1. Government Resolution for non- collection of tax or lesser collection of tax on certain commodities from 1-4-2006 to 30-4-2006

Kindly refer to May 2006 Income Tax Review. In clause 4 at page 126 of the said ITR I had hinted the announcement about administrative relief. The said administrative relief is announced by way of GR dated 26th May, 2006. The Commissioner’s Circular No. 16T of 2006 dated 8-6-2006 explains the Government Resolution. To put it shortly, the goods enumerated in the enclosure to the Circular should be first referred to. They are the goods like paddy, rice, wheat, papad etc. whose rate of tax was expected to change from 1-4-2006 but the rates were ultimately changed on and with effect from 1-4-2006. As per this Circular and GR the concerned dealer will get administrative relief for the period 1-4-2006 to 30-4-2006 for the goods on which tax rate is reduced from 1-5-2006 to 31-5-2006 to 0% or as the case may be 4% from 12.5%. The concerned dealer shall get administrative relief only if it has not collected the taxes or collected taxes at lesser rate then the rate applicable during the concerned period. In some cases the dealers have not collected taxes separately but have partially paid the taxes. All the concerned dealers are eligible for relief to the extent taxes not collected or not paid whichever is less.

The conditions for grant for administrative relief are specified in the above Circular. The tax collected must be deposited in the Government Treasury. If the tax is not collected then the dealer must pay the taxes at the rate applicable after 1-5-2006 for the same commodity for the month of April, 2006 along with interest for one month. The dealer must also file return for the period containing for the month of April, 2006 whenever it becomes due.

2. Notification under section 8(5) of the CST Act

On 26-4-2006 a notification is issued u/s 8(5) of the CST Act whereby sales by any registered dealer in course of interstate trade or commerce from any places of business of any goods to Konkan Railway Corporation Ltd. having registered office at New Delhi shall be calculated at the rate of 4%. The dealer would be required to produce certificate issued by the KRC, New Delhi to the effect that the goods are purchased by them for official use.

3. Amendment to Schedule (D) – Petroleum Products

By a Notification dated 15-6-2006 the State of Maharashtra amended rate of tax on certain goods covered by Schedule (d). Schedule Entry D(5) and D(10) are amended. The rate of tax on all the goods covered by D(5) is reduced by 1%. Similarly the rate of tax on all the goods covered by Schedule entry D(10) is reduced by 2% .

4. Revised procedure for online submission of C form & delivery through courier

On 20-8-2006 the Commissioner has issued one more Circular being Circular No.17T of 2006. As a move towards e-governance the facility of online filing application for issuance of Forms is introduced at Central Depository at Mumbai. The purpose is to further simplify the procedure of form to make entire process hassle free and to reduce the time for obtaining the form. The dealer who wishes to opt for this facility will have to get registered with the concerned Central Depository in the format appended to the said Circular. After the registration process the dealer would be issued user ID and password to access to concerned module on the Dept. website. After registration dealer may submit online application for issuance of the required statutory form. Necessary Numbered and type of form would be processed by the concerned Central Depository. The form duly printed with necessary details would be delivered to the place of business by courier or by post. The dealer need not visit the Central Depository for collecting the declaration under the CST Act. The actual cost of postage and handling including courier, envelope, label printing etc. will have to be borne by the dealer. A single envelope will contain up to 50 forms and the cost of postage and every envelope would be Rs. 60/-.

It is clarified in the Circular that the password issued to the dealer would not be known to anyone other than the dealer. Even the system administrator will not have access to the password. The dealers availing this facility will have to deposit a lump sum advance payment in the form of challan which would be adjusted towards the required fees for the statutory forms postage and handling charges. Minimum amount of Rs. 500/- will have to be deposited. Kindly refer to the detailed circular for more details.

5. Ordinance converted to Act

The Ordinance dated 20-6-2006 – the details of which were given in the August 2006 Income Tax Review is now converted into Maharashtra Act XXXII of dt. 5-8-2006.

6. Trade Circular for refund for the years 2005-06 and 2006-07

Circular No. 18T of 2006 dated 1-8-2006 of which the brief reference is made in the August ITR is explained herein below. Prior to this 3 circulars are issued by the Commissioner of Sales Tax. The first circular dated 21-10-2005 explains the General Procedure for grant of refund under the first proviso of section 51 of MVAT Act. This was in respect of refund for the part of year 2005-06. The second circular dated 7-1-2006 gave revised instructions for early grant of provisional refund. The second circular is applicable only in respect of period ending up to 30-11-2005 where the return is filed on or before 6-1-2006. The categories of dealers eligible for refund were the exporters, SEZ units and PSI scheme units. On 20-2-2006 third circular was issued to facilitate early claim of refund by the dealers other than the one referred to in Second Circular. [Except the dealers who have obtained certificate of Registration after 1-4-2004]. These dealers were unable to claim timely refund because of periodicity of Return. This circular provided that PSI dealers who were otherwise required to file quarterly returns were allowed to file monthly return for the month of Jan, Feb, March 2006. The dealers other than retailers and composition dealers who were required to file 6 monthly returns for the period June 31st March, 2006 were also permitted to file quarterly returns for the quarter ending Dec 2005 & March 2006. The new circular dated 1-8-2006 shall grant refund only to the dealers whose returns are correct, complete and self -consistent, application for refund in Form 501 is made on or before 31-7-2006 and return claiming refund is filed with the Return branch. The dealers who have not exercised their option as third circular will have to file application in Form 501. For the dealers situated in Mumbai the application shall be made to the Jt. Commissioner of Sales Tax (Refund), Vikrikar Bhavan, Mazgaon, Mumbai – 400 010. For the dealers situated outside Mumbai application should be made to the Officer in Charge [Refund] in the jurisdiction Sales Tax Office. The rest of the procedures are specified in the circular. It is made very clear in the circular that before grant of refund the Dept. authority may at their option decide to either conduct a refund audit or call for additional information or grant a refund without calling for any additional information.

The dealers whose claim for total refund is less than Rs. 1 Lakh shall be granted 100 % refund without bank guarantee or without condition of prior refund audit. Cases where the refund cannot be granted because all the declaration under the Central Sales Tax Act for 2005-06 are not received, the dealers assessment under the CST Act would be completed on top priority and subject to the demand arising out of this CST assessment the balance refund shall be granted to the assessee.

All the SEZ units shall be granted the refund by 31-8-2006 after completing the audit. As far as PSI units and exporters are concerned if they have been granted refund for any period and the refund audit has not shown substantial discrepancies then 100% of the refund claim for the balance period will be granted. For the PSI units or exporters who have claimed refund for any period 2005-06 shall be granted refund only after completing refund audit for 2005-06. In other cases refund shall be granted to the extent of 95% of the claim without requisite bank guarantee or precondition of prior refund audit. It is also provided that if the dealer furnishes bank guarantee equal to 25% of the refund claim 100% of the refund claim shall be granted within 15 days from the date of furnishing the bank guarantee. It is confirmed that refund claim of all the dealers except the dealers namely SEZ units shall be granted refund before 30-9-2006.

Under MVAT Act, refund of one financial year is not allowed to be carried forward to other year. However many dealers have adjusted the refund in next year. As a special case the dealers are allowed to adjust the refund of 2005-06 against dues of 2006-07.

7. Amendment to Schedule Entries

In Schedule-A; i.e., schedule relating to tax free goods, one entry is included. Plantain leaves which were exempted from 1-4-2005 to 7-8-2006 are now removed from Schedule–A and instead in Sr. No. A(38) Rakhee is included as taxfree goods with effect from 8-8-2006.

8. Amendment to Schedule C

In Sch. C–89 after clause (d) clause (e) is included on and with effect from 8-8-2005. Curds (whether or not sweetened or flavoured) when sold under brandname except when sold for consumption would be subject to 4%.

Entry C-107 (12) is amended. Up to 7-8-2006 silica send meant for construction was subject to 4%. From 8-8-2006 it is only silica sand without any reference to specific use which would be subject to 4%.

Vide notification dt. 25th August, 2006. Industrial input notification is further expanded w.e.f. 1-9-2006. The following entries are added in the list of Industrial input at Sr. No. 251, 252 & 253 respectively,
3702 Photographic films excluding cinematographic films
3703 Photographic paper
3707 Chemical preparations for photographic uses

9. Corrections of errors in TIN Certificates – Circular No. 20-T/2006 dt. 19-8-2006
   
   By this circular the Hon’ble C S T has directed that the complaints pointing out typographical and factual errors in the certificates be forwarded to officer who is designated in Registration Branch at each location in the State. The dealers should forward their complaints along with original erroneous certificates for correction explaining in brief the nature of error and correct position. It is also advised to forward copy of Form 108 to facilitate quick disposal of the application.

10. Levy of Profession Tax on Compensation/ex-gratia received under any kind of retirement scheme.

By a circular No. 19T/2006 dt. 18-8-2006 some more clarifications are given. The guidelines issued on levy of profession tax on compensation/ex-gratia received under any kind of retirement scheme in paras (3) and (4) vide circular No. 26T of 2005 are now revised as follows;

“(3) Normally the compensation/ex-gratia is paid either in lump sum or in instalments spread over one or more number of years. The salary or wages paid or payable in both the circumstances shall be the salary or wages of such specific year in which his employer accepts the application of the employee under the retirement scheme. An employer shall be responsible for payment of profession tax only for the period upto which an employee is under actual employment with him. The relationship of employer and employee shall cease to exist on the date on which the employer accepts the application under the retirement scheme of an employee, provided that if the application is accepted with effect from a date subsequent to the date of such acceptance, then the employee will be considered as in the employer’s employment till such date of effect.

(4) While assessing any employer or deciding any appeal, the departmental authorities shall follow the guidelines as explained in para (3) above for levy of tax on compensation/ex-gratia. The employers are requested to approach the respective authority and make an application for rectification of mistakes under section 15 of the Act, in case it is apparent on the face of record that the profession tax is levied in excess. In case, the levy of profession tax is in excess but not apparent on the face of record, the employer may prefer appeal against the order. The employers are also requested to apply immediately to the respective authority, so that limitation does not bar the period for rectification or appeal”.