A Brief Introduction about MVAT

CA Chinmay Gangwal , Last updated: 03 February 2016
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Vat is a one of the indirect tax in our India. It is simple and transparent system with limited scope of department control due to the self assessment made by dealers and less scope for tax evasion due to strict penal provision. As Per entry 54 in list II (State List) of schedule VII to constitution of India, state are empowered to levied tax on sale or purchase of goods other than newspapers. So that, In India there is different VAT system for each corresponding state. Therefore in Maharashtra state, MVAT system is applicable for levying a tax on selling of goods.

What is the Point of taxation for levied VAT?

VAT is charged at the time of selling of goods and not on manufacturing of Product. It is a multi point tax system which is levied at the time of every sale of goods. VAT is a tax on Value addition made at each stage and benefit of Setoff will be continued from manufacture up to retailers, so that ultimate Consumer should bear the tax. There are two conditions required for levying Vat i.e. passion and use of goods. Ex: - VAT is also charged on rental of machinery because in that transaction ownership is not transfer but passion and use of goods happens.

What is the definition of goods under MVAT Act?

Goods means every kind of movable property, the definition of good does not include newspaper, actionable claims, money, stocks, shares, securities or lottery tickets and includes livestock’s, growing crops, grass, trees and plants including the produce thereof, including property in such attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.

How does sale price is to be calculated under MVAT Act?

Sale price means the amount of valuable consideration paid or payable to a dealer for any sales made including any sum charged for anything done by the seller in respect of goods at the time of or before delivery thereof, other than the cost of insurance for transit of installation, when such cost is separately charged.

Which dealers are covered under MVAT Act?

A dealer is liable to pay tax on the basis of turnover of sale within the state. The term dealer has defined u/s 2(8) of the Act. It includes all person or persons who buys or sells of goods in the state whether for commission, remuneration or otherwise in the course of their business or in connection with or incidental to or consequential to engagement in such business. The term includes broker, commission agent, Auctioneer, PWD, Department of Union government, state Government Etc. However an agriculturist, educational institution and transporters shall not be deemed dealer. The Dealer has threshold Limit for VAT registration is Rs 10 Lac.

Sr. No.	Category of Dealer	Total turnover of sales to exceed	Turnover of sale or purchases of taxable goods
1	Importer:	` 1,00,000/-	Not less than ` 10,000/
2	Others (Including manufacturer, reseller, liquor dealer, works contractors, leasing etc.)	` 10,00,000/- (With effect from 01/07/2014 and Rs. 5,00,000 up to 30/06/2014)	Not less than ` 10,000/-
3	Voluntary Registration	- NA-	- NA-

What are the rates levied under MVAT Act?

In MVAT act, there are following rates are charged on selling of goods.

Sr.No	Particular	Rate	Applicable
1)	Schedule A	Nil Rate	Tax-free goods i.e. necessary goods
2)	Schedule B	1%	Bullion, Jewellery, precious stones, diamond Etc
3)	Schedule C	2,3,5%	IT Product, Declared goods, Cloth, Drugs and Pharmacy, Medicines Etc
4)	Schedule D	20% to 34%	Liquor, Motor Spirit, ATF Etc
5)	Schedule E	12.5%	Residuary Entry

Which form is required for Filing of E-Return in MVAT & CST?

There are six forms which are applicable to the Different categories of dealer for filing of E return under MVAT & CST Act and these categories are as follows:

Sr.No	Name of Form	Applicable
1)	Form 231	Regular Dealer
2)	Form 232	Composition dealer in second hand motor vehicles, retailer, works Contract, restaurant, club, caterers Etc
3)	Form 233	Dealer who are in the business of executing works contract, leasing etc
4)	Form 234	Dealer who are PSI units holding Entitlement Certificate.
5)	Form 235	Dealer notified oil companies & also any other dealer effecting sales of motor spirits.
6)	Form III E	Dealer who is dealing in interstate sales.(No CST Return is to be filed if interstate sale is NIL in period, as per trade Circular 15T of 1981,52T of 2007 & 15T of 2009.)

How many Different forms under CST Act?

There are Ten forms required for claiming the concessional rate, application of Registration Etc and these are as follows:-

Sr.No	Form	Description	Frequency
1)	A	Application for registration	Once
2)	B	Certificate of registration	Once
3)	C	Declaration by purchasing registered dealer to obtain goods at concessional rate	To be obtained for every quarter and submitted on quarterly basis.
4)	D	Form of certificate for making government Purchases ( D Form cannot be issued in case of sale made to government on or after 1-4-2007)	No Question arise after 01-04-07
5)	E-I /E-II	Certificate for sale in transit	To be obtained for every quarter and submitted on quarterly basis.
6)	F	Form by branch/ Consignment agent for goods received on stock transfer	To be obtained for every quarter and submitted on quarterly basis.
7)	G	Indemnity Bond when C Form Lost	When required
8)	H	Certificate of Export	To be obtained for every quarter and submitted on quarterly basis.
9)	I	Certificate by SEZ Unit	Not Specified in rules (But should be submitted before assessment)
10)	J	Certificate to be issued by foreign diplomatic Mission or consulate in India or the UN Agency	Up to the time of assessment by first assessing authority.

What is the due date for Payment and Return under MVAT & CST?

According to the periodicity, due date for payment and filing of return under MVAT and CST Act is depends. So that following table are helpful for understanding of due dates.

Sr.No	Periodicity	Due Date for Payment	Due Date for Filing of Return
1)	Monthly	21st of the Next Month	31st of the Next Month
2)	Quarterly	21st of the Next Month from End of Quarter.	31st of the Next Month from End of Quarter.
3)	Half yearly	30th of the Next Month from End of half year.	10th day from the date of Payment

What are the Penalties under MVAT Act?

In MVAT Act , there is a penalty levied in the form of late fees for MVAT Return and Interest is charged for late payment and these are as follow :-

Sr.No

Particular

Amount

Late filing Fees

(Return is not filed within due date)

Rs 1000 if Return is filed within one month after due date otherwise Rs 5000.

Interest u/s 30(2) (Payment is not made within due date)

Late Payment interest rates slab wise viz for delay of first month @1.25% P.M, for Next two Months @1.5% P.M and thereafter @2% P.M ( As Per latest Amendment)

What is the summary from above?

VAT is charged on value addition made at each stage. The system envisages levy of tax on the sale at each stage and contemplates allowing of set off of tax paid on purchases. There are five schedules for levying Taxes. There are six Forms for Filing of return under MVAT & CST Act. Due Date of Payment and Filing return are explained above in details. Penalties and Interest are levied if the filing of return and payment are not made within due date.

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