Set Off and Refund [ Section 48 to 54 ] under MVAT Act, 2002

SET OFF AND REFUND [SECTION 48 TO 54] UNDER THE MVAT ACT, 2002 

 

Contents -

1. Introduction of Maharashtra Value Added Tax Act. 2002, the excess tax is reimbursed as set off.
2. The Set Off can be Claimed on following Types of Goods with Reference to the Rule 51 to 55.
3. Section (48) Provides for Set off, refund etc.
4. Section 49 Provides for Refund of Tax on Declared Goods Sold in the Course of Inter-State Trade or Commerce.
5. Section (50) Provides for Refund of Excess Payment.
6. Section (51) Provides the Provisional Refunds.
7. Section (52) Provides for Interest on Amount of Refund.
8. Section (53) Provides for lnterest on Delayed Refund.
9. Section (54) Provides the Power of Commissioner to with Hold Refund in Certain Cases.
10. Provisions for Determination of Disputed Question and Advance Ruling (Section 55 r/w Rule 63].

Question :

Q : What are the provisions relating to Set Off and refund to the Dealer under

Maharashtra Value Added Tax act 2002 ?

Q : When is set off available ? What are the provisions of the Act regarang reimbursement of tax paid on declared goods ? 

Q : What are the provisions of the Act regarding Input Tax credit? when is set off not available?

Q : What are the provisions of the Act regarding set off and what taxes are

eligible for set off ? 

Q: What are the provisions of the Act regarding refund ?

Q : Discuss the provisions for "Determination of disputed question" and Advance ruling under Maharashtra Value Added Tax Act 2002.

Q : What is meant by Advance Ruling (Section 55 r/w Rule 63] ?

Introduction -

There are different words used for reimbursement of taxes paid by the assessee in the various revenue departments under the different laws. For

example in Excise Law the word used as "Cenvat on the Income Tax it is generally used as "Refund", in Custom duty" Draw back". It is not necessary to debate on such words. The basic concept that the person eligible to get back the excess tax paid under the related Law. The Vat word is familiar under Excise Law as MODVAT.

In Mah. Value Added Tax Act. 2002, the excess tax is reimbursed as set off :

It is not restricted to the Manufacture and there is no relation of sales and purchase for granting set of. The set off to be granted to the Manufacturer as well as to the reseller. the point or sale may be multiple. The basic condition to get the set

off by the Manufacturer or Reseller is that he should produce the relevant document

to the Sales tax authority that in the buyers tax invoice, the tax is shown separately. It is important that the dealer should be registered dealer.

The amount of sales tax has been replaced with Tax.To avail set-off the following conditions are to be satisfied,

1. The dealer shall be registered dealer under the Act.

2. The dealer has to maintain record purchases in chronological order showing

the following particulars,

i) The date of purchases

ii) Name of selling dealer and his registration number and date

iii) The number of the invoice

iv) Purchase price of the goods

v) Amount of purchase tax, if any, paid or payable by him in respect of goods purchased.

vi) Amount of sales tax recovered from him by the selling deal.

Section (48) Provides for Set off, refund etc. :

1. The State Government may, by rules, provide that :

a) In such circumstances and subject to such conditions and restrictions as may be specified in the rules, a set-off or refund of the whole or any part of the tax,

i) Paid under any earlier law in respect of any earlier sales or purchases of goods treated as capital assets on the day immediately preceding the appointed day or of goods which are held in stock on the appointed day by a person who is a dealer liable to pay tax under this Act, be granted to such dealer.

ii) Paid in respect of any earlier sale or purchase of goods under this Act be granted to the purchasing dealer.

iii) Paid under the Maharashtra Tax on Entry of Motor Vehicles into the Local Areas Act, 1987, be granted to the dealer purchasing or importing motor vehicles.

iv) Paid under the Maharashtra Tax on Entry of Goods into the Local Areas Act, 2002, be granted to the dealer.

b) For the purpose of the levy of tax under any of the provisions of this Act, the sale price may in the case of any class of sales be reduced to such extent, and in such manner, as may be specified in the rules.

2. No set-off or refund as provided by any rules made under this Act shall be granted to any dealer in respect of any purchase made from a registered dealer after the appointed day, unless the claimant dealer produces a tax invoice, containing a certificate that the registration certificate of the selling dealer was in force on the date of sale by him and the due tax, if any, payable on the sale has been paid or shall he paid and unless such certificate is signed by the selling dealer or a person duly authorised by him.

3. Subject to the provisions contained in sub-section (4), where no tax has been charged separately under any earlier law, the rate of tax applicable for the purposes of calculating the amounts of set-off, or refund in respect of any earlier sale or purchase of goods, or for the purposes of reduction of sale or purchase price for levy of tax, shall be the rate set-out against the goods in the relevant Schedule under any earlier law.

4. Where, under any notification issued under this Act or as the case may be, any earlier law, any sale or purchase of goods has been exempted from the payment of whole of sales tax or purchase tax, then, tor the purposes of sub-section (3), the rate of tax applicable shall he nil, and where it is exempted from payment of any part of sales tax (or purchase tax), the rate of tax applicable shall be the rate at which the payment of tax is to be made by virtue of such exemption.

5. For the removal of doubt it is hereby declared that, in no case the amount of set off or refund on any purchase of goods shall exceed the amount of tax in respect of the same goods, actually paid, if any, under this Act or any earlier law, into the Government treasury except to the extent where purchase tax is payable by the claimant dealer on the purchase of the said goods effected by him:

Provided that, where tax levied or leviable under this Act or any earlier law is deferred or is deferrable under any Package Scheme of Incentives implemented by the State Government, then the tax shall he deemed to have been received in the Government Treasury for the purposes of this sub-section.

6. Where at any time after the appointed day, a dealer becomes entitled to a refund whether under the earlier law or under this Act, then such refund shall the first be applied against the amount payable. if any, under any earlier law or this Act and the balance amount, if any, shall be refunded to the dealer.

The Set Off can be Claimed on following Types of Goods with Reference to the Rule 51 to 55 :

1. Trading goods
2. Raw Material
3. Parts, Components, spares (other than the components of motor vehicle)
4. Packing material
5. Fuel
6. Capital Assets
7. Purchases debited to P & L A/C
8. Entry Tax on Motor Vehicles
9. Entry Tax on other goods

With reference to the notification No STR.1506/CR-38/TAXATION-1 DT 8th

SEPTEMBER, 2006 THE AMENDED PROVISION FOR the following the Set Off is not available,

1. Motor vehicles.
2. Motor spirit.
3. Crude oil.
4. Purchases by the Shipping companies.
5. Manufacturer of scrap only.
6. Entitlement Certificate holders.
7. Purchases of Intangible Assets.
8. Works Contract resulting immovable property.
9. Purchase of goods are used in the erection of immovable property other than plant and machinery.
10. Purchase of liquor when the dealer opted for composition.
11. Purchases of capital goods by Hotels.

Section 49 Provides for Refund of Tax on Declared Goods Sold in the Course of Inter-State Trade or Commerce :

Where any declared goods are sold by a dealer in the course of Inter-State trade or commerce and tax has been paid by him under the Central Sales Tax Act, 1956, in respect of the sale of such goods in the course of Inter-State trade or commerce, and such dealer shows to the satisfaction of the Commissioner that tax under this Act, or any earlier law has been paid in respect of an earlier sale or purchase of such goods made in the state after the 1st day of October 1958, then an amount equal to the tax so paid shall be reimbursed to such dealer making such sale in the course of Inter-State trade or commerce, In such manner and subject to such conditions as may be prescribed.

Section (50) Provides for Refund of Excess Payment :

1. Subject to the other provisions of this Act and the rules made there under, the commissioner shall by order refund to a person the amount of tax, penalty, interest and fee except when the fee is paid by way of court fee stamp. If any, paid by such person in excess of the amount due from him. The refund may be either by deduction of such excess from the amount of tax penalty, amount forfeited and interest due if any, in  respect of any other period or in any other case by cash payment.

Provided that the Commissioner shall first apply such excess to word the recovery of any amount due in respect of which in notice under sub section (4) of section 32 has been issued, or, as the case may refund the balance, if any,

2. If a registered dealer has filled any , fresh return or revised returns in respect of any period contained in any year and any amount is refundable to the said dealer according to the return fresh return or revised return then subject to rules there dealer may adjust such refund against the amount due as per any return, fresh return or revised return for any period contained in the said year field under this act or the Central Sales Tax Act, 1956 or the Maharashtra Tax on the Entry of Goods into Local Area Act, 2002. 

Section (51) Provides the Provisional Refunds :

1. Where a registered dealer has in any return, fresh return or revised return shown any amount to be refundable and has not undertaken to adjust such amount against the amount due as per any return in accordance with Section 50, the commissioner shall, on an application made by the dealer and subject to rules, and the other provisions of this Act, grant refund of such amount to the said dealer.

2. (a) The registered dealer may, after the end of the year to which the return, fresh return or revised return relates, make an application in the prescribed form for grant of refund of the amount claimed refundable as aforesaid. The Commissioner may, within one month of the receipt of the application call for such additional information from the dealer, as he may think necessary. The refunds relating to all the periods contained in one year may be granted by a single order.

(b) Not with standing anything contained in clause (a), where a dealer has obtained a registration certificate as provided under this Act, then the refund in respect of the returns, fresh returns or revised returns in respect of the year containing the date of effect of registration shall be granted within six months of the end of the year succeeding the said year,

Provided that, the said dealer may apply in the prescribed form to the Commissioner at any time after the end of the year to which the refund relates for grant of the said refund and the Commissioner may subject to rules including rules relating to bank guarantees grant such refund.

3. (a) Notwithstanding anything contained in sub-section (2), if a dealer is,

i) An exporter within the meaning of sub-section (1) or sub-section (3) of Section 5 of the Central Sales Tax Act, 1956.

ii) A unit specified in the Explanation to sub-section (3) of Section 8.

iii) A holder of a Certificate of Entitlement under any Package Scheme of Incentives except the New Package Scheme of Incentives for Tourism Projects 1999, or then he may apply in the prescribed form to the Commissioner after filing the return for grant of refund relating to the period covered by a return, fresh return or revised return.

(iv) Selling any goods in the course of Inter-State trade or commerce.

v) The Canteen Stores Department or the Indian Naval Canteen Services.

(b) The commissioner, within one month of the receipt of the said application,

i) May require the dealer to furnish such bank guarantees for such amount from such banks, for such periods and to such authorities as may be prescribed.

ii) May call for such additional information as he may think necessary.

4. The Commissioner shall grant the refund under this Section within 3 months of the receipt of application or receipt of additional information whichever is later. If the additional information is not furnished, then the refund shall be granted within 6 months of the receipt of the application.

5. Notwithstanding anything contained in this Section, if the dealer has furnished a bank guarantee for such amount, from such bank, for such period and to such authority as may be prescribed, the commissioner shall grant the refund due under sub-section (2) or (3), within one month of the furnishing of the bank guarantee, irrespective of whether the additional information has been furnished or not.

6. (a) If before the grant of refund under this Section, a notice for assessment covering the period to which the return relates is issued or if any proceedings under sub-section (3) or sub-section (4) of Section 64 are initiated in respect of the period to which the return relates, then,

i) If the dealer has not furnished a bank guarantee then no refund under this Section shall be granted.

ii) If the dealer has furnished a bank guarantee then an amount equal to the guaranteed amount shall be refunded.

(b) If it is found as a result of any order passed under this Act that the refund granted under this Section is in excess of the refund, if any, determined as per the said order, then the excess amount shall be recovered as if it is an amount of tax due from the dealer and the dealer shall be liable to pay simple interest at the prescribed rate per month or part there of from the date of the grant of refund.

7. No refund under this Section shall be granted unless an application as provided is made and no application under this Section shall be entertained unless it is made within 3 years from the end of the year containing the period to which the return relates.

Section (52) Provides for Interest on Amount of Refund :

Where under this Act, refund of any tax becomes due to a registered dealer, he shall, subject to rules, if any, be entitled to receive, in addition to the refund, simple interest at the prescribed rate on the amount of refund for the period commencing on the date next following the last date of the period to which the refund relates and ending on the date of the order sanctioning the refund or for a period of 24 months, whichever is less.

The interest shall be calculated on the amount of refund due to the registered dealer in respect of the said period deducting there from the amount of penalty, sum forfeited and interest, if any, charged in respect of the said period and also the amount of refund, if any, adjusted toward any recovery under this act or any either law or as the case may be under The Central Sales Tax Act, 1956.

If as a result of any order passed under this act the amount of such refund is enhanced or reduced as the case may be such interest shall be enhanced or reduced accordingly.

If the interest is reduced, then the amount granted in excess shall be recovered as if it is an amount payable under this act provided that interest under this section shall not be granted towards any refund granted under section 51.

Explanation :

For the purpose of this section where the refund of tax whether in full or in part includes any amount of refund on any payment of tax made after the date prescribed for making the last payment in respect of the said period then the interest in so for as it relates to the refund arising from such payment shall be calculated from the date of such payment to the date of such order.

Section (53) Provides for lnterest on Delayed Refund :

1. Where an amount required to be refunded by the Commissioner to any person, by virtue or the provisions contained in Section 51 or by virtue of an order passed under any other provision of this Act, is not so refunded to him within 90 days of the end of the respective period provided in Section 51 or as the case may be, of the date of the said order, the Commissioner shall pay such person simple interest at the prescribed rate on the said amount from the date immediately following the expiry of the period of 90 days to the date of the refund.

Provided that, where the amount becomes refundable by virtue of an order of the Tribunal or the High Court or the Supreme Court, the interest under the provisions of this Section shall be payable from the date immediately following the expiry of period of 90 days from the date of receipt of the order of the Tribunal, the High Court or the Supreme Court, by the officer whose order forms the subject of the proceedings before the Tribunal, the High Court or the Supreme Court, to the date of refund.

The applicant dealer or person may supply to the said officer a certified copy of such order and if the copy is so furnished, interest shall become payable after the

expiry of period of 90 days from the date of such supply.

Explanation : 

If the delay in granting the refund within the period of 90 days aforesaid is attributable to the said person, whether wholly or in part, the period of the delay attributable to him shall be excluded from the period for which interest is payable.

2. Where any question arises as to the period to be excluded for the purposes of calculation of interest under the provisions of this Section, such question shall be determined by the Commissioner, whose decision shall be final.

Section (54) Provides the Power of Commissioner to with Hold Refund in Certain Cases :

1. Where an order giving rise to a refund is the subject-matter of an appeal or further proceeding or where any other proceeding under this Act is pending, and the authority competent to grant such refund is of the opinion that the grant of the refund is likely to adversely affect the revenue, such authority may, with the previous approval of the Commissioner, withhold the refund till such time as the Commissioner may determine.

Provided that, the Commissioner shall accord his approval to the withholding of the refund only if he is of the opinion that on the conclusion of such appeal, further proceedings or other proceedings, if it becomes necessary to recover the amount of refund in full or in part, then it may not be otherwise practicable or possible so to do in any reasonable period of time,

Provided further that, no order withholding the refund shall be made after the expiry of 90 days from the date of service of the order giving rise to the said refund.

2. Where a refund is withheld under sub-section (1), the State Government shall pay interest in accordance with the provisions of Section 53 on the amount of refund ultimately determined to be due to the person as a result of the appeal or further proceeding or any other proceeding for the period from the date immediately following the expiry of 90 days from the date of service of the order referred to in sub-section (1) to the date of refund.

Provisions for Determination of Disputed Question and Advance Ruling (Section 55 r/w Rule 63] :

This Section deals with Determination of disputed Question. It is like Advance ruling in Income Tax Act. If any question has to be referred to the Commissioner for Determination, the question should not be before court or the Commissioner should not have commenced assessment or reassessment of dealer.

In the case of Determination of disputed questions, the question can be referred to the Commissioner and his order is finding on the Department.

The State Government may, by notification in the official gazette, specify, any registered dealer may apply in the Form 703 and shall be presented to the Registrar of the Tribunal, for obtaining an advance ruling on the interpretation of any provision of this Act, rules or notifications in respect of a transaction proposed to be undertaken by him even though any question relating to the said provision has not arisen in any proceeding.

Any registered dealer can apply to the Tribunal for obtaining an advance ruling on the interpretation of any provision of this Act, Rules or Notification in respect of a transaction proposed to be undertaken by him even though any question relating to the said provision has not arisen in any proceeding.

If the Tribunal finds that the application does not involve any important and substantial question of law, then the Tribunal may, alter giving the applicant a reasonable opportunity of being heard, reject the application. If the application is admitted, then for determination of the question, The President shall cause a bench to be constituted, consisting of,

i) 3 members of the Tribunal.

ii) A senior practitioner entitled to appear before the Tribunal to be nominated by the President.

iii) An officer of the Sales Tax Department not below the rank of Joint Commissioner, to be nominated by the Commissioner.

After hearing the applicant, the Bench shall pronounce its advance ruling on the question specified in the application. If the members of the Bench are divided then the decision shall be the decision of the majority. The pronouncement of the advance ruling shall, in so far as it may, be made by the Bench within 4 months of the receipt of the application by the Tribunal.

The advance ruling so pronounced shall be binding unless there is a change of law on the basis of which the advance ruling has been pronounced and accordingly no such question shall be entertained in any proceeding by any authority appointed or constituted under this act save as provided in section 27.