Referencer

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INDEX
Para No. Particulars Page No.
CENTRAL SALES TAX ACT, 1956 2-9

1 Introduction
2 Inter State Sale
3 Situs of Sale
4 Import & Export
5 Charging Section
6 Branch Transfer
7 Rate of Tax
8 Registration
9 Interest / Penalty / Return / Assessment
10 Important Declarations under CST
11 Declared Goods
12 Amendment to Definition of Sales
MAHARASHTRA PROFESSION TAX, 1975 10 - 15

1 Scope
2 Registration – Tax on employer
3 Enrolment
4 Periodicity of Filing of return for registration
5 Date of Payment
6 Persons exempted from Payment of Profession Tax
7 Composition Scheme
8 Interest on late payment
9 Penalty
10 Time Limit for Assessment
MAHARASHTRA VALUE ADDED TAX ACT, 2002 16 - 40

1 Introduction
2 Registration
3 Levy of Tax under MVAT Act, 2002
4 Charging Section
5 Schedules and Rate of Taxes
6 Filing of Returns
7 Sales not liable to tax
8 Setoff
9 Composition Scheme
10 Works Contract
11 TDS
12 VAT Audit
13 Business Audit
14 Tax Invoice
15 Interest for late payment or non-payment
16 Penalty for various Default
17 Refunds
WANDREKAR AND COMPANY

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CENTRAL SALES TAX ACT 1956
1. INTRODUCTION:
The Central Sales Tax Act, 1956 is enacted by the parliament to fulfill the following objects.
(1) To formulate the principles for determining as to when sale or purchase of goods takes
place –
a) in the course of inter state or commerce or,
b) outside a state, or
c) in the course of import into, or export from India.
(2) To provide for the levy, collection and distribution of taxes on sales of goods in the
course of inter-state trade or commerce.
(3) To declare certain goods to be of special importance in inter state trade or commerce, and
(4) To specify the restrictions and conditions in respect of the State laws which impose taxes
on the sale or purchase of such goods of special importance.
a) The scheme of CST Act is that central sales tax payable in the state from which
movements of goods commences (i.e. from which goods are sold).
2. INTER STATE SALE AND PURCHASE:
2.1 Section 3 defines sale and purchase in the course of inter state trade or commerce.
It states -
(1) there should be movement of goods from one state to another, and
(2) such movement of goods should be under a contract.
2.2 Section 3 (b) states that property of goods passes during movement of goods from one
state to another by transfer of document of title to the buyer of the goods. He in turns can
make endorsement and can transfer document of title of goods to another buyer.
2.3 Explanation 1 of Section 3 states that where goods are delivered to a carrier or other
bailee for transmission, the movement of the goods shall, for the purpose of clause (b), be
deemed to commence at the time of such delivery and terminate at the time when delivery is
taken from such carried or bailee.
3. SITUS OF SALES:
Section 4 of the CST Act determines situs of sale, i.e. state in which the sales takes place.
Accordingly the situs is to be decided on the location of the goods at the time of sale.
4. IMPORT & EXPORT:
4.1 Section 5 defines the sale and purchase taking place in course of import and export and
such transactions are immune from levy of any tax by state government of central
government.
The underlying principle is that export sales should not be subject to Central Sales Tax so that
Indian goods become competitive in foreign market. Similarly import should be free from
Central Sales Tax as they are subject to Customs Duty.

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4.2 Section 5 (1) provides for two types of situations:

1. Sale occasions the movement of goods from India to abroad.
2. Sale by transfer of documents of title after goods cross the Indian Customs Frontiers.
4.3 Section 5 (2) deals with import of goods into territory of India. It provides two types of
situations,
1. Movement of goods from foreign country to India.
2. Transfer of documents of title to the goods before goods have crossed customs frontiers
of India.
Where an importer imports goods and transfers the documents to buyer in India and the buyer
clears the goods from the customs, this is sale by import. This is popularly known as High
Seas Sale. The documents have to be transferred to the buyer by the importer before the
goods are cleared from the customs. If however, an importer imports goods, and subsequently
sells then after obtaining clearance from customs to a buyer in India this is not a sale in
course of imports and is subject to tax.
4.4 Section 5 (3) enumerates the principle that sales prior to actual export of goods are also
sales in the course of export.
Three conditions are required to be satisfied:
a) The transaction of such last sale or purchase takes place after the agreement or order
received by the exporter from its foreign buyer.
b) The last purchase must have taken place after the agreement with foreign buyer was
entered into.
c) The transaction of such last sale or purchase was entered into for the purpose of
complying with the agreement or order received by the exporter from his foreign buyer.
d) In other words, the transaction between the exporter and his foreign buyer must be
entered first and thereafter the exporter should enter into the transactions with seller or
purchaser as the case may be with view to fulfilling the commitments with foreign
buyers.
5. CHARGING SECTION:
5.1 Section 6(1) provides that tax under this act is payable by every dealer of all sale of goods
affected by him in the course of inter state trade of commerce. However following are the
exceptions to this rule:
a) Inter state sale of electricity.
b) Sales in course of import / export.
c) Exemption by issuing a notification.
d) Sale of goods which are exempted or chargeable to lower tax.
e) Sold within the state.
f) Subsequent sales by transfer of documents.

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g) Sale to foreign diplomatic mission in India.
h) United Nations or any similar international body.
5.2 Section 6 (2) says Central Sales Tax Act envisages a single point levy at the first point of
sale. Subsequent sales during the movement of goods from one state to another state shall be
exempt from levy of Central Sales Tax if following conditions are fulfilled.
a) Sales should be subsequent sale.
b) Sales should be either to the government or to the registered dealers.
c) Sales should be of the same goods during their movement from one state to another.
d) Sales should be affected by transfer of documents of titles to the goods. Documents of

Titles to the goods mean document such as railway receipts or lorry receipts which can
be transferred from one dealer to another by endorsement.
e) Subsequent seller are required to obtain necessary certificate in the prescribed form from
his vendor i.e. from E1 or form E2 and Form C from the purchaser and Form D from
Government. Form D was abolished from 1-4-2007.
6. BRANCH TRANSFER:
6.1 Under Section 6A, branch transfer is allowed without any tax. Subject to condition Form
F is to be obtained from transferee branch / agent. The production of Form F is now
compulsory.
6.2 If Form F is not produced then such stock transfer will be treated as an inter state sales
and CST will be levied accordingly.
6.3 One F form can cover transfer effected in one calendar month.
7. RATE OF TAX:
As per section 8 of the CST Act, rate of taxes are to be decided as per rate under local Act.
The rates can be as under.
CST Nature of Goods Rate of CST Under Form

Sections
From 1-6-2008
8(1) All goods 2% or local rates C
whichever is lower
From 1-4-2007 to 31-5-2008
8(1) All goods 3% or local rates C
whichever is lower
From 1-7-1975 to 31-3-2007
8(1)(a) All goods 4% or local rates D
whichever is lower (Form D is abolished
from 1-4-2007)
8(1)(b) All goods 4% or local rates C
whichever is lower
From 1-4-2007 to date
8(2) Declared goods At rate applicable Without C / D
under local laws.

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From 1-7-1975 to 31-3-2007

8(2)(a) Declared goods Twice the rate Without C / D
applicable to local
sales
From 1-4-2007 to date
8(2) Schedule C goods If local rate is NIL
unconditionally
Other than declared goods Rate applicable under Without C / D
local laws.
From 11-5-2002 to 31-3-2007
8(2) Goods other than Declared If local rate is NIL
goods unconditionally
If local rate is 10% or Without C / D
less than 10% = Rate
10%
If local rate is more Without C / D
than 10% = such local
rates. In Maharashtra it
is 12.5%.
Note: Turnover tax and Surcharge will form part of local rates for above purpose in
Maharashtra. However from 1-4-2005 and TOT and surcharge have been abolished. The rate
in Maharashtra in above period 13% + 1% + 1.3% = 15.3%
8. REGISTRATION:
8.1 There is no threshold limit for registration under CST Act. Even one sale out of state, a
dealer will be liable for registration under section 7 (1).
8.2 Voluntary registration – Under Section 7 (2) the dealer can also obtain registration
voluntarily along with registration under MVAT Act.
8.3 Application for registration should be in Form A.
9. INTEREST / PENALTY / RETURN / ASSESSMENT:
As per Section 9 (2), interest / penalty / return / assessment provisions applicable under local
Act are also applicable to CST Act.
10. IMPORTANT DECLARATIONS UNDER CST
CST Remarks
Declarations
Form C To be issued by purchasing dealer for inter state purchases.
Form E-I / E-II To be issued inter state seller to purchasing dealer who effects sale u/s.
6(2)
Form F Issued by receiving branch, consignment agent for branch transfer.
Form H Issued by purchasing dealer who can claim exemption of sales deemed to
be in the course of export out of India u/s. 5 (3) of the Act.
Form I Issued by developer of SEZ unit
Form J Issued by Consulate, Diplomatic Mission and other International bodies.

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10.1 IMPORTANT FORMS UNDER CST
CST Forms Remarks

Form A Application for registration
Form III-B Upto 13-3-2008. Returns and payments.
Form III-E w. e. f. 14-3-2008 Returns and payments (online)
Form G Indemnity Bonds
Form IXB Appeal
10.2 Procedure for obtaining above declarations:
(a) One counterfoil of any of the declarations or certificates last issued to the dealer by the
department.
(b) The challan of last VAT / CST return due and filled.
(c) The highest value invoice from any dealer mentioned in the statement of requirement. If
the highest value invoice is not readily available, the photocopy of the next available
highest value invoice can be submitted.
(d) The proof of transport relating to the highest value invoice.
The central repository will issue forms against actual transactions only. Henceforth, no
advance forms will be issued. Facility for Online application for forms, which are dispatched
by courier, is also available.
10.3 Fees for Obtaining Form C:
W. e. f. 1-10-2005, Court fees Rs. 3/- has to be paid for per Form C.
W. e. f. 1-10-2005, Court fees Rs. 3/- has to be paid for per Form H and F
W. e. f. 1-10-2005, Court fees Re. 1/- has to be paid for per Form E-I and E-II.
10.4 Online procedure for obtaining statutory forms:
As per Circular 10T of 2006 dated 29-3-2006 and Circular 17T of 2006 dated 28-6-2006, the
following procedure for obtaining statutory forms online has been laid are as follows.
1) The dealer has to approach the Central Repository under whose jurisdiction his principal
place of business falls, for one time registration for this facility.
2) The dealer has to fill in his basic details in Annexure 1. He is also required to submit a
self-attested copy of the highest value tax invoice of interstate purchase for the last
quarter and show the original to the registering authority.
3) The dealers availing of this facility have to deposit, minimum Rs. 500/- in Form 210,
which would be adjusted towards the required fee for the statutory forms and postage and
handling charges.
4) If a dealer is applying for issuance of forms for the first time, he will have to necessarily
follow the manual procedure for the first time. Thereafter, he may apply for online
facility.
5) After submitting the application online, the same would be accessed by the concerned
Sales Tax Officer In-charge of the Central Repository, and he would check for

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availability of sufficient funds in the dealer’s Ledger account. The dealer would be
intimated about approval or rejection through e-mail.
6) Once the application has been approved, the Central Repository staff would print the
required number and type of statutory forms, sign and dispatch them to the dealer through
courier/Post. For each transaction, the postage and handling may vary depending upon the
number of forms for. After each transaction, Ledger account of the dealer would be
suitably adjusted by deducting the amount required for the cost of forms and postage and
handling charges.
7) Since the application is submitted online, the dealer is not required to submit any
document in printed copy or otherwise separately.
8) It is expected that the form would be delivered to the dealer within 4-5 days after the
approval. The dealer or his authorized representative has to give
acknowledgement/receipt of envelope containing the forms with dated signature
indicating his name and designation and duly stamped with office seal/designation stamp
(if available).
9) It may be noted that the present procedure of manual submission of application and
issuance of forms will also continue.
10.5 Conditions for issue of form C:
Purchase is to be effected against Form C are subject to conditions.

Form C can be used for effecting following purchases
Purchases for resale
Purchase for use in manufacturing or processing of goods for sale.
Purchases used in packaging of goods or sale / resale.
Purchases used in generation / distribution of power.
Purchases used in Telecommunication network
Purchases used in mining.
10.6 Periodicity of Forms:
Periodicity of Form C w. e. f 1-10-2005. Form C will have to be issued / collected separately

for each quarter of the year i.e. April to June, July to September, October to December and
January to March. Before this amendment, one form C can be issued / collected for
transaction for a financial year.
For 2004-05 One form for the whole year.

From 1-4-2005 to 30-9-2005 One form for the whole period will do.
From 1-10-2005 to 31-12- One form for a quarter is required to be issued / collected.
2005
From 1-1-2006 to 31-3-2006 One form for a quarter is required to be issued / collected.
From 2006 – 07 and onwards Separate form to be issued / collected for every quarter.
10.7 Production of Form C or Form D is made compulsory even in respect of goods attracting
tax under the state law at a rate lower than 4% (but above 0%). For tax free goods, C or D
forms is not required. Similarly, in case of deemed sales also the C or D form is required for
each and every transaction effected to a Registered Dealer or Government.

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11. DECLARED GOODS:
11.1 Constitution of India authorizes parliament to declare some goods as of special

importance and to impose restrictions and conditions to levy, rates and other incidence of tax
on such goods.
Section 14 gives a list of goods of special importance which are also often called as declared
goods.
11.2 Important among them are –
• Cereals, i.e. paddy, rice, wheat, bajra, jowar, barley, etc.
• Coal and coke in all forms excluding charcoal.
• Cotton in un-manufactured form but not cotton waste.
• Cotton fabrics, cotton yarn
• Crude oil
• Hides and skins
• Iron and Steel
• Jute
• Oil seeds, i.e. groundnut, til, cotton seed, linseed, castor, coconut, sunflower, mahua,
kokum, sal, etc.
• Pulses i.e. gram, tur, moong, urad, etc.
• Man-made fabrics, fabrics of man-made filament yarn, i.e. artificial textile materials
polyester filament yarn, staple fibers, polyester staple fiber, tyre cord fabric, impregnated
textile fabrics, etc.
• Sugar and Khandsari sugar
• Woven fabrics of wool.
• Coconut excluding tender coconuts.
• Liquefied Petroleum gas for domestic use.
11.3 Section 15 imposes certain restrictions on sale or purchase of declared goods. Tax
payable under local sales tax law of the state in respect of sale of goods inside the state on
declared goods shall not exceed 4% of the sale or purchase price thereof.
11.4 Section 15 is amended with a view to allow the State Governments to impose tax on
declared goods at more than one stage. As a result, the states are now empowered to levy tax
on sale or purchase of declared goods under the local sales tax act at more than one stage.
However, the restriction, as to the rate of tax not to exceed 4%, continues.
12. AMENDED DEFINITION OF SALE:
12.1 The definition of term sale was amended by Finance Act 2002 to include, works contrct,
leasing transactions, with effect from 11th May 2002, when President on India assented on
this day.
In view of the above amendment Central Sales Tax shall be leviable even in respect of
transactions of inter state works contract, inter-state lease, etc. The government has clarified
that all the provisions contained in the Central Sales Act Act, 1956 including those contained
in Sections 3, 4, and 5 will apply with equal focus to the transactions newly introduced.
Amended definition of Sale includes
12.2Compulsory sale is taxable: As per amended section 29 (i) transfer of property otherwise
than in pursuance of contract, for cash, deferred payment or valuable consideration is
sale. Thus, any transfer of property for valuable consideration will be taxable, even if
there is no contract.

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12.3Works Contract: Transfer of property in goods involved in the execution of works

contract. Generally works contract involves transfer of goods along with labour charges.
It is indivisible contract involving goods and labour. For E.g. Electric fitting. It involves
goods like fans, tube lights, heaters, electric wiring plus labour charges for installing
fans, tube lights, etc.
12.4Hire Purchase: Where possession in goods is given to buyer, but payment is made by
installment. For E.g. Purchase of car where payment in made by installments.
12.5Leasing transactions: The transfer of the right to use any goods for cash or deferred
payments. For E.g. right to use machinery given on hire. The transaction is taxable only
when exclusive possession of goods and right to enjoy them freely for contracted period
is given.
In lease, property in goods remains with the owner and only leases the goods for use to
another for certain charges. After the lease period is over, the owners can take back the
goods.
12.6Supply of good by any unincorporated association: To its members for e.g. Club, Society
giving goods to members.
12.7Supply of foods for human consumption: Such supply or service for valuable
consideration. For e.g. Hotel or Restaurant, Foods and beverages are given for human
consumption.
12.8 The aim of this amendment is to bring under that net transaction like works contract,
lease contract, hire purchase system, club, association of persons, hotel industry in the inter-
state Trade and Commerce.

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MAHARASHTRA PROFESSION TAX, 1975
1. SCOPE:
From 1-4-1975, the Maharashtra state tax on professions, trades, callings and employments
Act, 1975 also known as, Profession Tax Act has come into force. The purpose is to collect
money for implementing Employment Guarantee Scheme.
Every person engaged actively or otherwise in any profession, trade, calling or employment,
is liable to pay Profession Tax.
2. REGISTRATION - TAX ON EMPLOYEE:
Person earning salaries or wages are also covered, but their tax is to be deducted and paid by
employer. The employer has to obtain registration number by applying in prescribed form
within 30 days from date of his liability. The rates applicable to the employees are as per
entry 1 in the schedule. The schedule is as follows.
Particulars Rs.
Salary and wage earners. Such persons whose monthly
salaries or wages,
(a) do not exceed rupees 2,500 Nil
(b) exceed rupees 2,500 but do not exceed rupees 3,500; 60 per month
(c) exceed rupees 3,500 but do not exceed rupees 5,000; 120 per month
(d) exceed rupees 5,000 but do not exceed rupees 10,000; 175 per month
(e) exceed rupees 10,000. 2500 per annum, to be paid in
the following manner:-
a) Rs. 200/- per month except for the month February;
b) Rs. 300/- for the month February
3. ENROLMENT:
3.1 Act requires every person liable to pay profession tax to apply profession tax number i.e.
known as enrolment number within 30days from date of liability.
The list of person liable for profession tax is given in Schedule 1 of Profession Tax Act,
1975. There are 21 entries in the schedule to cover the different category of person. The rate
of tax and schedule of 21 entries is given below,
1. Given Above
2. Legal practitioners including Solicitor and Notaries;

Medical practitioners, including Medical Consultants and Dentists;
Technical and Professional Consultants, including Architects,
Engineers, R.C.C. Consultants, Tax Consultants, Chartered
Accountants, Actuaries and Management Consultants;
Chief Agents, Principal Agents, Insurance Agents and Surveyors and
Loss Assessors registered or licensed under the Insurance Act, 1938,
U.T.I. Agents under U.T.I. Scheme, N.S.S. agents under postal
Scheme; Commission Agents, Dalals and Brokers (other than estate
brokers covered by any other entry elsewhere in this Schedule);
All types of Contractors (other than building contractors covered by

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any other entry elsewhere in this Schedule); and Diamond dressers

and diamond polishers; having not less than one year’s standing in 2500 per annum
the profession.
3. Members of Association recognized under the Forward Contracts 2,500 per annum
(Regulations) Act, 1952.
(i) Member of Stock Exchanges recognized under the Security 2500 per annum
Contracts (Regulation) Act, 1956;
(ii) Remisiers recognized by the Stock Exchange. 2500 per annum
4. Building Contractors; 2500 per annum

Estate Agents, Brokers or Plumbers, having not less than one year’s
standing in the profession. 2500 per annum
5. Directors (other than those nominated by Government) of Companies

registered under the Companies Act, 1956, and Banking Companies
as defined in the Banking Regulation Act, 1949, 2500 per annum
Explanation: The term ‘Directors’ for the purpose of this entry will
not include the persons who are Directors of the companies whose
registered offices are situated outside the State of Maharashtra and
who are not residing in the State of Maharashtra.
6. Bookmakers and Trainers licensed by the Royal Western India Turf 2500 per annum
Club Limited;
Jockeys licensed by the said Club. 2500 per annum
7. Self-employed persons in the Motion Picture Industry, Theatre,

Orchestra, Television, Modeling or Advertising Industries, as
follows:
Writers, Lyricists, Directors, Actors and Actresses (excluding Junior 2500 per annum
Artists), Musicians, Play-back Singers, Cameramen, Recordists,
Editors and Still-Photographers,
Junior Artists, Production Managers, Assistant Directors, Assistant 1000 per annum
Recordists, Assistant Editors and Dancers.
8. Dealers registered under the Maharashtra Value Added Tax Act,

2002, or Dealers registered only under the Central Sales Tax Act,
1956, whose annual turnover of sales or purchases, —
(i) is rupees 25 lakhs or less 2000 per annum
(ii) exceeds rupees 25 lakhs 2500 per annum
9. Occupiers of Factories as defined in the Factories Act, 1948, who are 2500 per annum
not covered by entry 8 above.
10. (1) (A) Employers of Establishments as defined in the Bombay Shops

and Establishment Act, 1948, where their establishments are situated
within an area to which the aforesaid Act applies, and who are not
covered by entry 8 —
Such employers of establishments,
(a) where no employee is employed, 1000 per annum
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(b) where not exceeding two employees are employed, 2000 per annum
(c) Where more than two employees are employed. 2500 per annum
(B) Employers of establishments as defined in the Bombay Shops and

Establishments Act, 1948, where their establishments are not situated
within an area to which the aforesaid Act applies, and who are not
covered by entry 8 —
Such employers of establishment,
(a) where no employee is employed, 500 per annum
(b) where not exceeding two employees are employed; 1000 per annum
(c) Where more than two employees are employed. 2500 per annum
(2) Persons owning/running STD/ISD booths or Cyber Cafes, other 1000 per annum
than those owned or run by Government or by physically
handicapped persons;
(3) Conductors of Video or Audio Parlors, Video or Audio Cassette 2500 per annum
Libraries, Video Game Parlors;
(4) Cable Operators, Film Distributors; 2500 per annum
(5) Persons owning/running marriage halls, conference halls, beauty 2500 per annum
parlors, health centers, pool parlors;
(6) Persons running/conducting coaching classes of all types. 2500 per annum
11. Owners or Lessees of Petrol/Diesel/Oil Pumps and Service

Stations/Garages and Workshops of Automobiles. 2500 per annum
12. Licensed Foreign Liquor Vendors and employers of Residential

Hotels and Theatres as defined in the Bombay Shops and 2500 per annum
Establishments Act, 1948.
13. Holders of permits for Transport Vehicles granted under the Motor
Vehicles Act, 1988, which are used or adopted to be used for hire or
reward, where any such person holds permit or permits for,—
(a) three wheeler goods vehicles, for each such vehicle; 750 per annum
(b) any taxi, passenger car, for each such vehicle; 1000 per annum
(c) (i) goods vehicles other than those covered by (a); 1500 per annum
(ii) trucks or buses, for each such vehicle : 1500 per annum
Provided that the total tax payable by a holder under this entry shall
not exceed rupees 2,500 per annum.
14. Money lenders licensed under the Bombay Money-lender Act, 1946. 2500 per annum
15. Individuals or Institutions conducting Chit Funds. 2500 per annum
16. Co-operative Societies registered or deemed to be registered under

the Maharashtra Co-operative Societies Act, 1960 and engaged in any
profession, trade or calling —
(i) State level Societies 2500 per annum
(ii) Co-operative sugar factories and spinning Mills; 2500 per annum
(iii) District level Societies; 750 per annum
(iv) Handloom weavers co-operative societies; 500 per annum
(v) All other co-operative societies not covered by clauses (i), (ii),(iii) 750 per annum

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and (iv) above.
17. Banking Companies, as defined in the Banking Regulation Act, 1949. 2500 per annum
18. Companies registered under the Companies Act, 1956 and engaged in 2500 per annum
any profession, trade or calling.
19. Each Partner of a firm (whether registered or not under the Indian 2500 per annum
Partnership Act, 1932) engaged in any profession, trade, or calling.
20. Each Co-parcener (not being a minor) of a Hindu Undivided Family,

which is engaged in any profession, trade or calling. 2500 per annum
21. Persons other than those mentioned in any of the preceding entries
who are engaged in any profession, trade, calling or employment and 2500 per annum
in respect of whom a notification is issued under the second proviso
to sub-Section (2) of Section 3.
3.2 Notes:
1. If person is covered under more than 1 entry, the highest rate of tax specified under any
of those entries shall be applicable.
2. For the purposes of Entry 8 of the Schedule, the Profession Tax shall be calculated on the
basis of the "turnover of sales or purchases" of the previous year. If there is no previous
year for such dealer, the rate of Profession Tax shall be Rs. 2000. The expressions
"turnover of sales" or "turnover of purchases" shall have the same meaning as assigned
to them, respectively, under the Maharashtra Value Added Tax Act, 2002. "
3. The LIC agent gets commission only on pass business. He is not liable to pay profession
tax.
4. Professional retires from their profession but continuing in the list of any counsel,
association, etc. is not liable to pay profession tax.
3.3 Earlier the rate of Profession Tax payable by persons covered by Schedule Entry except
Entry 1 is as under:
Year Rate of Profession Tax
1975-1976 to 1988-1989 250/-
1989-1990 to 1993-1994 600/-
1994-1995 to 1996-1997 850/-
1997-1998 1,000/-
1998-1999 1,500/-
Income > 1 lakh Income < 1 lakh Income < 2 lakhs
Turnover > 25 Turnover < 25 lakhs Turnover < 1 crore
lakhs > 1 crore
1999-2000 1,500/- 2,000/- 2,400/-
2000-2001 to 2005-2006 1,700/- 2,200/- 2,500/-
From 1-4-2006 Turnover less than Turnover more than
25 lakhs 2,000/- 25 lakhs 2,500/-

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4. PERIODICITY OF FILING OF RETURN FOR REGISTRATION
Tax Liability Periodicity Months of salary to Due Date Form

be covered No.
In case of first year Quarterly March to May, 30th June III
June to August, 30th September
Sept. to Nov, 31st December
Dec. to February 31st March
Less than Rs. Annual March of the 31st March III
5,000/-in previous previous year and
year April to February of
the current year
Rs. 5,000/- or more Quarterly March to May, 30th June III
but less than April to June, June to August, 30th September
Rs. 20,000/- in July to September, Sept. to Nov, 31st December
previous Oct. to Dec. Dec. to February 31st March
year January to March
Rs. 20,000/- or Monthly Salary of previous End of the III
more in previous eg. March month month eg. 30th
year. April.
Last Return On cancellation of Registration certificate the return should be filed
from the first day of the year / quarter / month in which the certificate is
cancelled to the date of cancellation.
5. DATE OF PAYMENT:
Normally tax is required to be paid on 30th June of the respective financial year.
6. PERSONS EXEMPTED FROM PAYMENT OF PROFESSION TAX:
1. Senior Citizen - Person who have completed age of 65. (w. e. f. 1-4-1995)
2. Badli Workers in Textile Industry.
3. Any person suffering from a permanent physical disability (including blindness) as

specified in the rule No.32 which is certified by a physician, surgeon or an oculist, who
are working in a Government hospital and which has the effect of reducing normal work
or engage in the gainful employment as occupation.
4. Members of armed forces of Union serving in the state.
5. Women exclusively engaged as agent under the Mahila Pradhan Kshetriya BAchat
Yojana or Director of Small Savings.
6. Parents or guardians of any person who is suffering from mental retardation specified in
rule 32, which is certified by a psychiatrist, working in a government hospital.(w. e. f.
1-4-1995)
7. Parents and guardians of a child suffering from a physical disability as specified in

clause (C) (w. e. f. 1-10-1996)
15
7. COMPOSITION SCHEME
Under composition scheme for enrolment, holder’s u/s. 8(3) by can discharge 5 years’
liability by paying off tax for 4 years in lump sum. Any variation in rates during above years
will not affect the person covered under this scheme. If composition money is paid late (i.e.
after June in the financial year) interest at Rs. 200 p.m. is payable for delayed months. If this
amount is paid before June, 2007 no interest is payable.
8. INTEREST:
8.1 Interest on late payment

Interest for late payment of taxes is 2% per month upto 30-6-2004. From 1-7-2004 the rate of
interest is 1.25% per month i.e. 15% p.a.
8.2 Interest on refund:

Interest @ 6% p.a. for maximum period of 18 months on refund after assessment.
9. PENALTY:
9.1 Penalty for late application for enrolment / registration:

The authority may impose a penalty Rs.2 for each day of delay in case of any person for
enrolment. For registration, authority may impose a penalty of Rs. 5 for each day of delay.
Penalty for late filing of return by employer, the penalty of Rs. 300 per return.
9.2 Penalty for non payment or late payment:

Penalty = 10% of the tax dues.
10. TIME LIMIT FOR ASSESSMENT:
Previously there was no time barring limit for completion of assessment. However from 1-4-
2004, a time limit has been introduced.
As per Section 7, Assessments for periods starting on or after 1st April, 2004 will now be
time barred in three years, if the returns are filed within one month of the end of the year to
which the return relate. However assessments for periods ending on or before the 31st March,
2004 will become time barred by 31st March, 2008.

16
MAHARASHTRA VALUE ADDED TAX ACT, 2002
1. INTRODUCTION:
1.1 Maharashtra Value Added tax has been introduced with effect from 1-4-2005. The
original bill was passed in 2002. Due to political reason its implementation was postponed.
Maharashtra Government made modifications in said Act of 2002 and given its effect from
1-4-2005. Thus it is named as Maharashtra Value Added Tax Act, 2002 and not 2005.
1.2 Maharashtra Value Added Tax Act, 2002 is nothing but VAT i. e. Value Added Tax.
1.3 Maharashtra Value Added Tax is a form of Sales Tax collected by Maharashtra
government from consumers within the State of Maharashtra. It is collected through business
transactions involving Sale of Goods within State. In a chain of distribution goods moved
from Manufacturer to Wholesaler, Semi-wholesaler, retailer to consumer. In every stage there
is value addition. Tax is collected on every stage i. e. from manufacturer, wholesaler, semi-
wholesaler and retailer. It is multi point tax. It is collected on Value addition made by every
person.
1.4 MERITS OF VAT:
1) Vat is straight forward system.
2) Vat is easy to implement.
3) The benefit to the trader in vat system is that he can claim the tax paid on purchases as
'input credit and adjust it against the VAT collected on Sales. Under the Sales tax system
the dealer could not reclaim the tax which becomes their cost and it passed on down
chain to the consumer. That is 'Cascading effect of Sales Tax .It means Tax on Tax.
Obviously, this means increased 'price to the consumer. Under Vat input credit
eliminates the cascading effect from which price will be lower.
4) It is transparent system.
5) There are common rates allowing India all over India. It means particular item has same
rate of tax in all the state. Its avoid competition between state or rate war between states
and India can become one common market.
6) There are no concessional forms. Dealer collects tax and deducts tax paid on purchases
and pays to the Government.
7) It is collected every stage in system of distribution. This makes a large and tax base
lower rates of taxes.
1.5 DEMERITS OF VAT:
1) Every dealer becomes tax payer.
2) In absence of declarations many cases may result in refund.
3) In some of the cases it may result in price rise.
4) Detail accounts of Sales and Purchase are required.

17
2. REGISTRATION UNDER MVAT ACT, 2002
2.1 Under MVAT Act, the dealer becomes liable when its turnover exceeds particular limit as
defined under section 3 of the Act.
The limits of turnover shall be as follows:-
Limit of turnover Rs. In the case of a dealer, who is an importer, and the value of
1,00,000. taxable goods sold or purchased by him during the year is not
less than Rs 10,000.
Limit of turnover Rs. In any other case, where the value of taxable goods sold or
5,00,000. purchased by him during the year is not less than Rs 10,000.
2.2 Types of dealers:

1) Importer
2) Others
2.2.1 Limit for Importer:

Importer here means purchasing goods from out of Maharashtra.
1) Turnover of sales Rs.1,00,000.
2) Value of taxable goods sold or purchased by dealer during the year is not less than
Rs.10,000.
2.2.2 Limit for others:

1) Value of taxable goods sold or purchased during the year should not be less than
Rs.10,000.
2) Limit of Turnover of sales is Rs 5,00,000.
2.3 TRASITIONAL PROVISIONS
Section 3 (1) is transitional provision. It gives automatic continuation of registration of

dealers as registered dealer under VAT Act. It states every dealer who holds a valid or
effective certificate of Registration under earlier laws on the appointed day i.e. 1st April,2005
and
1) If he is an importer and his turnover of sale or purchase exceeded to Rs. One Lakh in
earlier year.
2) If he is other than importer and his turnover of sale or purchase exceeded to Rs. Five
Lakhs in earlier years. In short all dealers fulfilling above conditions automatically
become registered dealer and liable to collect and pay VAT tax from day one I.e. 1-4-
2005.
2.4 The dealer to whom sub (1) does not apply becomes liable only when their turnover of
sales made exceeds the relevant limit is to be computed with effect from 1st April
irrespective of accounting year followed by the dealer. The limits are given above.
2.5 Every dealer who has become liable to pay tax under the Act shall continue his
registration till it is duly cancelled.
2.6 Section 3 (2) also states that the day he first exceeds the relevant limit that day he is
liable.

18
2.7 Section 3 (3) provides that dealer shall not be liable to pay tax in respect of such sale as
taken place during the period commencing on the 1st day of April of the said respective year
upto the time when his turnover of sales as computed from the 1st day of April of said
respective year does not exceed the relevant limit applicable to him.
2.8 Section 3 (5) (a) provides turnover includes turnover of (1) taxable goods and (2) tax -free
goods. It means say calculating Rs 5,00,000 limit (other than import) both taxable and tax-
free to be taken into account.
2.9 Section 3 (5) (b) provides for calculating turnover of the dealer's own turnover of sales as
well as to sales made on behalf of his principal be taken into accounts.
2.10 Section 3 (5) (c) provides in case of an auctioneer has to add own turnover plus turnover
as agent plus the price of goods auctioned by him.
2.11 Section 3 (5) (d) states that in case of an agent of a non resident dealer the turnover shall
also includes the sale effected by non resident dealer in the state. Practically it is very
difficult provision to be implemented.
2.12 Section 3 (7) is deleted w. e. f. 20-06-2006.
2.13 Section 3 (8) provides when a dealer liable to pay tax under MVAT Act is succeeded by
other person due to death of dealer or due to sale of business by dealer to third person, such
third person becomes liable from date of such succession.
2.14 Section 3 (9) provides any person can take voluntary registration. In such case the
turnover limits are not applicable. Such person is liable to pay tax from the date of effect of
certificate of registration duly granted to him.
2.15 For such voluntary registration dealer has to pay Rs. 5000 as non refundable fees and w.
e. f. 16-08-2007 Rs. 25,000 as adjustable deposit to be adjusted during that particular year or
subsequent year against sales tax liability if any.
2.16 Documents & Limits for Registration w. e. f. 1-04-2005.
Category T.O. of sales or Total T.O. of Other Conditions

purchases of taxable sales to
goods not less than exceed
Voluntary Registration NIL NIL Payment of Rs.5,000 as non-
refundable fees and w. e. f.
16-8-2007 Rs.25,000/- as
adjustable deposit. To be
adjusted against sales tax
liability of current year or
subsequent year.
Importer Rs.10,000 Rs.1,00,000 No Minimum amount of
import is prescribed. Non
Refundable fees of Rs. 500
to be paid.
All other dealers Rs. 10,000 Rs.5,00,000 Non Refundable Fees of Rs.
(manufacturer, reseller, 500.
works contract, lessors,
liquor dealer, etc.)

19
Note:
1) Turnover of Sales of Rs. 5 lakhs include sale of both, tax free goods as well as taxable
goods.
2) No turnover limit of import is specified for importer.
3) Application for registration is to be made in Form 101 and Form A for CST registration.
4) The application for registration to be made within 30 days on which prescribed limit of
turnover exceeds as given above or if there is a change in constitution or change of
ownership, then the application is to be made within 30 days from date of such change or
date of change in constitution.
5) In case of death of a proprietor application shall be made within 60 days from the date of
death of a dealer by successor of business.
6) If dealer fails to make application within a prescribed time stipulated above, the dealer
will be liable from date of application.
7) In case of voluntary registration, registration will be granted from date of application.
8) If dealer fails to make application, he will be treated as URD dealer from the date he is
liable till date of application and will have to pay tax as per law during URD period.
9) The registration authority will issue VAT TIN i.e. Tax payer Identification Number.
2.17 Documents to be furnished along with the application.

Copies of documents must be self-attested and the originals should be submitted at the time
of verification
2.18 FRESH REGISTRATION:
1) Proof of constitution of business (as applicable)

In case of proprietary firm No proof required
In case of partnership firm (Registered or Copy of Partnership Deed
unregistered)
In case of company Copy of Memorandum of Association and
Articles of Association
In case of other constitution Copy of relevant documents.
2) Proof of permanent residential address *(Please provide at least 2 documents out of

the following documents containing the name and present address). #
a) Copy of passport
b) Copy of election photo identity card
c) Copy of driving license
d) Copy of latest paid electricity bill in the name of the applicant.
e) Copy of property card or latest receipt of property tax of Municipal corporation
/Council / Grampanchyat as the case may be.
3) Proof of place of business

In case of owner Proof of ownership of premises viz. copy of property card or ownership
deed or agreement with the builder or any other relevant documents.
In case of tenant / Proof of tenancy /sub-tenancy like copy of tenancy agreement or rent
subtenant receipt or leave and license or consent letter, etc. supported by Documents
showing ownership of licensor or person giving consent.
20
4) Two latest passport size photograph of the applicant ** (Please do not paste the photo on
the application.)
5) Copy of PAN card.
6) Challan in Form No. 210 (Original) showing payment of registration fee at Rs.5,000/-in
case of voluntary Registration and challan of Rs. 25,000/- adjustable deposit and Rs.
500/- in other cases.
REGISTRATION IN CASE OF CHANGE IN CONSTITUTION OF THE DEALER
1. Proof of change in constitution (e.g. if proprietary concern converted to partnership firm

then copy of Partnership deed etc.).
2. Copy of latest return-cum-challan.
3. Challan in original showing payment of registration fee.
4. PAN of new firm.
5. Proof of permanent residential address as specified at sr. no. 2
REGISRATION IN CASE OF TRANSFER OF BUSINESS:
1. All documents from 1 to 6 given above
2. Copy of transfer deed.
3. Copy of latest return-cum-challan of the original dealer.
Attach a leaf of cancelled cheque, as proof of bank account for all types of registrations.
Attach proof of Profession Tax No. of the proprietor, company, directors and partners.
2.19 Summary of Documents required by different types of dealers:
Category I.T. PAN Business Residential Photo

Card Proof Proof
Company
- Public Limited Yes Yes N.A. N.A.
- Private Limited Yes Yes N. A. N. A.
Directors
- Of Public Limited Yes N. A. N. A. N.A.
- Of Private Limited Yes N. A. Yes Yes applicant
director
Partnership Firm Yes Yes N. A. N. A.
Partners Yes N. A. Yes Yes applicant
partner
HUF Yes Yes N. A. N. A.
Karta Yes N. A. Yes Yes
Proprietor Yes Yes Yes Yes
Co-Operative Soc., AOP, Yes Yes Yes N. A.
BOI, etc.

21
Note:
The dealer holding registration on 1-8-2007 is now required to file PAN on or before 31-1-
2009 to the registering authority. Dealer who have not obtained the PAN so far, should obtain
and furnish the same before due date.
2.20 CANCELLATION OF VOLUNTRY REGISTRATION:
Rule 11, 4 and 5 are amended. Under second proviso of Section 16 (6), the Commissioner
was empowered to cancel the registration certificate of a dealer who has obtained the same
voluntarily but not commenced the business within 6 months after giving hearing to the
dealer.
Under amended provision date of cancellation is date of effect of registration certificate.
3. LEVY OF TAX UNDER MVAT ACT 2002.
Sales tax is payable on all sales of goods effected within the state of Maharashtra. The goods
are imported, manufactured or resold or purchased from URD. The registered dealer has to
charge Sales tax at prescribed rate and by reducing setoff pay to the government.
4. CHARGING PROVISION
Section 4 is the charging section and according to this section, every dealer who is liable to
pay tax, under this Act is required to pay tax or taxes leviable in accordance with the
provisions of the Act.
The liability arises irrespective of whether registration is valid or not, once he fulfils
prescribed conditions under Section 3. It is also settled position that an assessee is liable to
pay sales tax and question whether he has collected it from consumer or not is of no
consequence. His liability is by virtue of being assessee under the Act.
5. SCHEDULES AND RATES OF TAX:
5.1 Under MVAT, Commodities are divided into various schedules namely A, B, C, D and E.
Schedule A deals with Tax free goods. Section 5 provides for exemption from tax on any sale
of any goods mentioned in Schedule A subject to the conditions or exceptions mentioned
against them.
Items covered under Schedule A are the general necessity of life such as bread, milk, sugar,
plain water, books, vegetable, Gandhi topi, electricity, human blood, poha lahya and
chirmura.
5.2 Section 6 gives rate of tax for various commodities. The commodities are divided into 5
schedules they are as follows,
Schedules Commodities Rate of Tax
A Tax free NIL
B Gold silver, Precious metal and Precious stones 1%
C Declared goods and Industrial inputs 4%
D Foreign liquor, Indian Liquor, Molasses. At specified
High speed Diesel Oil rates
E All goods not covered by in any of the other schedules. 12.5%

22
6. FILING OF RETURNS
6.1 Prescribed Forms Effective from 1-5-2008 till date

Form Periodicity Description of Return-Cum-Challan and
No. of Dealer
231 Monthly / Quarterly / Six Monthly All dealers except given below –
Composition dealer
Restaurant
Bakery
Second hand passenger motor vehicle dealer
Retailer
232 Monthly / Quarterly / Six Monthly Composition dealer
Restaurant
Bakery
Second hand passenger motor vehicle
Retailer
233 Monthly / Quarterly / Six Monthly Works Contract dealer
Leasing
Partly under composition
234 Monthly / Quarterly / Six Monthly Package Scheme of Incentives units
235 Monthly / Quarterly / Six Monthly Notified oil companies
6.2 Prescribed Forms Effective from 1-4-2006 to 30-04-2008

Form Periodicity Description of the Return-cum-chalan
No. and of dealers.
221 Monthly / Quarterly / Six Monthly All dealers except given below –
Composition dealer
Restaurant
Bakery
Retailer
222 Monthly / Quarterly / Six Monthly Composition dealer
Restaurant
Bakery
Second hand passenger motor vehicle
Retailer
223 Monthly / Quarterly / Six Monthly Works Contract dealer
Leasing
Partly under composition
224 Monthly / Quarterly / Six Monthly Package Scheme of Incentives units
225 Monthly / Quarterly / Six Monthly Notified oil companies
Explanation 2:- where in respect of any period ending on or before 31st March, 2006 or, as
the case may be, the due date was before the 1st April 2006, but the return was not filed
before 1st April 2006, then the dealer shall file the return in the Form mentioned in column
(2) of the Table above for the purposes mentioned in column (3) of the said Table.

23
6.3 Prescribed Forms Effective from 1-4-2005 to 31-03-2006

Form Periodicity Description of the Return-cum-challan
No. and of dealers.
201 Monthly All dealers except given below –
Composition dealer
Restaurant
Bakery
Retailer
202 Quarterly All dealers except given below –
Composition dealer
Restaurant
Bakery
Retailer
203 Six Monthly All dealers except given below –
Composition dealer
Restaurant
Bakery
Retailer
204 composition for retailer
205 composition for Restaurants
206 composition for Bakery dealers
207 composition for second hand passenger
motor vehicle dealers
208 Composition for motor spirit dealer
209 Package Scheme of Incentive
214 Composition for caterers
6.4 ELECTRONIC FILING OF RETURN
6.4.1 E – Filing of return is mandatory. Rule 17 provides for filing of electronic return (e
return) by certain categories of dealers. It also provides that the registered dealer so liable to
file return electronically should first make the payment of tax along with interest, if
any, in challan 210 in the Government Treasury. The amended rule authorizes the
Commissioner of Sales Tax to notify the date for mandatory filing of e-return by certain
categories of dealers. The following are the provision for filing online returns,
6.4.2 The following classes of dealer shall be liable to file e-return.

Class of Dealer Period Staring From
Tax liability of Rs. 1 crore or more 1st February 2008
Tax liability of Rs. 10 lakhs or more 1st May 2008
Tax liability of Rs. 1 lakhs or more 1st July 2008
Refund exceed Rs. 1 lakh 1st July 2008
Person holding entitlement certificate under Package Scheme of 1st July 2008
Incentive
Dealer eligible to file electronic return under MVAT Act, rules, should file their Central Sales
Tax returns in Form III E electronically.

24
6.4.3 New rule 17A was inserted w. e. f. 1-11-2008. It provides that the Commissioner is
empowered to issue notification to file and submit application for registration, declaration,
appeal and memorandum audit report or any other document which may be specified in said
notification electronically.
6.4.4 Periodicity of return to be filed:

Sr. Periodicity of Eligibility Criteria Period of first Due date of
No the Returns return submission of
such return
1 Dealers eligible Taxes paid more than Rs April 2008 21st May 2008
to file monthly 10 lakhs.
returns Or
Refund was more than Rs 1
crore during the previous
year
2 Dealers eligible 1) Dealers under Package 1st April 2008 to 21st July 2008
to file quarterly Scheme of Incentive 30th June 2008
returns 2) Taxes paid more than Rs
1 lakh and less than Rs
10 lakhs
OR
Refund more than Rs 10
lakhs and less than Rs 1
crore during the previous
year
3 Dealers eligible 1) Newly registered 1st April 2008 to 21st October 2008
to file six - dealers 30th September
monthly 2) Retailers opted for 2008
returns Composition Scheme
3) Taxes paid less than Rs.
1 lakhs
OR
Refund less than Rs 10
lakhs during the previous
year
7. SALES NOT LIABLE TO TAX:
1. Inter state sale.
2. Sale in course of export.
3. Sale of fuel and lubricants to foreign aircraft.
4. Sale of goods made by any unit in SEZ
5. Sale of goods made by any unit in Electronic Hardware Technology Park.
6. Sale of goods made by any unit in Software Technology Park.
7. Sale of goods made by any registered dealer to the Canteen Store Department or The
Indian Naval Canteen Services.
25
8. Sales of goods affected by unit holding certificate of entitlement under any package
scheme of incentives.
9. Transfer of property in goods involved in processing of textiles covered in column (3) of

the First Schedule to the additional Duties of Excise ( Goods of Special Importance) Act,
1957 (58 of 1957)
10. The State Government may by general or special order, published in the official gazette
and subject to such conditions and restrictions, if any, as may be specified in the said
order, exempt fully or partly, from payment of tax, any sale or classes of sales of goods
made by any registered dealer as may be specified such as state government, central
government, transmitter or distributor of electricity, MTNL, BSNL, etc.
8. SETOFF:
8.1 Setoff is the backbone of VAT system (Input tax credit). Any tax paid on purchase of
goods is allowed as setoff against sales tax on goods collected. i. e. net tax is payable (tax
payable = tax collected on sales – tax paid on purchases)
The term purchases means not only purchase of raw material but purchase of goods debited
to profit / loss account including raw material, consumables, packing material, spare parts,
Printing & Stationary, Repairs & Maintenance, Workers Welfare, Sales promotion, Plant &
Machinery, etc. subject to conditions and restrictions mentioned in Rule 53 and 54.
8.2 The following are the basic requirement to claim setoff.
1. It is allowed to a registered dealer.
2. To claim setoff, a tax invoice in mandatory.
3. The name and address of the supplier of goods, TIN number of supplier, purchase price
and tax paid should be shown separately in the invoice.
4. Purchase register to be maintained in proper form showing above details.
5. The setoff can be claimed in the year in which the goods have been purchased.
6. A newly registered dealer can claim setoff on the goods including capital goods
purchased before the date of registration.
7. It is important to note that only purchases made in the state of Maharashtra is entitled for
setoff. No setoff is available on purchases made outside the state of Maharashtra.
8.3 Section 48 (1) provides for set off. It state dealer is entitle for set off
1) whole or any part of tax paid any earlier law in respect of any earlier sales or purchases
of goods treated as Capital Assets
2) Or any goods held in State on 1.4.2005, paid in respect of any earlier sales or purchase of
goods under this Act are granted to purchasing dealer.
3) Paid under the Maharashtra Tax on entry of Motor Vehicle into the Local Area Act 1987
are granted to dealer purchasing or importing motor vehicles.
4) paid under the Maharashtra Tax on Entry of goods into Local Area Act 2002 to granted
to the dealer
26
As per Section 48 (2) for getting set off dealer should produced Tax Invoice showing a
certificate that registration certificate is in force on the date of sale by him.
Section 48(5) provides that in no case amount is set off on purchase of goods shall exceed the
amount of tax in respect of the same goods, actually paid.
8.4 RULE 51 TO 54 OF MVAT ACT, 2004 PROVIDES FOR GRANT OF SETOFF.
8.4.1 Rule 51 provide for setoff of opening stock on 01-04-2005.
8.4.2 Rule 52 provides that the dealer is entitled to get set off on all purchases made by
registered dealer on a condition that such tax should be shown separately in Tax Invoice.
1) The goods may be Capital goods.
2) The purchases which are debited to Profit or Loss Account. It means any goods
purchased and debited to Trading Account or Profit / Loss Account are entitled to setoff.
It includes Trading Goods, Raw material, Parts, Components, Spare, Packing material,
Fuel, Finished Goods, Sales promotion, Repairs & maintenance, Staff welfare, Printing
& stationary, Books, etc.
3) Tax paid in respect of any entry made under the Maharashtra Tax on the entry made
under the Maharashtra Tax of the entry of Motor Vehicle into Local Area Act.
4) Tax paid in respect of any entry made under the Maharashtra Tax on the entry of goods
into Local Area Act.
8.4.3 Rule 53 provides reduction of set off under following circumstances
(1) Taxable goods used as fuel. In this case amount equal to 3% (prior to 1-4-2007, the rate
of reduction was 4%) of the corresponding purchase price be made.
(2) Claimant dealer deals in or manufacturers tax free goods then following reduction to be
made.
2% From 1-6-2008
3% From 1-4-2007 to 31-5-2008
4% From 1-4-2005 to 31-3-2007
Explanation to 53(2)(a) states that reduction of setoff clause is not applicable to
exporter of sugar and fabrics. These benefits are extended to exporter w. e. f.
1-11-2008 of all tax free foods specified in Schedule A. It means there is no reduction
of setoff on export of tax free goods mentioned in Schedule A.
(3) Resale of tax free goods using taxable packing material setoff will be reduced.
2% From 1-6-2008
3% From 1-4-2007 to 31-5-2008
4% From 1-4-2005 to 31-3-2007
(4) Stock transfer that is goods sent to own agent outside the state reduction in set off
2% From 1-6-2008
3% From 1-4-2007 to 31-5-2008
4% From 1-4-2005 to 31-3-2007

27
(5) The dealer has made sale as works contract and has opted for composition scheme
reduction be made to the extent of 16/25. If the principal Works Contractor opted for
Composition of Tax, the sub-contractor setoff in respect of said contract will also be
calculated under this rule i.e. reduction is applicable.
(6) In case of discontinued business goods held in stock at the time of discontinuance shall
be disallowed.
(7) Rule 53 (6) was substituted w. e. f. 8-9-2006. Rule 53(6) (a) deals with hotels and clubs
which are not under composition scheme. If their receipts buy or sales are less than 50%
of goods receipts then they will be entitled to claim setoff on the purchase of
corresponding food and drinks. They will also be entitled to claim setoff on capital assets
and consumables pertaining to kitchen.
(8) Rule 53 (6) (b) refers to dealers other than hotels and clubs whose receipts are less than
50% of gross receipts. Such dealers will be entitled to get setoff for those purchases
effective in a year where the corresponding goods are sold or resold or branch transfer
within 6 months of date of purchase. If such dealer is a manufacturer and who is also not
principally engaged in doing job work or labour work, then he shall be entitled to claim
setoff on his purchase of plant & machinery which are treated by him as capital assets,
parts, components and accessories of these capital assets and purchase of consumables,
stores and packing material.
(9) Proviso for Rule 53 (6) (b) states dealer entitle to claim setoff on purchase of plant and
machinery in respect of purchases made in period of 3 years starting from end of the year
containing the date of effect of certificate of registration.
(10) Rule 53(7) provides if claiming dealer is holding Liquor Vendor License and actual sale
price is less than MRP (Maximum retail price) the set off shall be granted in proportion
as per following.
Formula: Set off X Actual Turnover of Sale / Total turnover as per MRP. This rule is
not applicable to Indian Naval Canteen Services and Canteen Store Department.
(11) In Rule 53(7) explanation is added w. e. f. 4-7-2008 namely, the expression actual sale
price shall mean the aggregate of sale price and the tax charged separately is any and in
other case sale price inclusive of tax.
(12) Rule 53 (7) (A) states that if the dealer has purchased office equipment and furniture or
fixtures and has treated them as a capital asset. In this case reduction of 3% from 1-4-
2007 is allowed, this was 4% for the period from 8-9-2006 to 31-3-2007. No setoff was
allowed from 1-4-2005 to 7-9-2006.
(13) Rule 53 (7B) provides if dealer is having a business of generation, transmission and
distribution of electricity, the reduction is allowed as follows,
2% From 1-6-2008 onwards
3% From 1-4-2007 to 31-5-2008
4% From 1-4-2005 to 31-3-2007
(14) Rule 53 (8) states that the claimant dealer shall deduct the amount required to be reduced
under this rule from the amount of setoff available in respect of the period in which the
contingencies specified in this rule occur and claim only the balance amount as setoff
and when the amount so required to be deducted exceeds the said amount of setoff
available in respect of that period, he shall pay an amount equal to the excess at the time
when he is required to pay the tax in respect of the said period.

28
(15) Rule 53 (9) (a) is an amendment clarificatory in nature will apply w. e. f. 1-4-2005. It is
now provided for the purpose of Rule 53 (1), 53 (2) (a) and 53 (3), the reference to
corresponding goods on the purchase of which setoff is to be reduced shall not include
consumables, stores, component and accessories of capital assets and goods treated as
capital assets. It is also provided in the new sub rule that expression corresponding goods
will include goods which are resold or branch transfer or used in relation to manufacture
of goods sold or dispatched which are contained in the said goods, so sold, resold or
dispatch. This also includes packing material.
(16) Rule 53 (9) (b) (i) provides for method of working out the proportionate ratio for the
purpose of Rule 53 (2). Where it is not possible to ascertain a purchase price then, ratio
of sale price of taxable goods and tax free goods shall be adopted or where there is no
sale price available the ratio of value of taxable goods to tax free goods shall be applied.
(17) Rule 53 (9) (b) (ii) provides for the purpose of Rule 53 (3) in respect of branch transfer
or stock transfer, the value of goods should include any excise duty as it appears in the
books of accounts of the goods dispatched to the branch.
(18) Rule 53 (10) provides w. e. f. 1-4-2005 dealer executed a contract of processing of textile
and goods in respect of which the property is transferred during the processing as also
the packing material used for such textiles, the setoff will be curtail to the extent of rate
notified u/s. 8 (1) of the Central Sales Tax Act.
Rule Contingencies Quantum of Reduction

Rule 53 (1) Taxable goods used as 'Fuel' Reduction of 3% corresponding purchase
price of taxable goods. (Prior to 1-4-
2007, the rate of reduction was 4%)
Rule 53 (2)(a) Manufacture of 'Tax-free' goods % of corresponding purchase price of

taxable goods. (Not of goods treated as
Capital Assets or used as Fuel)
Reduction of -
4% - 1-4-2005 to 31-3-2007
3% - 1-4-2007 to 31-5-2008
2% - from 1-6-2008 onwards
Rule 53 (2)(b) Resale of 'Tax free goods' using % of corresponding purchase price of
taxable packing material packing material used, if any.
Reduction of -
4% - 1-4-2005 to 31-3-2007
3% - 1-4-2007 to 31-5-2008
Rule 53 (3) Stock Transfer of 'Taxable % of corresponding purchase price of

Goods' to Other State Taxable goods (Not of goods treated as
Capital Assets or used as Fuel)
Reduction of -
4% - 1-4-2005 to 31-3-2007
3% - 1-4-2007 to 31-5-2008
Rule 53 (4) Work Contracts opted for Set-off shall be reduced by 16/25. If
Composition Scheme u/s 42 (3)
Principal Works Contractor opted for
Composition scheme, then sub-contractor
setoff will be calculated under this rule.
29
Rule 53 (5) Business Discontinued or Not No set-off on Stocks as on the date of

Continued by Successor such event (Not of goods treated as
Capital Assets)
Rule 53 (6) (a) If Sales Receipts are less than Setoff will be available on the purchase
50% of Gross Receipts for of corresponding food and drinks. They
Hotels and clubs will also be entitled to claim setoff on
capital assets and consumables pertaining
to kitchen.
Rule 53 (6) (b) If Sales Receipts are less than Setoff will be available for those
50% of Gross Receipts for other purchases where the corresponding
than Hotels and clubs goods are sold or resold or branch
transfer within 6 months of date of
purchase. New registered dealer will be
entitled for setoff on capital assets, in
respect of a period of 3 years from the
date of Registration Certificate.
Rule 53 (7) Liquor Vendor, holding license Where actual Sale Price is less than
in Form FLII/CLIII MRP, the set off shall be granted in
proportion of SP/MRP i.e. Actual T.O. of
Sales/ Total T.O. as per MRP. This rule
is not applicable to Indian Naval Canteen
Services and Canteen Stores Department.
Rule 53 (7) Purchase of Office Equipment & % of corresponding purchase price of

(A) Furniture and Fixture. capital assets, i.e. Office Equipment &
Furniture and Fixture.
No Setoff - 1-4-2005 to 7-9-2006
Reduction of -
4% - 8-9-2006 to 31-3-2007
3% - From 1-4-2007 onwards
Rule 53 (7B) Generation, Transmission and % of corresponding purchase price of

Distribution of Electricity Taxable goods
Reduction of -
4% - 1-4-2005 to 31-3-2007
3% - 1-4-2007 to 31-5-2008
8.4.4 Rule 54 provides negative list

For following items no set off under any rule shall be admissible
(1) Purchase of Motor Vehicle (Other than goods vehicle) and treated as Capital Assets and
parts components and accessories thereof, unless business is leasing of Motor Vehicle.
(2) Motor spirit unless resold or stock transferred.
(3) Purchase of Crude Oil when used by oil Refinery for Refining.
(4) Any purchase of consumable and Capital Assets where he is principally engaged in
doing Labour work or job work and incidentally waste or scrap goods obtained or resold.
30
(5) Any purchase made by entitlement certificate holder to claim incentive by way of
exemption from Tax or deferment of tax being purchase of raw material as defined in
Rule 80.
(6) Set-off on Imports licenses, Scripts, Export Permit, License, Quota, DEPB and Software
purchased for resale is available. Even Resellers of SIM cards will not get set-off.. Trade
marks/ patents/ copy rights/ designs etc. which are used for business (Manufacturing or
marketing of goods) will not be eligible for set-off.
(7) Purchases effected by way of works contract where contract result into immovable
property.
(8) Purchase of building material based is the activity of construction.
(9) Purchase of Indian made foreign liquor or country liquor if the dealer has opted for
composition. U/s 42 (2).
(10) Purchase of Mandap, furniture fixture, lights, fittings, utensils, etc ordinarily used along
with Mandap if the purchasing dealer had opted for composition u/s. 42 (4).
(11) Purchases made on or after 1-4-2005, by hoteliers which are treated by him as capital
assets and which do not pertain to the supply by way of or as part of service or in any
other article for human consumption or any drink (whether or not intoxicating) where
such supply or service is made or given for cash, deferred payment or other valuable
consideration. Rule 54 (k)
(12) Purchase of the Office Equipment, Furniture & Fixture and Electrical installation and
treated as Capital Assets during the period 1-4-2005 to 07-09-2006.
9. COMPOSITION SCHEME:
9.1 MVAT Act requires detail and elaborate system of accounting. It requires giving Tax
Invoice to every customer showing taxable sales and tax amount separately also it requires
keeping details of purchases and obtaining tax invoice for every purchase showing net
purchase and tax charged. This is very difficult to small retailer to give tax invoice for every
sale. For e.g. Sale of Note book, Stationery, Soap, Sugar, Rice, Oil, etc. To overcome this
difficulty of accounting every small sales bills or cash memo of Rs.20, Rs.12, Rs.18 by
small retailer. Government has assumed power in section 42 to announce composition
scheme for particular case of retailer.
Accordingly government has announced composition scheme for,
1. Retailer,
2. Restaurants, eating house, refreshment rooms, factory canteen, boarding establishment,

clubs and Caterers
3. Bakers
4. Dealer in second hand motor vehicle.
5. Works Contractor
Following dealers are added for composition scheme from 20-6-2006

1. Liquor trader

31
2. Construction contractor
3. Mandap Keeper
9.2 General conditions applicable to all dealers for composition

1. The dealer must apply for composition scheme in prescribed form.
2. New dealer can exercise this option at the time of registration.
3. If the option for joining the composition scheme is exercised in any year, then it can be
changed only in the beginning of next financial year.
4. The dealer opted for composition is not eligible for any setoff or refund except dealer in
second hand motor vehicle.
5. The composition dealer cannot issue tax invoice showing tax component separately.
9.3 Scheme for different types of Dealers

9.3.1 For Retailer –
i) The turnover of sales, for applying composition, should be less Rs. 50 lakhs in the
previous year.
ii) Claimant dealer is not manufacturer or importer
iii) The taxable goods resold are purchased from registered dealer.
iv) Purchase of tax free goods may be from registered dealer or unregistered dealer.
v) Any other purchases from unregistered dealer are meant only for packing of goods
sold.
vi) At least 90% of sales should be made to a consumer and not to any dealer.
9.3.2 Rate of Tax:

If aggregate of sale of Schedule A goods (Tax free) and goods taxable @ 4%, exceeds 50%
of total turnover of sales the rate is 5% on difference between sales and purchases (excluding
liquor and motor spirits)
For other dealers, 8% on difference between sales and purchases (excluding liquor and motor
spirits)
9.3.3 Forms:
Application to be made in Form 4.
9.4.1 For Restaurants, eating house, refreshment rooms, factory canteen, boarding
establishment, clubs, etc. –
i) The provisions of composition are not applicable to hotels, restaurant, eating
house, refreshment rooms, boarding establishment having four star and above
gradation.
ii) Restaurant, etc serving alcoholic drink can also opt for this composition scheme in
relation to food and non- alcoholic drinks. In case of alcoholic drinks he will be
required to discharge tax liability as per the provisions of the Act.
9.4.2 Rate of Tax:

8% of turnover of sales Registered dealer
10% of turnover of sales. Unregistered dealer
9.4.3 Forms:
Application to be made in Form 1 and for Caterers in Form 2.
9.5.1 For Bakers -

32
i) The application should be made to the Joint Commissioner who shall certify the
claimant dealer for the purpose of claiming benefit under the composition scheme.
ii) To avail the benefit, the turnover of bakery product including bread should not
exceed thirty lakhs during the previous year.
iii) If there is no previous year, the dealer (New dealer) is entitled for composition
upto the turnover of sale of first thirty lakhs.
9.5.2 Rate of Tax:

4% of turnover of sales Registered Dealer
6% of turnover of sales Unregistered Dealer
9.5.3 Forms:
Application to be made is Form 3
9.6.1 Dealer in Second hand Motor Vehicle –

iv) The application should be made to the Joint Commissioner who shall certify the
claimant dealer for the purpose of claiming benefit under the composition scheme.
v) The selling dealer has to prove to the satisfaction of the Commissioner that the
Entry tax in respect of the said vehicle has been paid or that the said vehicle is
registered at the time of purchase under the Central Motor Vehicles Rules, 1989 in
the State of Maharashtra and accordingly, registration mark of this State was
allotted to the said vehicle.
9.6.2 Rate of Tax:

The composition amount shall be calculated @ 12.5% on 15% of the sale price of the vehicle.
9.6.3 Forms:
Application to be made in Form 5
10. WORKS CONTRACT:
10.1 Works contract transaction consists of supply of material and labour i.e. composite
contract.
Earlier there was separate Act governing works contract i.e. Works Contract Act, 1989. It
has become part of MVAT Act under deeming provision of sale of goods used in execution
of works contract.
The Act requires the dealer has to identify the sale value of the material transferred under
works contract. There is no tax on labour component.
Works contractor can determine his taxable sales price with any one of this method.
1. Sale price – Actual Specified Deduction.
2. Sale price – Lump sum specified deduction as per table.
3. Composition Scheme.
The contractor may adopt any one of this method at his discretion. He may adopt one
method for ‘A’ contract and other method for ‘B’ contract.

33
10.2 SALE PRICE – ACTUAL SPECIFIED DEDUCTION.
Rule 58 prescribes, how to determine sale price of such goods. Following deductions are
provided.
Sales Price (Value of Entire Contract )
Less: Specified Allowable Deduction
- Labour and Service charges for execution of works contract.
- Value of sub contract paid.
- Charges for planning, designing and architect fees.
- Charges for obtaining on hire or otherwise machinery and tools for works
contract.
- Cost of consumable in which there is no transfer of property such as water,
electricity, fuel, etc.
- Cost of establishment of contractor to the extent to which it relates to supply of
labour and services.
- Similar other expenses relatable to supply of labour and services.
- Profit related to supply of labour and services.
Sub - Total
Balance sales price i.e. value of goods involved in execution of works contract
liable for tax.
10.3 SALE PRICE – LUMP SUM SPECIFIED DEDUCTION AS PER TABLE.
Alternatively, it is not possible to find out deduction stated above; the dealer has been given
option to go for lump sum deduction as given below.
Sr. Types of Works Contract Amount to be deducted contract
No. price expressed as a percentage of
the contract Price.
1 Installation of Plant & Machinery 15%
2 Installation of air conditioners and air coolers 10%
3 Installation of elevators (lifts) and escalators 15%
4 Fixing of marble slabs, polished granite stones and 20%
tiles (Other than mosaic tiles)
5 Civil works like construction of buildings, 30%
bridges, road, etc.
6 Construction of railway coaches on under 30%
carriages supplied by Railways
7 Ship and boat building including construction of 20%
barges, ferries, tugs, trawlers and dragger.
8 Fixing of sanitary fittings for plumbing, drainage 15%
and the like.
9 Painting and polishing 20%
10 Construction of bodies of motor vehicles and 20%
constructions of trucks
11 Laying of Pipes 20%
12 Tyre re-treading 40%
13 Dyeing and printing of textiles 40%
14 Annual Maintenance Contracts 40% (upto 31-3-2006 20%)
15 Any other works contract w.e.f. 1-4-2006 25%
Note:
1. The percentage is to be applied after first deducting from the total contract price, the
quantum of price on which tax is paid by the sub-contractor, if any, and the quantum

34
of tax separately charged by the contractor if the contractor provides for separate
charging of tax.
2. The balance value arrived at by deduction of labour charges by any of above

methods will be taxable value of goods. On such value, tax will be required to be
paid at 0%, 4% or 12.5% depending upon the goods transferred in the contract.
Contactor can issue ‘tax invoice’ while charging the above tax.
10.4 COMPOSITION SCHEME FOR WORKS CONTRACT
10.4.1 There is no need to make any application for going for composition scheme.
10.4.2 The dealer can issue tax invoice showing composition scheme separately. Such
composition sum can be collected separately.
10.4.3 The dealer can go for composition contract wise.
10.4.4 Taxable Amount:

Computation of VAT under Composition Scheme
Total Contract Value XXX
Less: Sub – Contracts (RD) XXX
Balance Contract Value (subject to tax) XXX
10.4.5 Rate of tax

From 1-4-2005 to 20-6-2006 8%
From 20-6-2006 –
- Notified Construction contracts 5%
- Other Contracts 8%
10.5 CONSTRUCTION CONTRACT:

The Government of Maharashtra vide Notification No. VAT.1506 / CR-134 / Taxation-1,
dated 30.11.2006, has notified the following works contracts to be the ‘Construction
Contracts’ for the purposes of clause (i) of the Explanation to Sub-Section (3) of Section 42
of the Maharashtra Value Added Tax Act, 2002.
(A) Contracts for Construction of –
1. Buildings
2. Roads
3. Runways
4. Bridges, Railway over bridges
5. Dams
6. Tunnels
7. Canals
8. Barrages
9. Diversions
10. Rail Tracks
11. Causeways, Subways, Spillways
12. Water Supply schemes
13. Sewerage works
14. Drainage
15. Swimming pools
16. Water purification plants, and
17. Jetty.

35
(B) Any works contract incidental or ancillary to the contracts mentioned in paragraph (A)
above, if such work contracts are awarded and executed before the completion of the said
contract.
10.6 INPUT TAX CREDIT:
Works contract opted for tax provision Full setoff is allowed.

Works contract opted for composition scheme Setoff shall be reduced by 9/25 i.e. 36%
i.e. allowable only 64%.
For construction contract opted for composition Retention is at 4%.
10.7 CONTRACTOR AND SUB-CONTRACTOR
10.6.1 If the contractor allots the works contract to the sub-contractor, then the contractor and
sub-contractor are treated as Principal and agent. The responsibility for payment of tax will
be joint and several. However the contractor can make the payment of tax on contract and
sub-contractor can take deduction by obtaining declaration and certificate in Form 406 and
409 from the contractor. Similarly if the sub-contractor has made payment of tax on contract
allotted to him, then contractor can take deduction to that extent by obtaining declaration and
certificate in Forms 407 and 408 from sub-contractor.
10.6.2 The dealer has made sale as works contract and has opted for composition scheme
reduction be made to the extent of 16/25. If the principal Works Contractor opted for
Composition of Tax, the sub-contractor setoff in respect of said contract will also be
calculated under this rule i.e. reduction is applicable.
10.8 ONGOING CONTRACT UNDER OLD WORKS CONTRACT ACT
In respect of contracts, which have entered into and commenced before 1-4-2005 and on
execution of contract started before 1-4-2005 and continued thereafter, the dealer is required
to discharge his tax liability, under the MVAT Act, in accordance with the provisions of
earlier law (i.e. old works Contract Tax Act). Thus the dealer shall be liable to pay tax on
such ongoing works contract at the rate/s prescribed (or as per the old composition scheme, if
so adopted) under the earlier law. And such a dealer shall not be entitled for any set off on
purchases of goods used in the execution of such ongoing works contracts.
11. TDS:
11.1 Section 31 of the MVAT Act authorizes the Commissioner of Sales Tax to bring suitable
TDS scheme in respect of Works Contract or normal sale transaction. However at present the
scheme is made applicable in respect of works contract only.
By notification dated 29-8-2005, the State Government has specified the list of employers
liable to TDS and the rates of TDS.
11.2 List of employers liable for TDS

Sr. Classes of Employers Amount to be Deducted
No.
1 The Central Government and any State Government Registered Dealer – 2%
Unregistered Dealer – 4%
2 All Industrial, Commercial or Trading undertakings, --------------“----------------
Company or Corporation of the Central Government or of
any State Government, whether setup under any special
law or not, and a Port Trust setup under the Major Ports
Act, 1963.
36
3 A Company registered under the Companies Act, 1956. --------------“---------------

4 A local authority, including a Municipal Corporation, --------------“---------------
Municipal Council, Zilla Parishad, and Cantonment
Board
5 A Co-Operative Society including a Co-operative --------------“---------------
Housing Society registered under the Maharashtra Co-
Operative Societies Act, 1960.
6 A registered dealer under the Maharashtra Value Added --------------“---------------
Tax Act, 2002.
7 An Insurance or Finance Corporation or Company, and --------------“---------------
any Bank included in the second Schedule to the Reserve
Bank of India Act, 1934, and any scheduled bank
recognized by the Reserve Bank of India
8 Trusts, whether public or private. --------------“---------------
9 A Co-Operative Housing society, registered under the --------------“---------------
Maharashtra Co-Operative Societies Act, 1960, which
has awarded contract of value aggregating to rupees 10
lakhs or more in the previous year or as the case may be
in the current year.
11.3 Conditions for TDS:

1. TDS provisions are applicable only to specified employers as mentioned above.
2. A contractor awarding sub-contract is not required to deduct TDS from such sub-
contractor/s.
3. No TDS is to be deducted when the payment of the aggregate of the payment to be

made to
Co-Operative Society 10 lakhs
Others 5 lakhs
4. Deduction of tax is to be made on the date of payment to the contractor or amount

credited to his account whichever is earlier.
5. If tax is not deducted by the Contractee, still TDS is payable.
6. TDS to be deducted from the net amount and no TDS is required to be deducted from
sales tax or service tax separately charged by the contractor.
7. Advance payment is made to the contractor; such payment is liable to TDS only
when it is adjusted against the amount payable.
8. The amount of TDS shall not exceed the tax payable by such contractor.
9. TDS should not apply to contracts taking place in course of inter-state trade or in
course of import / export.
10. Every person liable to deduct TDS is not required to obtain any Tax Deduction
Account number.
11. The contractor can claim credit for TDS in the month in which it is deductible or in
which the actual TDS certificate is received.
12. Interest is payable for late payment of TDS.

37
13. TDS amount should be paid within 21 days at the end of the month in which TDS is
deducted irrespective of the amount of TDS.
11.4 Important forms for TDS

Form No. Particulars
402 TDS certificate given to contractor
404 Register to be maintained by the employer who deducted TDS
405 Return-cum-challan to be used for depositing tax deducted.
410 Application for no deduction of TDS.
12. VAT AUDIT:
12.1 VAT Audit is applicable from the financial year 2005-06. The last date of filing the
VAT Audit report for the financial year 2005-06 and 2006-07 was 30th September 2008. Last
date for VAT Audit for financial year 2007-08 is 31st Jan. 2009.
12.2 LIMIT OF TURNOVER
12.2.1 Every dealer is required to get their accounts audited if

1. Turnover of sales or turnover of purchases exceeds Rs. 40 lakhs in the financial year or
2. Dealer who holds specified liquor license.
12.2.2 Limit of Turnover of Purchase:

For the purpose of deciding the limit of Rs. 40 lakhs, the turnover of purchase include, all
purchases debit to Trading and Profit / Loss Account i.e. raw material, packing material,
consumables, finished goods, purchase of material in printing & stationary, purchase of
material in repairs & maintenance, workers welfare, purchase of material in sales promotion,
purchase of assets, etc.
12.2.3 Limit of Turnover of Sales:

For the purpose of deciding the limit of Rs. 40 lakhs, the turnover of sales include, all sales
credited to Trading and Profit / Loss Account i.e. sale of goods, sale of scrap, sales to
employees, sale of assets, etc.
12.3 AUTHORISED PERSON TO DO AUDIT
1. Practising Cost Accountant
2. Practising Chartered Accountant
12.4 PERIOD OF FILING THE REPORT
The report of such audit is required to be furnished in Form No. 704 within 10 months from
the end of the relevant year.
The last date for filing the report for the financial year 2007-08 is 31st Jan. 2009.
The department has introduced new form 704 which was published in the official gazette on
10th November 2008.
The Commissioner by trade circular 41T of 2008 dated 18-12-2008 clarified that the year
2007-08 audit report can be in old form 704 or new form 704.

38
12.5 PENALTY
12.5.1 Penalty for not filing VAT Audit Report:

Failure to file the audit report in prescribed time, the Commissioner may impose, after giving
the dealer a reasonable opportunity of being heard impose on him a sum by way of penalty
equal to 1/10th percent of the total sales.
12.5.2 Penalty for Late Report submission by one month:

If a dealer fails to file copy of such report within prescribed time, and files it within 1 month
from the end of the said period and dealer proves to the satisfaction to the Commissioner that
the delay was on account of fact beyond his control, then no penalty under this section shall
be imposed on him.
12.6 EXEMPTION FROM VAT AUDIT:
Following dealers are exempted.

1. Department of Union Government
2. Department of State Government
3. Local Authority
4. Indian Railways
5. Konkan Railways
6. Maharashtra State Road Transport.
13. BUSINESS AUDIT
13.1 Section 22 speaks about Business Audit. The Criteria for selecting Business Audit are as
follows.
1. The dealer who has not filed the returns on the prescribed date.
2. The dealer who has claimed refund of tax
3. Where the Commissioner is not satisfied with the correctness of any return filed by a
dealer.
4. Selected by the Commissioner on random basis or on the basis of any application of any
criteria.
5. Where the Commissioner has reason to believe that detailed scrutiny of the case is
necessary.
14. TAX INVOICE
14.1 Issue of Tax Invoice:

Every registered dealer, selling any goods may issue a tax invoice to the purchaser and retain
a copy thereof for three years.
14.2 Contents of Tax Invoice:
1. Word ‘TAX INVOICE’ to be printed in bold letter at the top or on prominent place in the
invoice.
2. Name, address and TIN Number of the selling dealer
3. Serial number of tax invoice.

39
4. Date of issue of tax invoice
5. Name and address of the purchasing dealer.
6. Description of the goods.
7. Quantity of goods sold
8. Price of goods sold
9. Amount of Sales tax charged and it is required to be indicated separately.
10. Signed by selling dealer or Authorized representative of the selling dealer.
11. Certificate stating TIN number in force on the date of the bill.
“I/ We hereby certify that my / our registration certificate under the Maharashtra Value
Added Tax Act, 2002 is in force on the date on which the sale of the goods specified in
this tax invoice is made by me/us and it shall be accounted for in the turnover of sales
while filing of return and the due tax, if any, payable on the sale has been paid or shall be
paid”
12. Entitlement certificate holder shall give prescribed certificate.

“I / We hereby declare that sale of goods evidenced by this invoice is exempt from the
whole of sale tax in my / our hands on account of the Certificate of Entitlement bearing
No.______ duly granted to me / us and as such my / our immediate purchaser shall not
be entitled to claim ant set-off in respect of this transaction under any provision of
Maharashtra Value Added Tax Act, 2002 or the rules framed there under and that the
transaction shall be accounted for in the turnover of sales while filing my return”.
15. INTEREST FOR LATE PAYMENT OR NON-PAYMENT
Section Nature of Delay Rate of Interest

30 (1) Non-payment, late payment of tax Simple interest @ 1.25% for each month or
by unregistered dealers or dealers part thereof.
who have failed to apply for Quantum of such interest shall not exceed
registration in time the quantum of tax found payable for the
respective year.
30 (2) Late payment of tax by Registered Simple Interest @ 1.25% for each month or
Dealer part thereof.
30 (3) Interest on differential dues, on Simple Interest @ 1.25% for each month or
assessment part thereof.
16. PENALTY FOR VARIOUS DEFAULTS
Section Nature of Delay Penalties

29 (3) Concealment of particulars of any Equal to the amount of tax found due (if the
transaction or knowingly subject is found guilty).
furnishing inaccurate particulars of
any transactions
29 (4) Knowingly issuing/ producing any Equal to the amount of tax found due (if the
document including a false bill, subject is found guilty).
40
cash memorandum, voucher,

declaration or certificate which has
an effect of reducing the tax
liability or claim of incorrect setoff
29 (5) Failure to comply with the Equal to one and a half times the tax which
conditions or restrictions of would have become payable.
purchase of goods under sub-
section (3), (3A), (3B), or (5) of
Section 8.
29 (6) Failure to issue Tax Invoice, Bill Equal to half the amount of tax which
or Cash Memorandum as provided would have been under-assessed, or
u/s. 86 of the MVAT Act, 2002. Rs.100, whichever is higher.
29 (7) Failure (without a reasonable A penalty equal to Rs.1,000.
cause) to comply with any notice
in respect of any proceedings
29 (8) Failure to file a return (without a If the return is filed before the initiation of
reasonable cause) as provided the penalty proceeding, then penalty Rs.
under Section 20 of the MVAT 1,000 upto 30-4-2008 Rs.5,000 w.e.f. 1-5-
Act, 2002 2008.
In any other case, Rs.2,000 upto 30-4-
2008 Rs.10,000 w.e.f 1-5-2008
This penalty is without prejudice to any
other penalty, which may be imposed under
the Act.
29 (9) (c) Filing of a return, which is not Rs.1,000 per return
complete and self-consistent This penalty is without prejudice to any
other penalty, which may be imposed under
the Act.
29 (10) Collection to tax / Composition in Penalty not exceeding Rs. 2,000 and
contravention of Section 60 of the Forfeiture of an amount collected in
MVAT Act, 2002. contravention of Section 60 of the MVAT
Act, 2005.
17. INTEREST ON AMOUNT OF REFUND AND INTEREST ON DELAYED

REFUND
17.1 Section 52 provides on amount of refund and section 53 provides for Interest on delayed
refund.
17.2 Interest on Refund – the dealer is entitled to get Interest on refund commencing on the
date next following the last day of the period to which the refund relates and ending on date
of order sanctioning the refund or for a period of 24 months (2 years) whichever is less. The
rate of interest is 6% per annum or half a percent per month. The interest is payable on net
amount of refund i.e. after deducting any recovery under earlier law or CST dues if any.
17.3 Interest on Delayed Refund – Section 53 provides for Interest on delayed refund. It is
available from the date immediately following the expiry of the period of 90 days from the
date of order granting the refund till the date of refund. The rate of interest on such refund is
half percent per month or 6 % per annum.

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1

CENTRAL SALES TAX ACT, 1956 2-9

MAHARASHTRA PROFESSION TAX, 1975 10 - 15

MAHARASHTRA VALUE ADDED TAX ACT, 2002 16 - 40

WANDREKAR AND COMPANY

CENTRAL SALES TAX ACT 1956

2. INTER STATE SALE AND PURCHASE:

(2) such movement of goods should be under a contract.

4. IMPORT & EXPORT:

WANDREKAR AND COMPANY

4.2 Section 5 (1) provides for two types of situations:

Three conditions are required to be satisfied:

b) Sales in course of import / export.

c) Exemption by issuing a notification.

d) Sale of goods which are exempted or chargeable to lower tax.

e) Sold within the state.

f) Subsequent sales by transfer of documents.

WANDREKAR AND COMPANY

g) Sale to foreign diplomatic mission in India.

h) United Nations or any similar international body.

b) Sales should be either to the government or to the registered dealers.

d) Sales should be affected by transfer of documents of titles to the goods. Documents of

CST Nature of Goods Rate of CST Under Form

WANDREKAR AND COMPANY

From 1-7-1975 to 31-3-2007

8.3 Application for registration should be in Form A.

9. INTEREST / PENALTY / RETURN / ASSESSMENT:

10. IMPORTANT DECLARATIONS UNDER CST

WANDREKAR AND COMPANY

10.1 IMPORTANT FORMS UNDER CST

CST Forms Remarks

10.2 Procedure for obtaining above declarations:

(d) The proof of transport relating to the highest value invoice.

10.3 Fees for Obtaining Form C:

10.4 Online procedure for obtaining statutory forms:

WANDREKAR AND COMPANY

10.5 Conditions for issue of form C:

Purchase is to be effected against Form C are subject to conditions.

10.6 Periodicity of Forms:

Periodicity of Form C w. e. f 1-10-2005. Form C will have to be issued / collected separately

For 2004-05 One form for the whole year.

WANDREKAR AND COMPANY

11. DECLARED GOODS:

11.1 Constitution of India authorizes parliament to declare some goods as of special

12. AMENDED DEFINITION OF SALE:

Amended definition of Sale includes

WANDREKAR AND COMPANY

12.3Works Contract: Transfer of property in goods involved in the execution of works

WANDREKAR AND COMPANY

MAHARASHTRA PROFESSION TAX, 1975

2. REGISTRATION - TAX ON EMPLOYEE:

2. Legal practitioners including Solicitor and Notaries;

All types of Contractors (other than building contractors covered by

any other entry elsewhere in this Schedule); and Diamond dressers

4. Building Contractors; 2500 per annum

5. Directors (other than those nominated by Government) of Companies

7. Self-employed persons in the Motion Picture Industry, Theatre,

8. Dealers registered under the Maharashtra Value Added Tax Act,

10. (1) (A) Employers of Establishments as defined in the Bombay Shops

(B) Employers of establishments as defined in the Bombay Shops and

11. Owners or Lessees of Petrol/Diesel/Oil Pumps and Service

12. Licensed Foreign Liquor Vendors and employers of Residential