Update on Circulars

New procedure for Registration :
(Cir. 32T/05 dated 13-10-2005)

On and with effect from 1-11-2005 the Sales Tax Registration procedure is modified the details of which are given in Circular 32T of 2005 of
13-10-2005. As per this new procedure the application would be first verified at the counter between 10.00 a.m. and 1.30 noon only. If the counter clerk finds on a face checking of the application that the application is completely filled in and the documents are correctly enclosed as per check list, an acknowledgement would be given with Sr. No. to the applicant. The applicant would be called for verification. Photo attestation would be on the same day at 2.00 p.m. The applications not filled in correctly or not found attached with all the documents would be returned forthwith. The scrutiny of the registration application once complete, the dealer would get the registration on the same date. The rest of the formalities like obtaining form and appointment on phone etc. are like the passport application. The purpose is to minimize the interaction between the registration staff and dealer, to avoid corruption.

Circ. 33 T of 205 dated 21-10-2005
Provisional Refund Procedure

This circular lays down procedure for grant of early refund to the exporters, SEZ units, PSI units. All the above specified dealers are required to make application in the prescribed form; i.e., Form 501. For the dealers in Mumbai the application should be made to the officer-in-charge of VAT-refund. For the dealers situated outside Mumbai application should be made to the Officer-in-charge VAT refund of the area office. The amount of bank guarantee for various types of units is specified in the circular as follows:–

1. a) New Registered Dealers 2004-05 or
   2005-06. Bank guarantee should be for the amount equal to the refund claimed if the amount is more than Rs. 25,000/- . The requisition of the bank guarantee would be waived if the amount of refund is less than Rs. 25,000/- ;
    

2. In case of PSI dealer the bank guarantee would be of an amount equal to amount claimed in PSI return under the BST Act for the corresponding period in the year 2004-05. It is also provided that if the amount of refund claimed is not more than the amount of incentive claimed under the BST Act for the corresponding period, no bank guarantee would be insisted upon;
    

3. For the exporters and the SEZ units the bank guarantee shall be of the amount in excess of the amount of refund claimed under the BST Act for the corresponding period in the year 2004-05. It is also specified that if the amount of refund claimed is not more than the amount of refund claimed in the return for the corresponding period in the year 2003-04, the exporters and SEZ units need not furnish bank guarantee.
    

4. For every subsequent refund claim, the bank guarantee would be for the amount in excess of bank guarantee furnished in respect of first refund claim. Here also it is provided that if the amount of refund claimed is not more than the amount for which bank guarantee is furnished earlier for the first refund then no further bank guarantee would be insisted.
    

5. The period of bank guarantee would be 37 months and the amount of bank guarantee should be rounded off up to near 1,000 rupees. Bank guarantee should be from nationalized bank and in the format enclosed in the circular. The dealer may furnish one bank guarantee in respect of all the periods in a financial year. The bank guarantee is to be furnished to the authority granting refund.
    

6. If additional information is required to be filed before the grant of provisional refund and if such details are not furnished in the specified time then the period in which refund is to be granted shall commence on the first date of the month following the month in which the required information is furnished.
    

7. It is also provided that the annexure in Form 501 should be provided as a hard copy as well as soft copy; i.e., on floppy or CD to be submitted with the application in Form 501.
    

8. The refund shall be granted within 3 months of the end of period to which the return relates. The provisional refund will not carry any interest on the amount of refund but if the provisional refund is delayed otherwise then on account of delay in furnishing details by the dealer, then there would be interest payable by the State on amount of delayed refund.
    

9. It is also specified that the refund would be payable only if the returns are filed as per rules. If the dealer is eligible to file monthly return he must file monthly return and not quarterly return and vice versa. The periodicity of return depends on the tax liability in the previous year. The return in which refund is due should be filed with the Return Branch and not with the Bank. Normally people with NIL return files the return in the bank by paying Rs. 10/- This practice should be discouraged.

Notification u/s 8 (5) of CST Act dated 17-10-2005

1. Notification of Motor Vehicle having engine capacity of 950 CC onwards. By this notification an amendment is made to the earlier notification dated 1-5-2002 and the earlier reference to specific entry is now replaced by the new entry under MVAT; i.e., Schedule E-1 under the MVAT Act. This is merely a consequential amendment. Similar notification is also issued in respect of sale of motor vehicle having 4 or more wheels .

Circulars under the Luxury tax

Circular No. 16 A T of 2005 dated 09 August, 2005 and Circular No. 21T of 2005 dated
23-9-2005 are with regard to Luxury tax in respect of tobacco and textile traders. Because of the Judgment of M/s. Godfrey Philips India Ltd. by the Supreme Court the Sales Tax Department has stopped Registration of Tobacco and Textile Traders. they are also stopped from collecting Luxury tax from the customers. The tobacco and textiles traders are not required to file return hereafter. The assessment and appeal proceedings in their respect are also stopped. Certain formalities are prescribed for the past transaction for the Tubo and Textile Traders.