from other person. Indirect taxes are those which the

tax pays indirectly i.e. while purchasing goods and commodities, paying for services etc.

Indirect taxes are paid before the goods and services reach the tax payers.

This project is done on the Study & Analysis of VAT which is included in the in

Indirect Taxation. The VAT are playing very important role in the taxation system. Thetaxation are the helping hands to the Central government and State government for the

improving the Infrastructure project, dam, road development, maintain law & order,

defense, social health services etc government obtained the fund from the various sources,

out of which main source is taxation. The Taxation system is very important to all types of

government not only India but also the Foreign Country. The VAT has been adopted by 130

Countries.

This project is improving the practical knowledge of the VAT system of the

company. This project has also helped in improving presentation as well as data

interpretation skill; overall in the Klaus Multiparking System Pvt Ltd. I got invaluable

Experience. The actual importance of study of VAT analysis is to know as how the

company actually operates, manages and controls its overall activites.

1 | P a g e
http://www.multiparking.com/http://www.multiparking.com/


2/72

COMPANY PROFILE

Since 1907 when Klaus started a wheelrights shop, intelligent technical solutions have

characterized the company activity. By 1960s Klaus became true pioneer in technical history

constructing car bodies, inventing the Klaus-Bremsluft-schnellkiper developing innovative

carousel constructions for amusement park and producing built on excavators and loading

cranes.

The first Klaus car parking systems enter the market in 1964. By 1972 the production

extended to three different series. In 1973 when the company moves into new premises in

AITRACH near memmingen in southern Germany it has already become one of the leading

manufacturers of car parking systems worldwide.

From 1975 on the first licences are granted for the production of car system e.g. in

Japan, and not later than 1980 Klaus became internationally renowned for innovation and

technical process in all its business lines.

When dealing with new challenges Klaus succeeded in keeping its edge in the market

based on flexibility in new ideas

In 1985 the company expanded its product line the production of car parking system

with horizontal parking spaces increases compare to the incline systems. At the same time, the

systems are constantly adjusted to new vehicle dimensions.

In 1988 Klaus presents the new space-saving Parking Automat system, which quickly

takes over the market. Finally in 1993, fully automatic car parking systems are introduced, with

store the vehicles themselves via computer-controlled operating elements, saving thus

additional length and maneuvering areas. Up until today, Klaus has continued R&D and added

new features to these systems, providing its customers with the newest and most advanced

technical solutions.

Thus, Klaus car parking systems stands for the basic, ever more important principle of

our time of constant change: state-of-the-art know-how, innovative technologies and individual

solutions.

Klaus Multiparking GmbH

Hermann-Krum-Str. 2

D-88319 Aitrach

Fon: 07565 / 508-0

Fax: 07565 / 508-88

email:[email protected]

2 | P a g e
mailto:[email protected]:[email protected]:[email protected]


3/72

KLAUS IN INDIA

"KLAUS India has been leading the development of Multi-Level and Automated

Parking Systems in India by successfully providing customized solutions."

KLAUS multiparking Systems Pvt Ltd is a Joint Venture between AUTOMAG -India

and KLAUS Germany

AUTOMAG established in 1985 at Pune, India is a leading manufacturer of state of the

art material handling systems, conveyor systems & assembly lines for leading automobile

manufacturers

KLAUS Germany is a pioneer in parking systems and has a vast experience in more

than 45 countries for the last 40 years and has won several awards for Innovation in

technology.

KLAUS India offers reliable and time-tested full range of products for Multi-Level and

Automatic Parking based on German technology: Stack Parking for 2 or 3 level solutions,

along with Fully Automatic Parking Systems such as Parking Towers, Bi-directional Systems,

Multilevel Circulation and Lift Slide Systems.

KLAUS India is a leader in providing innovative, customized solutions for car parking,

supported by an able team of technically qualified designers, technicians, engineers &

managers trained under German supervision, a Pre-Sales and After Sales Technical Team who

have executed and maintained several Multilevel Parking projects in India.

KLAUS installations have become an Industry benchmark!

KLAUS India has its own manufacturing facilities in Pune and is committed to quality

and delivery to meet requirements of the Indian customers.

KLAUS India is committed in its endeavor to serve our customers better by offering the

latest & best solutions.

KLAUS INDIA PRIVATE LIMITED KLAUS INDIA PRIVATE LIMITED

Car Parking System (Head Office) Car Parking System (Plant)

5/3 Prashant Apartment, Gate no: - 1271/72

Erandwane, Pune:-411004 MIDC Shirval Phone:- +91-

20 5443056/5460835 Taluka-Khandala District-Satara Fax: - +91-20-

5446360 Email:

[email protected]

3 | P a g e
http://www.multiparking.com/mailto:[email protected]://www.multiparking.com/mailto:[email protected]


4/72

PRODUCT PROFILE

Klaus Stack Parker (G61):-

For best use of the available room height the G-61 system provides you with an idealcombination of long-term and short-term parking.

The system is equipped with a single platform, allowing long-term parking on the upper

level and short-term parking on the lower one. For use of the upper platform remove the

vehicle from the lower parking space. This system can also be retrofitted into existing

buildings.

Klaus Over Ground Puzzle:-

Designed to save space, accommodate maximum cars in limited space on ground.Maximum 5 levels possible. Cars are parked on pallets on the ground level and based on

assigned space are moved vertically and horizontally to reach the space on a particular level.

Cars are retrieved by entering the Space Number / or by a smart card and the pallets

start moving automatically to bring the car to the ground position from where it can be driven

out. The entire operation is PLC controlled and safety latches are provided in each pallet to

prevent unintentional lowering.

Features:

Possible to install from 3 to several hundred vehicles in any space. The simplest parking system and its managing & installation is cost saving.

The time of IN/OUT car is apparently fast and there rarely occurs mechanical trouble,

thus easy to manage.

Even if one unit does not function; the rest of the units can be operated normally.

4 | P a g e


5/72

Klaus puzzle Parker Two level (P210):-

The P210-system is a parking automat, in which 2 vehicles can be parked on top of

one another. The storage capacity of the P210-system is between 3 (2 drive in) and 19 (10drive in) vehicles.

With Parking Automats, one vacant space on the entry level allows for horizontal and

vertical shifting of all platforms. Just press a button, and the system automatically moves the

platforms in the desired position.

An access/exit lane must be available on the entry level, complying with the local

regulations. This system can also be installed into small walled-up rooms. It mobilizes the

existing space by using it the best possible way.

Functional scheme:

e.g. for parking space No. 4:

5 | P a g e


6/72

Klaus Puzzle Parker Three level (P310):-

The P310-system is a parking automat, in which 3 vehicles can be parked on top of

one another. The storage capacity of the P310-system is between 5 (2 drive in) and 29 (10drive in) vehicles. For the installation of the system one pit is required.

With Parking Automats, one vacant space on the entry level allows for horizontal and

vertical shifting of all platforms. Just press a button, and the system automatically moves the

platforms in the desired position.

An access/exit lane must be available on the entry level, complying with the local

regulations. This system can also be installed into small walled-up rooms. It mobilizes the

existing space by using it the best possible way.

Functional scheme:

e.g. for parking space No. 8:

6 | P a g e


7/72

Klaus Fully Automatic Systems:-

1. Elevator System.

2. Flat Bi Directional System.

3. Lift Sliding System.

4. Multi Level Circulation.

1. Elevator System:-

Maximized the space efficiency through stores max. 72 cars at 3 cars parking

space

(approx. 48 m2).Fast Lifting Speed: 60-140 m/min.

In case of mechanical trouble, the content of each case is automatically

displayed on PC screen, so that managing personnel can deal with the problem andit can get prompt service with ease.

PC SIMULATION system makes it possible to catch hold of every situation

such as entering/taking out of vehicles, management of charges, monthly statistical

data, day, and hour.

It is possible to install the equipment horizontally, vertically, as a built-in type,

and independently according to the shape of area, and it is also free to choose lower,

middle and upper type according to the method of entering and taking out vehicle.

2. Flat Bi Directional System:-

Features:

Minimized the IN/OUT time by simultaneous lifting & traversing operation.

Available to increase system according to space capability.

Energy saving mechanism due to partial operation by advanced control system.

7 | P a g e


8/72

3. Lift Sliding System:-

Features:

Maximize the space efficiency by minimize the Stacker size. Simultaneous Lifting & Traversing movement shorten the IN/OUT car time

Advanced makes anybody to control system conveniently.

4. Multi Level circulation:-

Features:

As there is no need for an entrance, parking efficiency can be enhanced more than

several times.

It is possible to make a choice of entrance, for instance, upper, lower, left, right, or

middle according to conditions of location.

This system makes it possible to maximize the use of limited space, as you can install

the equipment two stories or higher than three stories according to the structure of

buildings.

8 | P a g e


9/72

MANAGEMENT HIERARCHY

9 | P a g e

Managing Director

Mr.Bhave

Chief Executive Officer

Mr.Deshpande

Works Manager

Mr.

Chandrashekhar

Finance Head

Mr.Joshi

Marketing Head

Mr.Shridhar

Senior Executive

Accountant

Mr.Utigikar

Executive

Accountant

Executive

Accountant


10/72

OBJECTIVE OF STUDY

The summer training at Klaus Multiparking System Pvt ltd. was undertaken with a view

to study certain fundamental as well as the commercial and operational aspects of the

company..

To study how VAT works.

To study the procedure of VAT.

To study the computation of VAT.

To study the filing of returns.

10 | P a g e


11/72

SCOPE OF STUDY

VAT will benefit everybody in long run. Under the old sales tax system, it has not

been possible for the government to bring in transparency as regards incidence of tax or the

quantum of tax payable on goods. Whereas tax encourages voluntary compliance and therebysimplifies assessment procedure. With introduction of VAT the structure of tax has become

simple and more transparent to improve tax compliance and to bring in revenue. VAT reduces

the cascading effect of taxes and inflation as all stages of production and distribution are

subject to tax.

As a result of this overall tax burden is rationalize and the price in general is stabilize

which will help the general public to have the goods in reasonable prices and avoids

speculative transactions. VAT system has already been introduced by the government of India

in the form of central excise duty.

To introduce state level VAT.

To harmonize state level tax by implicating uniform floor rate.

To discontinue the sales tax related industry incentive scheme.

11 | P a g e


12/72

RESEARCH AND METHODOLOGY

Methodology is the process of collecting the information which helps to find out the solution tothe topic selected by the researcher. Whereas research helps to study and to find out the

techniques with proper process. It is a systematic way of presenting information.

In order to collect the required information for the project the following methods were adopted.

Primary Data

Discussion with finance Manager regarding process of VAT in the organization.

Collection of information related to VAT from taxation department of the organization.

Secondary Data

Secondary data is collected from

Value Added Tax by Sales Tax Department

www.google.com

MVAT Act, 2002 Mahendra Jain

www.vat.maharashtra.gov.in

THEORETICAL BACKGROUND OF TOPIC

12 | P a g e
http://www.google.com/http://www.vat.maharashtra.gov.in/http://www.google.com/http://www.vat.maharashtra.gov.in/


13/72

Part 1 Budget 2010

1. Concessional duty of 4 percent for solar power rickshaw developed by Council of

Scientific and Industrial Research.

2. Concessional customs duty of 5 percent for cable TV operators for importing

equipment.

3. Toys fully exempt from central excise duty.

4. Service sector tax retained at 10 percent to aid the introduction of GST; more services

to be taxed.

5. Accredited news agencies exempt from service tax.

6. Taxes on large cars and SUVs increased 2 percent to 22 percent.

7. Basic duty of 5 percent on crude oil restored.

8. Tax on cigarettes, cigars and chewing tobacco increased.

9. Rs. 26,000 crore revenue loss due to reduction of direct taxes.

10. Partial roll back of reduction in central excise duty.

11. Income up to Rs.1.6 lakh per year exempt from income tax; up to Rs.5 lakh to be taxedat 10 percent; income of Rs.5-8 lakh to be taxed at 20 percent and income above Rs.8

lakh to be taxed at 30 percent.

12.IT returns forms for individual tax payers to be further simplified.

13. Two more centralised tax processing centres to be set up in addition to the one at

Bangalore.

14.Corrigendum to MVAT notification No. VAT.1510/ CR.47 taxation-1, dated 10th

March 2010.

15. Clarification on imposition of VAT on Sugar and Fabric.

16. Silently proposed VAT on Fabrics by Maharashtra Government.

17. MVAT Amendment to Rate Schedule in A & C

Part 2 - Introduction of Tax structure in India

13 | P a g e


14/72

The government needs money for financing defense, infrastructural development such

as construction of Dams, roads, Project, railways, health & services, etc. Funds for this entire

requirement are collected by the way of taxes. Taxes are major source of revenue of any state.

The role of government is thus, not a just to maintain the law & order but also to provide the

above network to the citizens.

Tax is price that people have to pay for a civilized society

Taxes are conventionally broadly classified as Direct Taxes and Indirect Taxes. As the

name suggest, direct taxes are paid directly and indirect taxes paid indirectly. In case of

indirect taxes, one person pays them, but he recovers the same from another person. Thus, the

person who actually bears the tax burden pays it indirectly through some other persons, who

practically, merely act as collecting agent.

Part 3 - Introduction

14 | P a g e

TAXES

DIRECT

TAXES

INDIRECT

TAXES

INCOME

TAX

WEALT

H

VAT CENTRA

L

SERVIC

ES

CUSTO

MS


15/72

Maharashtra is one of the 21 States which have introduced the Value Added Tax (VAT)

system of taxation from 1st April 2005. With the introduction of VAT, the Sales Tax

Department has moved to a globally recognized sales taxation system that has been adopted by

more than 130 countries.

The design of Maharashtra State 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 State level VAT is the national consensus on certain issues. The

consensus has been arrived at through the discussions in the Empowered Committee of State

Finance Ministers on implementation of State level VAT.

On 1st April 2005, VAT replaced the single point sales tax. Single 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. In addition to offering the possibility of a set-off of

tax paid on purchases, VAT has other advantages for both business and government.

It eliminates cascading impact of double taxation and promotes economic efficiency.

It is primarily a self-policing, self-assessment system with more trust put on dealers.

It provides the potential for a stronger manufacturing base and more competitive export

pricing.

It is invoice based, and as a result it offers a better financial system with less scope for

error.

It has an improved control, mechanism resulting in better compliance.

It widens the, tax base and promotes equity.

VAT in Maharashtra is levied under a legislation known as the Maharashtra Value

Added Tax Act (MVAT Act), supported by Maharashtra Value Added Tax Rules (MVAT

Rules). VAT is levied on sale of goods including intangible goods.

The meaning of goods for VAT purposes

15 | P a g e


16/72

Goods 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.

Businesses engaged in. the buying and selling of goods within the scope of the VAT

law are referred to as dealers.

The meaning of 'sale' for VAT purposes

A transaction of sale can be a:

normal sale of goods;

sale of goods under hire-purchase system;

deemed sale of goods used I supplied in the course of execution of works contract;

Deemed sale of goods given on lease.

The rate of tax applicable to the goods sold under various classes of sales is uniform.

However, 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. Being so, the tax liability has to be determined

with reference to the option exercised by the dealer for discharging tax liability.

Businesses covered by VAT

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. 1t applies to al1 businesses, including importers, exporters, manufacturers,

distributors, wholesalers, retailers, works contractors and lessors.

Part 4 - Registration under VAT

16 | P a g e


17/72

Rules for registration

If a dealers annual turnover exceeds the below mentioned threshold, then it must

register with the local office of the Sales Tax Department.

All Figures are in Rs.

Category Annual Turnover of

Sales

Turnover of sales or

purchase of taxable

goods not less than

Fees payable on

registration

Importer 1,00,000 10,000 100

Others 5,00,000 10,000 100

If the dealers turnover is less than the above threshold, then they are not liable to

collect and pay VAT. However, 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 Rs.5, 000/ -.

Benefits of being a registered dealer

As a registered dealer, they are entitled to:

collect VAT on the sales;

claim set-off of tax (input tax credit) paid on purchases;

Issue tax invoices and, be competitive.

Effective date of registration

The effective date of registration, that is, the date from which a dealer may charge VAT

on sales; will depend on the date they first become liable to pay VAT. This date will bedetermined as follows:

a) New businesses:

If a dealer is not registered because their annual turnover is less than the threshold; their

liability to account for VAT starts from the date they cross the threshold.

b) Existing businesses:

17 | P a g e


18/72

If 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.

c) Voluntary registration:

If 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.

d) Late registration:

If a dealers 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. Further, having crossed the threshold, it is an

offence to be engaged in business as a dealer without a certificate of registration.

Certificate of 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. If a dealer has

more than one place of business, then Sales Tax Office will provide them, upon their request,

one copy of the certificate of registration and hologram for each additional place of business.

If a dealer loses his / 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.

Changes to business circumstances

If, following dealer register, there are any amendments to the details they can be

reported while applying for registration, it must done within 60 days of the change, inform us

in writing.

Where the amendment involves a:

change in the name of the business;

change in the constitution of the business without dissolution of the firm;

change in the trustees of a Trust;

change in the guardianship of a ward;

18 | P a g e


19/72

change in the Karta of a Hindu Undivided Family;

conversion of Private limited Company to a Public limited Company;

change in the place of business;

addition of new place of business;

formation of a partnership with regard to the business,

an application made by a dealer for insolvency or liquidation of their business;

an application made against dealers business for insolvency or liquidation;

opening or closing of a bank account;

A dealer will not need to make a fresh application for registration. However, the

communication to the Registering Authority concerned should be made within sixty days of the

change or occurrence of the event.

Cancellation of registration

A dealer will be liable to pay VAT while their registration is effective. If however, their

turnover falls below the threshold, he may choose to apply for cancellation of his registration.

However, 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.

If a dealer:

discontinue the business;

dispose of or sell or transfer the business;

A dealer must inform the Sales Tax Department within 30 days of the event. In case of

disposal or sale of business, their successor will need to apply for a fresh registration

certificate. For cancellation of registration a dealer should submit form 103 which is available

with the local sales tax office. It can also be downloaded from the website

www.vat.maharashtra.gov.in if the Sales Tax Department cancels the dealers registration,

they must return the Certificate of Registration. 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.

The obligations of a registered dealer

19 | P a g e


20/72

Following are the registration, which dealers are obliged to:

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 business;

Inform their sales tax office of any changes in the details previously reported to the

sales tax office;

Collect VAT on all sales at appropriate rates;

Calculate the tax due and submit correct, complete and self consistent returns and pay

the amount of tax due on or before the due dates;

Issue tax invoice / bill or cash memorandum to all customers;

Maintain adequate records and retain them for a period of five years from the end of the

tax year to which they relate;

Extend co-operation to the officers of the Sales Tax Department at dealers business premises

and provide all assistance to them to discharge their duties.

Part 5 - Explaining VAT

20 | P a g e


21/72

How VAT works?

When a dealer sell goods, the sale price is made up of two elements; the selling price of

the goods and the tax on the sale. The tax is payable to the State Government. 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 (input, tax credit) while discharging the tax liability

on sales.

Example

The following example shows how the VAT works through the chain from manufacturer to

retailer.

Company A buys iron ore and other consumables and manufactures stainless steel utensils;

Partnership firm B buys the utensils in bulk from Company A and polishes them;

shopkeeper C buys some of the utensils and purchases packing, material from vendor D,

packages them and sells the packed utensils for the public

Calculation of VAT

Manufacturer Wholesaler Retailer Customer

Price Payable 11,250.00 13,500.00 16,200.00

VAT Recoverable 1,250.00 1,500.00

Net Cost 10,000.00 12,000.00

Profit 2,000.00 2,400.00

Net Selling Price 10,000.00 12,000.00 14,400.00

VAT Charged 1,250.00 1,500.00 1,800.00

Sale Price + VAT 11,250.00

13,500.00

16,200.00

Here we have taken VAT as 12.5 %.

21 | P a g e


22/72

Rates of value added tax

There are two main rates in VAT 5% and 12.5%. The goods are grouped into five schedules as

under:

Schedule Rate of tax Illustrative Items

A 0% Vegetables, milk, eggs, bread, unprocessed items.

B 0.5% Precious metals and precious stones and their jewellery

C 5% Raw materials, notified industrial inputs, notified information

technology products and a few essential items which are declared

goods as defined under Section 14 of the Central Sales Act 1956.

Other than Declared goods, as defined under Section 14 of the

Central Sales Act 1956.

D 20% and

above

Liquor, petrol, diesel etc

E 12.5% Other than items specified in schedules A, B, C & D.

Difference between tax free goods and exempt sales

It is sometimes confusing to have goods that are tax free and sales that are exempt. Both

result in no VAT being charged, so what is the difference?

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, viz., export sales which are exempt

from tax.

Composition schemes

Certain dealers may find it difficult to keep detailed records for claiming set-off. For

such dealers, a simpler and optional method of accounting for VAT has been introduced. This

method is the composition scheme. It 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 payable by dealers opting for composition in lieu of VAT

22 | P a g e


23/72

The following classes of dealers are eligible for option to pay tax under composition:

Resellers selling at retail, i.e., to consumers,

Restaurants, eating houses, hotel (excluding hotels having gradation of 'Four Star and

above), refreshment rooms, boarding establishments, clubs and caterers,

Bakers,

Dealers in second-hand passenger motor vehicles and

Works contractors

Dealers engaged in the business of providing mandap, pandal, shamiana.

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 Notification in

this regard. Apart from the terms and conditions governing each of the composition schemes,

the Notification 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. If dealer

wishes to switch, over to normal VAT, he can do so only at the beginning of the next financialyear. However, a new dealer can opt for composition at the time of registration. In respect of

works contract, the contractor can choose to discharge tax liability under composition option.

Moreover, such an option can be exercised by the contractor on contract to contract basis.

Part 6 - Calculating tax liability

23 | P a g e


24/72

In, 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 of sales and purchases

The turnover of sales is the total of the amounts received or receivable (excluding VAT

charged separately) 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.

Similarly, the turnover of purchases is the total of the amounts paid or payable

(excluding VAT charged separately) in respect of the purchase of goods less (the amounts

repaid to dealer in respect of goods they return, within six months of the date of purchase.

Credit notes and debit notes.

If 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.

Special cases

Auctioneers

If dealer is an auctioneer, then they must include in their turnover, the price of the

goods they auction for their principal

Hotels

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 (food and beverages) which they provide. The supply of food in a

restaurant also includes an element of service. But the full amount charged is the sale price for

the purposes of calculating turnover and tax.

Works contracts

24 | P a g e


25/72

VAT applies only to the sale of goods. Supply of services is not liable to VAT. Works

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. Some other examples of works contracts are photography, repairs

& 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 architect's fees.

Hiring charges for machinery and tools.

Cost of consumables, such as, water, gas and electricity.

Dealers administrative costs relating to labour and services and any other similar

expenses.

Any profit element that relates to the supply of labour and services.

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. If 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 purchases not liable to tax under VAT

The VAT law specifically excludes from value added tax all imports, exports and inter-

state transactions. These transactions are covered by the CST Act. Similarly, transactions that

take place outside Maharashtra are not within the scope of MVAT Act.

Point of levy in certain cases

Hire purchase

Where 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. If 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 the amount of VAT due on sales

25 | P a g e


26/72

Dealer should also make some adjustments to the total turnover of sales to arrive at the

amount on which tax is due. From the total sales one should deduct

The total of exports and inter-State sales.

the total of sales of goods that are tax free, and

Branch / consignment transfers to locations in Maharashtra as well as other States.

The tax collected.

To calculate the tax due, dealer should start allocating their turnover of sales in the

return period (net of the above deductions) to the rates of tax they have been charged. 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 the turnover of purchases

Records 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 India.

Inter-State purchases.

Purchases of tax free goods.

Direct purchases from exempted units under the Package Scheme of Incentives.

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 the amount of set off due (VAT paid on purchases)

This is the next stage of tax calculation. At this stage VAT is charged on total

purchases. Dealer must, however, make some adjustments to this amount for, in certain cases,

the full set off of the VAT paid on purchases is not available.

Adjustments to tax available for set off

If dealers purchases include goods, used

as fuel, or

26 | P a g e


27/72

for the manufacture of any tax-free goods, or

As packaging for tax-free goods, these goods should be sold.

Then a dealer must calculate the value of those items and deduct tax @ 5% of thecorresponding purchase price from the amount otherwise available for set off. (Not applicable

to PSI dealers other than the New Package Scheme of Incentives for Tourism Projects, 1999

and also to manufacturers of tax-free sugar or fabrics covered by Entry A 45 and where such

goods are sold in the course of export falling under section 5 of the CST Act, 1956). Similarly,

if the goods are stock transferred by way of branch / consignment transfer to a place outside the

State, deduct tax @ 5% (1 % in respect of goods covered by Schedule B) of the corresponding

purchase price from the amount otherwise available for set off.

Dealer must also make further adjustments as follows: -

If they have been used any goods (other than capital assets) as part of a works contract

for which they have been opted for payment composition @ 8% on the total contract

value, they must also deduct 36% of the amount from the set off otherwise available

(5% of purchase price in respect of construction contracts for which they have been

opted for payment of composition @ 5% on total contract value).

Where a dealers sales are less than 50 % 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 State by way of stock transfers.

In respect of office equipment, furniture or fixtures which have been treated as capital

assets, a dealer should reduce set-off otherwise entitled by an amount equal to 5% of

the purchase price.

If a dealer is the retailer of liquor vendor and its actual sale prices are less than the

Maximum Retail Price, there is a special formula for calculating the amount of the

adjustment. Effectively this means that, if a dealer sells at 75% of the MRP then they

can claim set off only to the extent of 75% of the tax paid.

A dealer cannot 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.

Set off not available

27 | P a g e


28/72

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 for claiming set off

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 payable

The amount of set-off admissible can be adjusted against tax payable. The amount of

net tax payable is the total of sales tax collected on sales less the set-off available.

Refund cases

If the amount of set-off admissible during the period is more than the amount of tax

payable, then dealers 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

Inputs are taxable at higher rate as compared with the rate of tax on output.

Outputs are tax-free goods while inputs carry tax.

Outputs are export sales.

Outputs are CST sales which are taxable at the concessional rate of CST.

Manufactured goods or trading goods are transferred to branches outside the State or

are sent on consignment transfers.

Apart from part of the admissible set-off which can remain unutilized, excess credit can be

on account of:

unutilized portion of tax deducted at source or

refund payment order or

Ad-hoc payment made is more than tax payable.

Whatever 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. For the purpose of granting

28 | P a g e


29/72

refund, dealers have been classified under two categories viz. a) specified class of dealers and

b) other dealers.

Refund to specified class of dealers

Specified classes of dealers are : -

Exporters exporting out of the country or dealers selling to an exporter against form H.

A unit set-up in SEZ or STP or EHTP or a 100% EOU unit. These units have to be

certified by the Commissioner of Sales Tax.

An Entitlement Certificate holder availing of the benefit of incentives under the

Package Scheme of Incentives (PSI).

Specified class of dealers and the dealers who have made a sale in the course of inter-

State 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. Full 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 Form 501. The application has to be filed with the Refund Branch. The

Refund Branch may ask for Bank Guarantee and any relevant information for checking

correctness of refund claimed. Normally, refund would be granted within one month from the

receipt of Bank Guarantee or within three months from the date of receipt of refund application

in Form 501, or as the case may be, the date of receipt of the additional information, whichever

is later.

Refund to other dealers

Other dealers are not eligible to get refund in each of the return filed. They are required

to carry forward excess credit to the next return within the same financial year and claim refundof excess credit in the return for the period ending March. The dealer claiming refund in March

return has to make refund application in Form 501. The application has to be filed with the

Refund Section. Normally, refund would be granted within six months of the end of the year to

which the return relates. However, refund would be granted within six months to the new

dealers at the end of the year succeeding the said year.

Audit of refund claims

29 | P a g e


30/72

The refund granted to dealer would be subject to audit by the Refund Audit Section.

The audit may be taken up before granting the refund or after the refund is granted. Normally,

refunds made against Bank Guarantee would be taken up for audit after the refund has been

granted. During the course of the audit, the audit team will check dealers eligibility to claim

refund and the correctness of the amount of refund claimed by them.

Interest on delayed refund

No interest is payable on the refund due to a dealer as per returns filed by a dealer.

However, if granting of refund is delayed beyond the above mentioned periods, dealer is

eligible for interest for delayed payment. Simple interest at the rate of 6% per year would be

payable for the period from the due date to the date of refund.

Some tips for getting timely refund

Dealers claim of refund would be processed faster if: -

They had filed the return with the Returns branch as per the prescribed time schedule.

The return filed by the dealers 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.

Refund application in Form 501 is filed with the Refunds branch in time.

They should have promptly furnished Bank Guarantee 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 required to file.

Thus, if they are required to file a quarterly return, but they file a monthly return, then

the refund would not be granted for the monthly return. In order to be eligible for refund, they

would have to file a quarterly return.

30 | P a g e


31/72

Part 7 - Filing a return and paying the tax

VAT is a self-assessment system and dealers 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. Further, they are also required to pay the tax

due as per the return filed. In Maharashtra, 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. However, 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

Government Treasury and file the return in the local office of Sales Tax Department along with

a self attested copy of the chalan. If no payment is due for a refund is claimed as per the return,

they are also required to file the return in the local office of the Sales Tax Department.

Return forms

The return forms prescribed are as follows.

Form No. To Be Used By

221 All VAT dealers other than dealers executing works contract, dealers engaged

in leasing business, composition dealers (including dealers opting for

composition only for part of the activity of the business), and PSI dealers and

notified Oil Companies.

222 All composition dealers whose entire turnover is under composition

(Excluding works contractors opting for composition and dealers opting for

composition only for part of the activity of the business).

223 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

business.

224 PSI dealers holding Entitlement Certificate (Transactions by PSI dealers

relating to the business of execution of works contracts, leasing, frading and

composition only for part of the activity of the business to be included in a

separate return in Form 223).

225 Notified Oil Companies (Transactions by OIL Companies relating to the

business of execution of works contracts, leasing and composition only for

31 | P a g e


32/72

part of the activity of the business to be included in a separate return in Form

223).

A dealer can refer to the instructions given in the form before filling the return. Please ensure

that the return for a tax period covers all the transactions of sales, purchases, branch transfers

received, branch transfers made etc. Further, they must ensure that all the columns of the return

are duly filled in and are clearly legible. If a particular column is not relevant, please do not

leave it blank but mention" not applicable". The return filed by them must be correct, complete

and self-consistent.

Time schedule for filing returns

Periodicity of filing returns is as follows: -

Retailers who have opted for composition should file six-monthly returns.

Newly registered dealers should file quarterly returns until the end of the year in which

they first register.

All package scheme dealers should file quarterly returns.

All other dealers should file returns as given below :-

Dealers whose tax liability in the previous year was less than Rs.1,00,000/-

(Rs.1lakh) or whose entitlement for refund was less than Rs.10,00,000/-

(Rs.10lakh) should file six-monthly returns.

Dealers whose tax liability in the previous year was more. than Rs.10,00,000-

(Rs.10lakh) or whose entitlement for refund was more than Rs.l,00,00,000-

(Rs1crore) should file monthly returns.

All other dealers should file quarterly returns.

Filing and payment dates for return-cum-chalan are as follows:

Return Frequency Filing / Payment date

Monthly 21 days from the end of the return period

32 | P a g e


33/72

Quarterly 21 days from the end of the return period

Six Monthly 21 days from the end of the return period

Scrutiny of returns filed

The return filed by the dealer should be correct, complete, and self-consistent in every

respect. The Sales Tax Office will check the return to ensure that there are no obvious errors in

consistencies or contradictions in calculations. If this check reveals discrepancies, then the

dealers 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 30 days of the notice. If 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 'show cause' notice, explaining that a

penalty may be imposed.

Offences relating to filing of returns and payment of tax

The following are the offences liable for interest / penalty / prosecution etc.

Short- payment / non- payment of tax due

Failure to file returns

Delay in filing returns

Knowingly furnishing false returns

Filing of incorrect or incomplete or inconsistent returns

Consequences for filing a return, which is not correct, complete and self-consistent

Each of the returns filed by them is checked to confirm that the same is correct,

complete and self-consistent. In case the return is defective, a defect notice is issued by the

Returns Branch pointing out the error or the omission. On receipt of the notice, it is required 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 Fresh Return and the

dealer should indicate so on the return in the space provided for the same. Fresh return

33 | P a g e


34/72

rectifying the defects has to be filed within the time limit specified in the defect notice. Failure

to comply with the notice would be construed as non-filing of return and consequently, a

unilateral (ex-parte) assessment order would be passed.

Failure to file a return

If dealers 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. However, they can get this

assessment order cancelled only by filing the return and paying the tax and interest due as per

the return. For this purpose they should file application in Form 304 and submit to Returns

Branch.

Paying the tax due

All the dealers or the person must file their return and should pay the tax due, in a bank

that is authorized to accept the return. If they are required 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. If there is any doubt that where to file the return and pay

the tax due, then can ask to their local sales tax office

Revised return

Subsequent 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. Such return should be

accompanied by

Payment of tax and interest, if any. In 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.

The various types of returns and their description have been summarised as under:

Type Of Description

34 | P a g e


35/72

Return

Original The return filed by the dealer originally along with the payment in the

bank.

Fresh The return filed by the dealer after the department issues a defect notice.

Revised The return filed by them to correct any error or omission.

Filing of returns in special cases

The first return for the newly registered dealer is for the period up to the end of the

quarter containing the date of its registration.

Example 1

The turnover exceeds the threshold on 1st November. Then they should apply for

registration, which is granted on 30th November and the date of effect is 1st November. The

first return is for the quarter ended 31st December covering the period 1st, April to 31st

December; and the second return is for the quarter ending following 31st March.

Example 2

If turnover exceeds the threshold on 1st November. But dealer apply late for

registration i.e. on 10th December, and the registration is granted on l0th December, then the

date of effect registration is 10th December i.e., Date of application. The first return is due for

the quarter ending on 31st December (covering. the period 10th December to 31st December).

Filing of return in case of cancellation of registration

Dealers 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.

Example

If dealers file the returns quarterly and there, last return was for the quarter ending 30th

September. If a dealer closes the business on 15th November, then their final return will be for,

35 | P a g e


36/72

the period 1st October to 15th November. The return should be filed within one month, that is,

before 15th December.

Dealer under the Package Scheme of Incentives

If dealers hold a Certificate 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 quarterly return, in Form 224. They must continue to file quarterly return till the Certificate

of Entitlement remains valid.

When the validity of the Certificate of Entitlement ends, then dealer must file: -

a quarterly return, in form 224, for the period from the first day of the quarter in

which the event occurs to the date the Certificate of Entitlement ceases, and

A quarterly return, in form 221 or 222 or 223 as the case may be, for the remainder of that

financial year. For succeeding years, the period and frequency of the returns will be determined

on the Basis of the tax liability or entitlement for refund of the preceding financial year.

Filing multiple returns

Dealers are required to file a single return at its principal place of business for all its

businesses or places of business. If they desire to file separate returns for separate places /

divisions, then they must apply forForm 211 for permission to file multiple returns. Dealer

should ensure that correct, complete and self-consistent returns are filed at all the locations in

the State.

Tax deduction at source by an employer in a works contract

The works contractor is obliged to pay the tax on the works contracts executed by him.

However, 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 employer is required 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.

36 | P a g e


37/72

Part 8 - Records and accounts

Keeping records

Proper records are an essential part of effective management and control of their

business. Dealers are required by law to keep a true and accurate account of the transactions

effected by them. This will also help them to correctly quantify 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. If they wish

37 | P a g e


38/72

to keep them at a different location they may do so, but only if they have the permission of the

Commissioner of Sales Tax.

Nature of records

Normally, this department will not expect them to keep any special records for VAT

purposes. However, 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. If Sales Tax

Office 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 records: -

to identify the nature and value of goods purchased and sold;

distinguish between -

Local sales, interstate sales & exports.

Local purchases, interstate purchase & imports.indicate value of -

Sale and purchase of tax free goods.

Sales exempted from tax.

Purchases from URD.

Rate-wise purchases & sales.

Local purchases from registered dealer with VAT shown separately.

Record payments for the purchases and sale of goods in cash book / bank book.

Include a summary of VAT paid separately on purchases, VAT charged on sales, VAT

paid to the State treasury and VAT refundable / refunded to the dealers.

contain adequate proof that goods have been exported or imported;

Be supported by invoices for all goods purchased, and copies of invoices, and bills or

cash memoranda, issued for goods sold.

Tax invoices and memoranda of sales or purchases

As a registered dealer, they should issue a tax invoice when they sell goods to another

registered dealer and charge VAT. For sales made to consumers and unregistered dealers, they

must issue a tax invoice, or a bill or cash memorandum. However, 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. Failure to issue a tax invoice or a bill or cash memorandum may result in a penalty.

38 | P a g e


39/72

The tax invoice must contain: -

the words 'Tax invoice', printed in bold letters at the top or at a prominent place;

Dealers name, address and registration number (TIN).

the name, address and the registration number of the purchaser;

date of issue;

description of the goods, the quantity and price of the goods sold;

rate and the amount of the tax charged and indicated separately;

prescribed declaration regarding validity of the registration and payment of tax;

And it must also be signed either by dealer or by someone who is authorized by the dealer.

If a dealer issues a bill or cash memorandum, it must contain: -

words 'Bill / cash memorandum', printed in bold letters at the top or at a prominent

place;

if a dealer is 'a composition dealer (other than works contractor) then the words

Composition Dealer at the top of the bill / cash memorandum;

dealers name, address and registration number (TIN);

the name and address of the purchaser;

serial number of the bill / cash memorandum;

date of issue;

description of the goods, the quantity and price of the goods sold;

prescribed declaration' regarding validity of the registration and payment of tax;

And it must also be signed either by dealer or by someone who is authorized by the dealer.

Retention of records

A dealer must keep all their records including tax invoices / bill / 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. However, in case any legal proceedings are pending; the records pertaining to that

period should be retained till the proceedings reach finality.

Independent audit of accounts by a Chartered Accountant

39 | P a g e


40/72

If dealers annual turnover of sales exceeds Rs.40lakhs, or if they hold a license for the

manufacture or sale of liquor, then they must have their books of accounts audited by a

practicing chartered accountant. The Chartered Accountant's audit report, to be made on Form

704 and it must be submitted within 8 months from the end of the financial year. If they fail to

submit the audit report to the Sales Tax Department within the prescribed time, then they may

be liable to a penalty.

Production and inspection of accounts and documents

If the concerned sales tax authorities have reason to believe that there may have been

attempts to evade the payment of tax, they may require dealer to produce all their books of

accounts. If a dealer fails to comply with such a requirement, it may commit an offence and

will be liable to a penalty

Part 9 - Business Audit

Business Audit is a new function of the Sales Tax Department. This will be conducted

by the Sales tax officials ordinarily at the dealer's place of business. This audit is independent

from the audit by a Chartered Accountant. Business Audit is however, not an activity of

enforcement for search and seizure at dealers' business premises.

Objectives of Business Audit

40 | P a g e


41/72

The objective of a Business audit is to close any possible gap between the tax declared

by' a dealer and the tax legally due. It aims to ensure optimum revenue collection and voluntary

compliance. The aim of Business audit is to encourage the highest possible level of voluntary

compliance in a system of self-assessment.

Selection for 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. Based on such examination and pre-determined criteria, some dealers will be

selected for audit. Generally, 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.

The Business Audit Process

If any of the dealers business is selected for an audit, then Sales Tax Office 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 require to enable him to carry out the audit effectively and speedily.The audit

officer may like to understand dealers business process and examine their stocks of goods. He

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. However, audit officer can request

for copies.

Results of the audit

If 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.

41 | P a g e


42/72

Additional tax demand

If any additional tax is due, the auditor will issue a notice explaining the additional

demand. If the dealer accepts the additional demand shown, then they should file a revised

return along-with the payment of tax. However, 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. In 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.

Time limit for audit

There is no time limit prescribed for conducting Business Audit. Normally, 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 MVAT Act and MVAT Rules.

Investigation

Normally, the Sales Tax Department will make Business Audit visits by appointment.

However, if the department suspects any tax evasion, it may conduct investigation of thebusiness including search and seizure operations at any time without giving notice. Such

investigation will be carried out by a duly authorized investigation officer (not audit officer).

Part 10 Appeals

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 cannot appeal

against a unilateral assessment order passed as a consequence of non filing of returns. There are

two appeal bodies; the first is the departmental appeal officers and the second is the

Maharashtra Sales Tax Tribunal ('Tribunal').

42 | P a g e


43/72

Appeal bodies

Normally, dealers appeal will be, in the first instance, to the departmental appellate

authority. However, where the Commissioner, or a Joint or Additional Commissioner issues the

order, its appeal is directly to the Tribunal. (The order will show the designation of the officer.)

If the dealer is not satisfied with the decision of the departmental appellate authority, then they

may make a second appeal to the Tribunal.

The Tribunal

The Tribunal consists of equal number of judicial and technical members. The latter are

ordinarily, senior ex-officers of the Sales Tax Department.

Filing an appeal

Dealers appeal must be made, using Form 310, within 60 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 Sales Tax Department website

www.vat.maharashtra.gov.in. A dealer must make sure that the form is fully and correctly

completed. If there are any mistakes or omissions, then they will be advised and given an

opportunity to correct them. If again they fail to do so, then their appeal will be rejected. Beforemaking an appeal, dealer must pay a fee through a challan in Form 210. If the amount involved

in their appeal is one lakh rupees or more, the fee is one tenth of a percent (0.1%) of the

amount in dispute, subject to a maximum of Rs.1000/-. In all other cases, the fee is Rs.100/-.

Application to stay the order

In 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. Dealer must make their said application on Form 311 which can be simultaneously filed

along-with the appeal.

Appeal rejected

If the dealers appeal is rejected on the ground of non-attendance, then they may apply,

it again within 30 days for the restoration of the appeal citing sufficient reasons. The appellateauthority will take appropriate decision.

43 | P a g e
http://www.vat.maharashtra.gov.in/http://www.vat.maharashtra.gov.in/


44/72

Appeal accepted

If dealers appeal is admitted, then the appellate authority will give them a minimum of

10 days' notice of the date, place and time of the appeal hearing (unless they request an earlier

hearing). The hearing may be adjourned or postponed upon the dealers request if deemed fit

by the appellate authority.

The Appeal hearing

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. If the dealer is not satisfied with the appeal officer's

decision, then they may file a second appeal within 60 days to be heard by the Tribunal

Appeal to Tribunal

Dealer should file their appeal to the Tribunal in Form 310, taking care to ensure that

they provide all the information relevant to their appeal as required by the form. And they must

pay the appropriate fee through a challan in Form 210. The proceedings before the Tribunal

will be similar to those outlined above. Dealer may present their case and evidence before theTribunal 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.

In addition, there are two important differences: -

1. The Tribunal has the discretionary power to award costs.

2. The decision of the Tribunal is final, especially on points of facts, subject only to an

appeal to the High Court if the case involves a substantial question of law.

If the dealer fails to attend the hearing by the Tribunal, then they will be liable to such

costs as the Tribunal may award. If the dealer, or the department, are not satisfied with the

decision of the Tribunal and believe that the disagreement involves a substantial question of

law, an appeal can be filed before the High Court. However, such filing of an appeal to the high

court shall not affect their liability for payment of tax / claim of refund as per the order of the

Tribunal.

Appeal to the High Court

44 | P a g e


45/72

Dealer may appeal to the High Court within 120 days of receiving the order from the

Tribunal. A statement setting out in detail the point(s) of law to be decided must accompany the

appeal memo.

Late appeals

A late appeal may be admitted provided that they have a good reason for not making

the appeal within the time allowed. But they must demonstrate that, having become aware that

their appeal was late, and then they had made the appeal without further delay.

Priority hearings for senior citizens

Appeals are normally heard keeping in view the two criteria of the age of the appeal

and the stakes involved. However, if the dealer is a senior citizen aged 75 years and over, then

they may apply (using Form 313) for priority to be given to the hearing of their appeal.

Part 11 - Tax Payer Services

Sales Tax Office expects from the dealer to comply with the law and fulfill their

obligations to pay their taxes correctly, and timely. Sales Tax Office will provide certain

services and facilities to help the dealer in this regard. Some of the important ones are listed

below.

Advisory visits

In case of a newly registered dealer, an advisory visit will follow shortly after the dealer

receives their new VAT Registration Certificate. The Sales Tax Department will then contact

them to arrange a visit to the dealers 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. Dealer can also use this opportunity to get

their queries, doubts clarified. By providing such information, the Sales Tax Department is

45 | P a g e


46/72

trying to ensure that the dealer do not incur any penalties or interest by failing to comply with

the legal requirements of being a registered dealer.

The advisory visit team will also verify the details submitted by the dealer at the time of

registration. Dealers are expected to make available the necessary information and documents

at the time of the visit. The Sales Tax Department would appreciate the dealers feedback on

the usefulness of the advisory visit. Dealers valued suggestions / input will help the Sales Tax

Office to improve their system and will serve the dealer better.

Central Repository for Issuance of Statutory Forms

A Central Repository has been set up in every Sales Tax Office having Registration

branch. Each Central Repository issues various statutory forms prescribed under the CST Act,

to the dealers registered within the jurisdiction of the concerned registration office. However,

Form I will be issued to the SEZ units from the office of the Commissioner of SEZ. The Dealer

has to submit an application in the prescribed format for supply of statutory forms along with

the 'Statement of Requirement' which is available in every Sales Tax Office or can be

downloaded from the Sales Tax Office website www.vat.maharashtra.gov.in Dealers will be

issued the requisite number of forms on payment of the following fees by way of court fee

stamps only:

SR.No. Type of Form Fee per form (Rs.)

1 C 3.00

2 F 3.00

3 H 3.00

4 E-I 1.00

5 E-II 1.00

The statutory forms will be issued on a quarterly basis only after the transactions of the said

quarter are completed. However, form F will be issued on a monthly basis.

TINXSYS

46 | P a g e


47/72

Tax Information Exchange System (TINXSYS) is a centralized exchange of all CST

dealers spread across various States and Union territories of India. TINXSYS can be used by

any dealer to verify authenticity of his counterpart dealer in any other State. The TINXSYS will

also help the States in cross checking the interstate transactions on a real time basis. The pilot

phase of TINXSYS has commenced and the Maharashtra Sales Tax Department is an active

partner in the system.

Determination of disputed questions

If 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

question. An illustrative list of such questions is given below:

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.

Dealer will be given an opportunity to present their case before the Commissioner

makes an order. If the dealer disagrees with the commissioner's ruling, then they may appeal tothe Tribunal against the order. However, if the Sales Tax Department has commenced

assessment proceedings or if the case is pending in appeal, dealer can not apply for

determination of disputed, question.

Tax clearance certificates

If dealer wishes to apply for a tax clearance certificate, Sales Tax Office will provide

the same within 15 days of their request.Sales Tax Office will issue the certificate based on the

dealers record. It will show the

Periods for which dealer have filed returns.

Periods for which dealer has not filed a return.

Periods for which Sales Tax Office have made al1 assessment.

status of any pending proceedings, and

Any amounts of tax outstanding and due for payment.

Dealer should apply for a certificate using Form 414.

47 | P a g e


48/72

Service Cell

The service cell meetings are held at the Head Quarters in Mumbai once in every

quarter. Dealer can actively participate and can provide their valuable feedback / suggestions

during these meetings. The Website (www.vat.maharashtra.gov.in) Sales Tax Office has

developed a Website for serving all the dealers or person in a more efficient and faster way.

The website has been divided into five sections as under:

What's new?

Dealer will get all the latest notifications / circulars that are issued by the Sales Tax

Department in this section.

General Information

This section, contains general information on the Sales Tax Department such as

statistical information with regard to the, tax collection location of all their offices in the State.

Knowledge Center

This section is a repository of the MVAT Act & MVAT Rules and, also includes the

notifications and Circulars issued under the MV AT Acts as well as earlier Acts.

Tax Payer Services

This section contains the soft copies (downloadable format) of the forms that have been

prescribed. This section also contains the information as required by the Right to Information

Act. Dealer can find out their Tax Identification Number (TIN) and also TIN of other dealers

by using various search criterion. Dealer can also obtain various declaration forms as

prescribed under the Central Sales Tax Act, through online requisition of these forms. The web

links menu of this section connects dealers to the relevant important websites including the

websites of other States Sales Tax Department.

Communication Centre

This section facilitates the communication process wherein dealer can post their

queries. Dealer may also be able to post their valuable feedback / suggestions.

48 | P a g e


49/72

Part 12 - Recovery, Offences and Penalties

Recovery of unpaid tax

VAT is a self-assessed tax. In order to operate effectively, the self-assessment system

relies on the expectation that every dealer will deal with his tax matters promptly and honestly.

But 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 requires the dealer to pay the tax due at the time of submission of the

return. If this dealer does not pay the tax that he has declared, or if only pays a part of the taxdue, interest is payable in addition to the tax due.

Attachment of Bank Account

Where any tax, interest or penalties remain unpaid, the department may issue an

attachment notice to the dealer's bank and to his debtors. If necessary, officials of the Sales Tax

Department may call for the records from the defaulting dealer to examine and obtain the

necessary details.

49 | P a g e


50/72

Attachment proceedings

The department may also recover the amounts due by attaching the defaulting dealer's

moveable or immoveable property under the provisions of Maharashtra Land Revenue Code. If

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 consequences that

follow. In addition, interest will be charged on any tax paid late at the rate of 15% per year.

Offences

The principal offences, each of which has been referred to in the text of this guide, are as

follows: -

If a person -

Poses as a registered dealer when they not registered.

Files a false return.

Keeps false accou

Date post:	06-Apr-2018
Category:	Documents
Upload:	dhaval-deshmukh
View:	221 times
Download:	0 times

After Correction Copy of New Analysis Final Writing Page With Logo

Documents