6.9k comp dealers in soup over MVAT rates
Shishir Arya | TNN | Mar 20, 2019, 04:25 ISTNagpur: An advance ruling on rate of erstwhile Maharashtra Value Added Tax (MVAT) applicable on laptop bags, adaptors and tablets has led to opening of previous assessment files of over 6,900 computer dealers across the state. They are facing action for charging the same concessional rate applicable for computers and laptops also on the accessories like bags and adaptors as well as tablets.
Under MVAT rules, tablet is considered as a separate electronic device than a computer.
Before goods and services tax (GST) came in, the state had its own indirect levy on trading of commodities in the form of MVAT. The advance ruling was issued on January, 2017, and GST was introduced in July, 2017. However, the order on opening of the cases was issued on February, 2019. Traders have raised questions on delay in initiating the action.
An advance ruling is an official clarification sought by a taxpayer on doubt over any tax-related issue. A Pune-based company Data Care Corporation had moved the MVAT advance ruling authority seeking its view on tax rate applicable on accessories like laptop bags and adaptors. The plea also sought clarification on the rate for tablets, an electronic device, also sold by computer dealers. Laptops and computers attracted a concessional rate of 5.5% to 6% under the MVAT regime. A clarification was sought whether other items sold along with computers had the same rate.
The ruling said items like bags, adaptors and tablets were not found in the entries of schedule A, B, C or D of MVAT rates. This means that the items are covered in the residuary entry of the MVAT Act, 2002, on which a rate of 12.5% is applicable.
On the basis of this ruling, the office of commissioner of sales tax in Maharashtra has issued an order on March 14 for a comprehensive assessments of the dealers. The list of the dealers has been attached in the order and the total number crosses 6,900.
The commissioner’s order says an exercise was carried out to find out the dealers who had paid a lesser tax than the prescribed rate of 12.5%. The drive revealed that 2,290 dealers paid tax at a lower rate in 2013-14, it was 2,331 dealers in 2014-15 and 2,293 in 2016-17. This comes to 6,914 in all. Now, all the cases will be reopened. The list includes over 150 dealers in Vidarbha. These include 122 in Nagpur and rest in Amravati. TOI has a copy of the order.
Commenting on the issue, chartered accountant Pritam Mahure said advance ruling provides a mechanism to seek clarification on key issues and saves litigations in the long run. The ruling will certainly lead additional demand of MVAT. However, it must be noted that according to principles of classification, there is enough contention that MVAT will apply on these products at a concessional rate. The dealers facing action can also move the court.
(in a nutshell)
Under MVAT, laptops attracted a concessional rate of 5.5%
Some dealers also charged same rate on accessories like bags and adaptors
An advance ruling said the items attract a tax of 12.5.%
The ruling said tablet also attracted a 12.5% tax
Dealers who charged a lower rate on tablets also facing action
Under MVAT rules, tablet is considered as a separate electronic device than a computer.
Before goods and services tax (GST) came in, the state had its own indirect levy on trading of commodities in the form of MVAT. The advance ruling was issued on January, 2017, and GST was introduced in July, 2017. However, the order on opening of the cases was issued on February, 2019. Traders have raised questions on delay in initiating the action.
An advance ruling is an official clarification sought by a taxpayer on doubt over any tax-related issue. A Pune-based company Data Care Corporation had moved the MVAT advance ruling authority seeking its view on tax rate applicable on accessories like laptop bags and adaptors. The plea also sought clarification on the rate for tablets, an electronic device, also sold by computer dealers. Laptops and computers attracted a concessional rate of 5.5% to 6% under the MVAT regime. A clarification was sought whether other items sold along with computers had the same rate.
The ruling said items like bags, adaptors and tablets were not found in the entries of schedule A, B, C or D of MVAT rates. This means that the items are covered in the residuary entry of the MVAT Act, 2002, on which a rate of 12.5% is applicable.
On the basis of this ruling, the office of commissioner of sales tax in Maharashtra has issued an order on March 14 for a comprehensive assessments of the dealers. The list of the dealers has been attached in the order and the total number crosses 6,900.
The commissioner’s order says an exercise was carried out to find out the dealers who had paid a lesser tax than the prescribed rate of 12.5%. The drive revealed that 2,290 dealers paid tax at a lower rate in 2013-14, it was 2,331 dealers in 2014-15 and 2,293 in 2016-17. This comes to 6,914 in all. Now, all the cases will be reopened. The list includes over 150 dealers in Vidarbha. These include 122 in Nagpur and rest in Amravati. TOI has a copy of the order.
Commenting on the issue, chartered accountant Pritam Mahure said advance ruling provides a mechanism to seek clarification on key issues and saves litigations in the long run. The ruling will certainly lead additional demand of MVAT. However, it must be noted that according to principles of classification, there is enough contention that MVAT will apply on these products at a concessional rate. The dealers facing action can also move the court.
(in a nutshell)
Under MVAT, laptops attracted a concessional rate of 5.5%
Some dealers also charged same rate on accessories like bags and adaptors
An advance ruling said the items attract a tax of 12.5.%
The ruling said tablet also attracted a 12.5% tax
Dealers who charged a lower rate on tablets also facing action
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