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The Maharashtra Sales Tax Amnesty Scheme-2004

Subject : Indirect Taxes
Month-Year : Aug 2004
Author/s : Janak Vaghani
Chartered Accountant
Topic : The Maharashtra Sales Tax Amnesty Scheme-2004
Article Details :

1. Introduction :

The Government of Maharashtra, with a view to reduce the arrears of tax, interest and penalty, has announced a scheme called ‘Amnesty Scheme-2004’. The scheme is announced by the Maharashtra Government Resolution No. AMD-1003/15/Adm-3, dated the 1st June 2004. The Commissioner of Sales Tax has issued Trade Circular No. 10-T of 2004 dated 22nd June 2004, which explains the details of the scheme. In this article, important aspects of it are discussed in brief.

2. Nature of amnesty :

The scheme grants amnesty in respect of tax, interest and penalty payable under various sales-tax laws administered by Sales Tax Department, Maharashtra State. There is no disclosure scheme. The amnesty is applicable to any amount of tax, interest or penalty payable as on 1-7-2004, whether assessed or un-assessed under the various sales-tax laws.

3. Applicable Acts :

The scheme is applicable for any amount payable under the following Acts :

(i) The Bombay Sales Tax Act, 1959;

(ii) The Central Sales Tax Act, 1956;

(iii) The Maharashtra Tax on Entry of Motor Vehicles into Local Areas Act, 1987;

(iv) The Maharashtra Tax on Luxuries Act, 1987;

(v) The Maharashtra Purchase Tax on Sugarcane Act, 1962;

(vi) The Bombay Sales of Motor Spirit Taxation Act, 1958;

(vii) The Maharashtra Sales Tax on the Transfer of Property in goods involved in the execution of Works Contract (Re-enacted) Act, 1989, popularly known as Works Contract Act;

(viii) The Maharashtra Sales Tax on the Transfer of Right to use any goods for any Purpose Act, 1985, popularly known as Lease Act;

(ix) The Maharashtra Tax on Entry of Goods into Local Areas Act, 2002.

The scheme is not applicable to any amount payable under The Maharashtra State Tax on Professions, Trades, Callings and Employments Act, 1975.

4. Duration of the scheme :

The duration of the scheme is of four months consisting of two phases as under :

(i) First phase :

From 1-7-2004 to 31-8-2004.

(ii) Second phase :

From 1-9-2004 to 31-10-2004.

The division of the scheme in two phases is for the purposes of determination of amount payable under the scheme. When application is made in the first phase, then the dealer has to pay lesser amount than in the second phase. So, dealers applying and making the payment in the first phase get more benefit. However, when the payment is made in two phases, then the benefit of the scheme is available as per the second phase only.

5. Eligible persons :

The benefit of the scheme is available to the following persons :

(i) Registered dealers.

(ii) Unregistered dealers, whether registered before the scheme or yet to be registered. However, the dealer who is not registered till the date, will have to apply for registration as a prerequisite for amnesty. This condition for registration along with amnesty application is not specified in the original GR, but the Commissioner has specified this by issue of Trade Circular No. 11-T of 2004.

(iii) Deferral units covered under the Package Scheme of Incentives.

(iv) Exempted units under the Package Scheme of Incentives, to the extent they are required to pay tax.

6. Amnesty benefits :

Amnesty benefits are available in respect of the following amount payable as on 1-7-2004 under the specified Acts :

(i) waiver of disputed tax.

(ii) waiver of interest and penalty for assessed as well as un-assessed periods.

(iii) waiver of post-assessment interest or penalty, whether levied or not levied. U/s.36(3)(a) of the Bombay Sales Tax Act, 1959, no interest was payable on late payment of any tax up to 21-4-1987, but penalty was payable under that Section. From 21-4-1987, instead of penalty, interest is payable on late payment of tax, whether as per return or any order. As per note (1) in Annexure-I of GR, it is provided that any amount of post-assessment penalty payable up to 21-4-1987 will be exempt fully upon dealer making an application for amnesty.

(iv) waiver of penalty other than post-assessment payable in respect of which notice is issued separately for levy of it, in respect of any assessment order, etc. passed before 31st May 2004. This is applicable mainly under the CST Act, 1956. Due to the Supreme Court ruling in the case of India Carbon, no interest was payable under the CST Act, 1956. With a view to compensate for levy of interest, the Bombay Sales Tax Act, 1959 was amended to levy penalty for late payment of tax as well as differential assessment dues on the line of provisions of interest payable u/s.36(3) of the Act. As a result of which in many cases, the sales-tax Department has initiated penalty proceedings to levy penalty under the CST Act, 1956 in such cases. Finance Act, 2001 has amended S. 9 of the CST Act, 1956 to provide for levy of interest under the Act from retrospective effect. After this amendment, the provisions for levy of such penalty under the BST Act, 1959 is deleted. So, where any such penalty is proposed to be levied in any assessment order or in appeal, any action to levy it is deferred, then it is provided for exemption when dealer makes application for amnesty.

(v) waiver of penalty payable u/s.36(4A) for un-assessed periods. Where a dealer gets the benefit of interest u/s.36(3)(a) under the amnesty scheme, then the said penalty u/s.36(4A) will not be levied in future at the time of assessment.

(vi) In case of exempted unit, no benefits of Amnesty Scheme are available. However, if a part of the year is under exemption, and balance part of the year is not under exemption, then the dealer can avail the benefit of the scheme in respect of the part of the year not covered under exemption. At the same time, such Unit is allowed to get benefits of the scheme, in respect of the period covered by exemption, for any additional demand raised due to non-fulfilment of the conditions, like manufacture of scrap sales, as also for any demand raised due to proportionate levy of payable tax, etc. where the sales are not exempted in terms of the relevant scheme.

The Commissioner has also clarified that the C.Q.B. calculations of an exempted unit will not be affected, even if the exempted unit avails of the amnesty benefit as above.

(vii) In case of deferral units, benefit of amnesty is available in respect of any demand of other tax (which is not deferred as per the Package Scheme) and interest, penalty and post-assessment interest consequential thereto. However, such a Unit will have to make payment as per the net present value as per table prescribed in Rule 31D of the B.S.T. Rules, 1959 in respect of the amounts deferred. Even though payments are made on NPV basis, the amount of tax to be deferred shall be debited as per the deferral scheme. When a part of the year is under deferral and balance part of the year is not under deferral, then amount payable under the scheme will have to be calculated separately for both the parts of the relevant year. It may be noted that for a unit under deferral (whether for a part of the year or for the full year), availment of amnesty is subject to the unit making NPV payment of the amount deferred in respect of the period under deferral.

(viii) No amnesty benefit is available in respect of any amount of un-disputed tax payable. Further, no amnesty in tax is available for un-assessed period.

7. Undisputed amount of the tax :

The term ‘undisputed amount of tax’ is given special definition in the scheme, which is as under :

(i) taxes collected separately; or

(ii) deduction allowed by the departmental authorities in statutory order for the taxes collected separately; or

(iii) taxes shown payable in the return; or

(iv) amount claimed by the dealer as deduction under Rule 46A(b) (ii) of the B.S.T. Rules, 1959; and for the purposes of Acts other than the B.S.T. Act, the amount of tax claimed by the assessee as a statutory deduction from sale price is also to be treated as undisputed tax;

(v) amount forfeited in the order, and

(vi) Additional tax/surcharge, turnover tax in respect of (a), (b), (c) or (d) whether collected separately or not; and whether shown payable or not in the return and whether or not the period is assessed. Even if an appeal is filed against such levy of additional tax or surcharge or turnover tax, then also the same will be treated as undisputed tax.

8. Disputed amount of tax :

As per the scheme, the term ‘disputed amount of tax’ means ‘any amount of tax other than ‘undisputed amount of tax’. Under the scheme, benefit is available only in respect of disputed amount of tax for assessed period only. This term is given artificial meaning under the scheme. Accordingly, any amount of tax payable, which is not undisputed as defined in the scheme, would be the disputed amount of tax.

Under the BST Act, 1959, extra tax becomes payable due to various reasons. It is not necessary to create any dispute by filing an appeal against the assessment order or any application for rectification of mistake, etc. For the purpose of the scheme, one has to calculate undisputed tax as specified in the scheme. The balance tax payable will be the disputed tax eligible for amnesty. As per the scheme, in the following cases balance tax payable will be treated as disputed amount of tax :

(i) Disallowance of set-off for any reason. This is clarified in the Trade Circular issued by the Commissioner of Sales Tax at Para No. 24(v).

(ii) Amount of purchase tax payable to the extent not shown in return.

(iii) Disallowance of claim of exemption or concessional rate of tax for want of production of forms like Form 14, BC, Form C, etc.

(iv) Disallowance of resale claim.

(v) Disallowance of claim of goods return.

(vi) Dispute relating to the rate of tax payable.

(vii) Levy of tax on suppressed or concealed turnover of sales or purchases. Even order passed in Enforcement proceedings is eligible for amnesty as disputed tax.

9. Dues in respect of which amnesty is applicable :

Under the scheme, the following amount of dues payable as on 1-7-2004 are eligible for benefit of amnesty scheme :

(i) Dues as per any statutory orders passed on or before 31st May 2004.

(ii) Interest payable on late payment of return dues for un-assessed period, whether or not returns have been filed, which have become due on or before 31st May 2004.

Under the BST Act, 1959, a registered dealer is required to file monthly or quarterly returns depending upon its tax liability. The due date for filing of monthly or quarterly return is 25th of the next month immediately following the month or quarter, as the case may be. So, a dealer required to file monthly returns could avail benefit of amnesty for the period up to April 2004. In any other case, the benefit of amnesty can be availed for the period up to 31-3-2004.

(iii) Assessment, rectification, reassessment, revision orders passed on or after 1st June 2004 to 31st October 2004.

(iv) In case of appeal orders passed after 31st May 2004 and before the end of the scheme :

(a) if demand in appeal is reduced, the benefits are available as per the original statutory order against which appeal order is passed.

(b) in case the demand in appeal is increased, then benefits are available : (i) in respect of additional demand raised in appeal; excluding relief granted in appeal; and (ii) also in respect of original statutory order against which the appeal order has been passed.

In other words, for the purpose of amnesty scheme, in case of any order passed in appeal, during the period of amnesty scheme, any relief granted in appeal is to be ignored, but any additional demand raised in such order will be considered.

10. Amount payable under the scheme :

The benefit of amnesty is available only upon payment of amount as specified in the scheme, which is the aggregate of the following in respect of the relevant assessment year :

(a) undisputed amount of tax in full and

(b) prescribed percentage of amount of disputed tax and also prescribed percentage of interest, penalty and post-assessment interest/post-assessment penalty levied or not, applicable to particular phase of the scheme as per Annexure-I.

11. Appropriation of the payments made prior to 1st July 2004 :

With a view to determine any outstanding dues as on 1-7-2004, in respect of a composite order which is the subject matter of the scheme, any payment made prior to 1-7-2004, is to be appropriated, as specified in the scheme, in the following order :

(a) Undisputed amount of tax as per the scheme.

(b) Disputed amount of tax as per the scheme.

(c) Interest and penalties.

12. Treatment of refund :

Where any dealer is entitled to any refund, as per refund order issued by the Department, then it is provided in the scheme for adjustment of such refund towards any payment to be made during the period of the scheme. This adjustment of refund is to be made in respect of any refund due to the dealer under any of the Acts covered under the scheme towards the dues payable under any other Acts. If any refund arises out of any order passed, whether before or after 1st July 2004, the same will be first adjusted against arrears in the same manners as provided in para 10 and the balance amount of arrears if any, will alone be considered eligible for amnesty.

13. Unconditional withdrawal of appeal, etc. :

In order to avail amnesty benefit, it is necessary to withdraw any appeal, or reference or writ petition filed by the applicant. Unconditional withdrawal of pending appeal or reference or writ petition is a necessary condition precedent for availing concession under the Amnesty Scheme, in respect of the period of assessment for which amnesty is sought. If an appeal or reference or writ petition is filed subsequently, then amnesty benefit granted in respect of that period will be withdrawn.

However, when in respect of any order, the Department raises any audit objections, and an appeal is preferred against that order, then the appeal will not be allowed to be withdrawn. The appellate authorities are instructed to dispose of such appeals expeditiously.

14. Denial of Amnesty in case of partial payments :

Benefit of the amnesty for any assessment period is subject to full payment of amount payable, as per the scheme, in respect of that assessment period, during the amnesty period. Any short payment will result in denial of benefits for the relevant year. The dealer is not entitled for any benefits under the Amnesty Scheme in case of partial payments made during the period of the scheme.

15. Procedure for availing the benefits under the scheme :

In order to avail the benefit of the scheme, the dealer is required to comply with the following procedure :

(i) Payments to be made during the period of the scheme.

(ii) Application to be made in prescribed form in Trade Circular to the assessing authority of the dealer. Separate application is to be made for each period of assessment as well as for each Act. When the dealer is not aware of his assessing officer, then he will have to file an application to the P.A. to the Deputy Commissioner of Sales Tax (Adm.) of concerned Division. In case of unregistered dealer, the same is to be made to the P.A. of the Deputy Commissioner of Sales Tax (Adm.) of the concerned Division.

In the case of dealers who want to get the benefit of amnesty scheme under Entry Tax on Motor Vehicles Act, the application is to be made to The Deputy Commissioner of Sales Tax (Adm.).

(iii) The dealer is required to submit photocopies of chalans in support of all payments made during the amnesty scheme as well as prior to it.

(iv) The dealer is required to submit acknowledged photocopy of application for unconditional withdrawal of appeal or reference or writ petition made by the dealer to the concerned authority, along with the amnesty application form.

(v) In the cases of benefits to be availed for un-assessed periods, dealer should submit photocopies of the returns or revised returns filed during the period of amnesty.

(vi) In case of dealers who were never registered during the relevant period under this Amnesty Scheme, are required to file the proof of the application for registration under the relevant Act, along with the application form for amnesty and to file the returns for unregistered as well as registered periods.

(vii) Upon receipt of the application for amnesty, the assessing officer will scrutinise it. If there are any defects, then the officer will communicate the same to the dealer within 15 days of receipt of the application and request him to make good such defects.

(viii) If the assessing officer finds that the application is correct and complete in all respects, then he will pass the amnesty order within 15 days of receipt of the amnesty application.

16. Procedure in respect of dispute :

If any dealer is not satisfied with the merits of the amnesty order passed in his case, he may approach the immediately superior administrative officer. However, the decision of the Commissioner of Sales Tax is final and no appeal lies against such order.

17. Withdrawal of benefit of Amnesty :

When the sales tax department finds that the amnesty given to any dealer is not as per the scheme, then the immediate higher administrative authority would pass the corrective orders withdrawing the benefit of amnesty. It may be noted that such corrective orders cannot be disputed at any legal forum and it will be binding on the dealer.

18. No refunds under amnesty scheme :

Under no circumstances a dealer is entitled for refund of amounts paid prior to the date of commencement of the Amnesty Scheme.

19. Option for amnesty :

The dealer is allowed to opt for amnesty for all or any period of assessment under any applicable Act. However, no option is available for partial benefit of amnesty for the particular period of assessment. The dealer has to avail amnesty for all demands by way of any tax, interest or penalty, pending for the particular period of assessment.

20. Quantum of payment or benefit :

Under the scheme, the dealer is required to make payment of tax, interest and penalty as per Annexure-I depending upon the date of payment and application made in the first phase or the second phase. Annexure-I of the GR is given herewith for the benefit of the readers.

21. Conclusion :

In this article, an effort is made to explain the amnesty scheme on the basis of the Government Resolution issued in this respect and also on the basis of the Trade Circular issued by the Commissioner of Sales Tax in this respect. Before making any application, it is necessary to refer the Government Resolution and the Trade Circular issued by the Department.


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