Amnesty scheme under MVAT and its lesser known benefits

A new amnesty scheme has been rolled out for dealers under the Maharashtra VAT Act, but businesses seeking amnesty need to move fast, as the application and payment period closes on 30 September 2016. This scheme will help dealers to recover disputed dues that were placed on hold by the appellate authority. In this article, you’ll learn about the rules for amnesty eligibility, as well as some lesser-known benefits of this amnesty scheme

Any seller who has filed an appeal under MVAT or under CST in Maharashtra can apply for amnesty scheme. Amnesty waiver benefits are available for all pending appeals for assessment periods up to 31 March 2012.

Amnesty is available if the dealer withdraws his or her appeal. In order to obtain the benefits of the amnesty program, a seller must take the following steps:

a. Apply to withdraw the appeal. This application is submitted to the appellate authority with whom the appeal is pending. Appeals can be withdrawn in full or in part.

b. Upon receipt of your withdrawal application, an order confirming your withdrawal is issued by the Appellate Authority.

c. Appropriate payment of taxes & interest (if any) must be remitted by the applicant.

d. After following the steps above, “Form I” has to be downloaded from MahaVat website > Downloads > Forms > Electronic Forms > Amnesty Form.

e. Form I, an application for amnesty, must be filled out and validated accordingly.

f. The following documents must be uploaded on MahaVat website, along with Form I:

- Original Withdrawal Order
- Copies of Paid challans.
- Copy of the Statutory Order against which a settlement is sought.
- Copy of Stay Order
- Self-Declaration of Applicant.

All the above documents must be uploaded and submitted electronically. Once documents have been submitted, you will receive a confirmation. Amnesty is not available for tax dues. Applicants requesting amnesty are required to pay the requisite amount, and the amount of undisputed arrears, on or before 30 September 2016.

The benefits of the amnesty scheme vary depending on the assessment period. Those with an assessment period prior to 1 April 2005 will see a slightly higher level of benefit. The dealer obligation for this assessment period is 100% of disputed tax and the benefit is waiver of 100% interest and penalty.

For assessment period between 1 April 2005 till 31 March 2012, the dealer obligation is 100% of disputed tax plus 25% of disputed interest and the benefit is waiver of 75%interest and 100% penalty.

• If a dealer has not filed MVAT Audit Reports for periods up to 31 March 2012, the 100 percent penalty will be waived and the MVAT Audit Report will be considered.

•Late appeals may now be accepted by the authority. The appellate authority will decide the issue of delayed filing as per the provisions of law. If the appeal is accepted, the applicant can avail themselves of the benefits of the amnesty scheme.

Partial withdrawal means a dealer can withdraw only some of the issues raised in the appeal, allowing him or her to pursue the appeal for the remaining issues. Partial withdrawal can help the dealer save the amount of interest that would have been payable if the appeal was not partially withdrawn for such pending invoices.

Every invoice for sale against C Form, H Form, F Form, or I Form is considered to be a separate transaction. With such a broad definition of a pending issue, it is possible to withdraw appeal and save on interest even for part of the C Form transactions for which a CST Appeal is filed.

If it is not possible to present certain C Forms to appeal authorities, it’s better to partially withdraw the appeal against pending forms for such invoices, allowing a dealer to obtain relief from differential tax interest charges on such invoices.

• Appeals under CST Act related with different types of declaration forms

• Mismatch of set-off (passed on by supplier and claimed by the buyer) due to any reason; considered separately for each invoice as a pending issue

• Errors in computation of retention of set-off, denial of set-off, etc.

• Wrong tax rates applied, a particular sales transaction is mislabeled as taxable, tax-free, exempted, etc.

The amnesty scheme, which allows for both full and partial amnesty, offers great potential benefits to sellers, especially where the dealer is uncertain about the outcome of the appeals pending with the department. Also, no interest & penalty is to be paid for periods up to 2004-05, which is a big relief for applicants, as the amount of interest and penalty fees are equal to the taxes due.

To learn more about how Avalara can help you with tax automation, contact us through https://www.avalara.com/contact-us/

This article is contributed by CA Mukund Abhyankar (mbabhyankar@gmail.com)