retention and disallowance of set-off under mvat-ca.neeraj...
TRANSCRIPT
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Retention and Disallowance of Set-Off under MVAT(Indirect Tax Refresher Course)
CA NEERAJ MENON - PARTNER
Mumbai Pune New Delhi Aurangabad Hyderabad Gurgaon
www.bdo.in
Pune OfficeLevel 3, Riverside Business Bay,
Wellesly Road, Near RTO,
Pune 411001,
INDIA
MZSK & ASSOCIATES
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Topics
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General Rules of MVAT
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General Rules of MVAT
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General Rules of MVAT
General Rule:
Set Off is available on all purchases (Trading, Expenses & Capital Assets) made from a
dealer registered under MVAT Act who issues TAX INVOICE in a prescribed format showing
VAT separately.
However, there are few exceptions to this General Rule:
Rule 52A: Reduction of Set Off
Rule 53: Reduction of Set Off
Rule 54: Non-Admissibility of Set Off
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Practical Issues: Rule 52 A
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Practical Issues: Rule 52 A
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Mega Unit:
12
WITHIN MAHARASHTRA
Scenario 1: Below is a pictorial presentation of the case under consideration:
Sales are effected by a
Customers
sells the goods
within
Maharashtra.
MEGA UNIT
CUSTOMER
3OUTSIDE MAHARASHTRA
Sales are effected by a
Mega unit located in
Maharashtra to its
customers situated in
Maharashtra.
Maharashtra.
Customer sells
the goods
outside
Maharashtra
In this scenario, both the Mega Unit as well as the Customers used to claim setoff of tax paid on purchases.
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Rule 52 A:
After insertion of this Rule (w.e.f 17 March 2011), a dealer purchasing goods from Mega
Unit holding valid Identification Certificate under the Act shall claim the input taxcredit towards the goods purchased from Mega unit:
Sr. No. Particulars Input tax CreditSr. No. Particulars Input tax Credit
1 Goods sold outside
Maharashtra
Only to the extent of Taxes paid / payable
under CST Act.
2 Goods sold within
Maharashtra
The taxes paid on the purchases of said goods
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Mega Unit: Approval Procedure
Actual Manufacturer applies for
Mega Unit Project.
Now in the year 2014, the applicant
has met with criteria, so set, and
then applies for the Eligibility 2015
20092012
2014
Actual
production
got started
Mega Unit Project.
At the same time promises to
fulfill the criteria, as required
under Packaged Scheme of
Incentives
then applies for the Eligibility
Certificate and gets Identification
Certificate with effect from 2012 i.e. the year of production.
2015
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Practical Issue: Mega Unit:
Scenario 1:
How does the dealers claim setoff of goods purchased from Mega Unit for the period
commencing 2012 considering provisions of rule 52A of Maharashtra Value Added Rules,
2005?2005?
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Practical Issues: Rule 53(6)
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Practical Issues: Rule 53(6)
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Rule 53 (6): Claim of setoff in case of Hotels
In case of dealers, whose total receipts on account of sale are less than 50% of total gross
receipts then set off is restricted to corresponding purchases, which are sold within 6
months from the date of purchase.
In case of hotels and clubs not being covered under composition scheme as notified by State
Government under Section 42 vide notification No. VAT-1505/CR/Taxation-1, datedGovernment under Section 42 vide notification No. VAT-1505/CR/Taxation-1, dated
1/06/2005, in addition to set off on goods sold above, the set off will be available on capital
assets and consumables pertaining to kitchen and service of foods and drinks.
What happens in a case of a Hotel hit by provisions of Rule 53(6) and opting to pay by way of
Composition Scheme?
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Practical Issues: Rule 54 (g) & (h)
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Practical Issues: Rule 54 (g) & (h)
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Rule 54 (g) & (h):
Rule 54(g) prohibits set off pertaining to purchases effected by Employer by way of Works
Contract resulting in immovable property other than Plant & Machinery.
Rule 54(h) states that set-off relating to purchases of any goods effected by a dealer used in
erection of immoveable property other than plant machinery shall be inadmissible.
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Practical Issues: Rule 53(3)
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Practical Issues: Rule 53(3)
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Rule 53(3):
Rule 53(3) provides for reduction of set-off by 4% in case of taxable goods sent to any other
State in India as branch transfer/consignment transfer
For the purpose of calculating purchase price under the corresponding Rule 53 (3), method has
been prescribed as the ratio of : Value of good dispatched incl Excise / Sale price of other
goods
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