1. Interest on builders
Whether interest under section 30(2) or 30(3) of the Maharashtra Value Added Tax Act, 2002 (MVAT Act, 2002) is payable by builder for 2007-08, where amendment in rule 58 is made in 2014?
Reply: Interest u/s. 30(2) is charged on delayed payment as per returns. In other words, this interest is attracted once there is filing of returns showing tax amount payable and such payment is beyond the prescribed time of filing return.
In case revised returns are filed and any amount is to be paid as per revised returns, still the interest will be attracted from due date of original return.
In case of builders, the liability under MVAT Act, 2002 is contemplated from 20-6-2006. However, the matter was under litigation. The issue was resolved by Hon’ble Bombay High Court in 2012 vide judgment in case of Maharashtra Chamber of Housing Industry (51 VST 168)(Bom). The matter was further carried to Hon’ble Supreme Court which is decided by Hon’ble Supreme Court vide common judgment in case of Larsen & Toubro Limited and Another v. State of Karnataka and another (65 VST 1)(SC). This judgment came in September, 2013. Thereafter, there is amendment in MVAT Rules about computation of tax liability. In particular rules 58(1A), 58(1B) etc., are changed/inserted.
Vide Circular No.7T of 2014 dt. 21-2-2014, the Commissioner of Sales Tax advised to file revised returns in view of amended position by 30-4-2014.
Therefore, the builders may be filing returns/revised returns and paying additional taxes etc., much after the due dates of original returns based on above background. However, there is no relief granted in respect of interest. In other words, the interest will remain attracted from the due date of original return, whether builders file original return or revised return.
However, the interest is not at present recoverable. This is as per the Circular bearing No. 12T of 2014 dated 17-4-2014. In point 3(22), it is explained as under;
“(22) The applicability of interest on the tax liability determined now in accordance with new rules.
Ans: Interest is applicable as per provisions of law. However, the stay to coercive recovery of interest granted by Division Bench of Supreme Court in the SLP No. 17709 of 2012 continues till it is finally disposed by Supreme Court.”
Interest u/s. 30(3) is about differential dues, which get attracted from 1st day following the concerned period of assessment.
Thus, this interest is also mandatory and no relief is given by any statutory provision.
However, like above, this interest is also not recoverable due to above circular.
2. Branch transfer vis-à-vis issue of ‘C’ form by branch
Whether ‘C’ form can be issued by Branch, where ‘F’ form is not produced and claim of stock transfer is disallowed?
Reply: The issue is in light of section 6A of the CST Act. The said section is as under:
“S. 6A. Burden of proof, etc., in case of transfer of goods claimed otherwise than by way of sale.
(1) Where any dealer claims that he is not liable to pay tax under this Act, in respect of any goods, on the ground that the movement of such goods from one State to another was occasioned by reason of transfer of such goods by him to any other place of his business or to his agent or principal, as the case may be and not by reason of sale, the burden of proving that the movement of those goods was so occasioned shall be on that dealer and for this purpose he may furnish to the assessing authority, within the prescribed time or within such further time as that authority may, for sufficient cause, permit, a declaration, duly filled and signed by the principal officer of the other place of business, or his agent or principal, as the case may be, containing the prescribed particulars in the prescribed form obtained from the prescribed authority, along with the evidence of dispatch of such goods and if the dealer fails to furnish such declaration, then, the movement of such goods shall be deemed for all purposes of this Act to have been occasioned as a result of sale. …”
Thus, section 6A provides that if F form not available it will be deemed to be “sale for all purposes of CST Act”. Once the transfer is considered as a sale, the tax is attracted under CST Act and it will be levied at full rate. Therefore, transferee branch can issue ‘C’ form to reduce impact of tax on such deemed interstate sale. When the tax is to be levied even though the transfer is between two branches of same entity considering the same as sale then certainly there cannot be any objection about C form also.
It may also be noted that if the branch transfer is considered to be sale under CST Act i.e. deemed sale for failure to bring F form, then under MVAT Act, reduction of set off under Rule 53(3) for branch transfer should not apply.