28 August 2009

Registration under Sales tax Law in Maharashtra


Sales-tax law in Maharashtra is governed by Maharashtra Value Added Tax Act, 2002 (MVAT Act). Every person who is required to pay tax under MVAT Act, is required to get himself registered under provisions of MVAT Act and obtain the certificate of Registration. Such persons cannot carry on business without obtaining registration; they are mandatorily  required to obtain registration certificate or the will not be able to collect sales-tax on sales and have to pay the sales-tax from their pocket, They will not be entitled to set-off/vat input credit. They may have to pay interest and penalty and will also be disadvantaged in other matters.  Other dealers may want to voluntarily apply for registration, as some benefits are available to registered dealer. Such unregistered dealers will be able to take advantage of these benefit if they obtain registration voluntarily.
Mandatory Registration
MVAT Act requires that every dealer whose turnover crosses a specified limit is liable to pay tax on sales made, as per provisions of MVAT Act.
For purpose of calculating the limits of turnover, the dealer have been classified into importers and and other dealers.
The importer means a dealer who brings any goods from outside the state of Maharashtra into the state; or to whom goods are dispatched from any state outside Maharashtra. The importer is liable to pay sales-tax when his turnover of sales form 1st April of the year first crosses Rs.1,00,000/- and value of taxable goods sold or purchased by him during the year is not less then Rs.10,000/-.
In case of other dealer,the turnover of his sales from 1st April of the year first crosses Rs.5,00,000/- and value of taxable goods sold or purchased by him during the year is not less than Rs.10,000/-
The limit should be calculated from 1st April of the year. If the limit is not crossed by 31st March  of that financial year, then the dealer is to liable to pay tax for that year and counting of his liability will have to be restarted again form next 1st April.
For calculating the limit of Turnover of sales for determining the liability the following sales will be include;

  1. taxable goods as well as tax-free goods,
  2. sales of goods made by the dealers as agent, on behalf of his principle,
  3. in case of auctioneer, the price of goods auctioned by him, even though the purchaser pays price to the principal and
  4. sales effected by an agent in the state on behalf of non-resident dealer.
  5. Limit shall be calculated only in relation to turnover in state of Maharashtra only. Sales-purchase outside the state will not be included in turnover of calculating the limits.

Mandatory registration is/can also required to be obtained by successors of registered dealer if they want continue with business of registered dealer. 1.Successor of registered dealer means legal representative of the deceased registered dealer who wish to continue the business of the registered dealer, 2. Successor also includes any person who is assigned or to whom whole of part of the business is transferred by registered dealer.  Successor are not required to cross the specified limit applicable to dealers starting new business. The advantage to the successor is that he gets benefit of preceding registered dealers, such as set-off/vat-credit on goods held on stock, he is entitled to benefits of exemption certificate issued to preceding registered dealers, etc.
Voluntary Registration
Any person can apply for voluntary registration by depositing Rs.25,000/- towards taxes in advance This amount will then be adjusted against taxes payable by him during the year. Any amount of advance not adjusted during the year will be refunded back to the Dealer.
Time limit for making application for registration
Person requiring to be registered mandatorily must apply within 30 days from the day on which his turnover crosses the specified limit. The successor or assignee of the business must apply within 60 days of the date of preceding registered dealer or within 60 days of transfer of business.  An applicant has and can to collect taxes from purchaser as soon has he crosses the specified limit. He need not to wait for making application and allotment of registration number. After the registration number, also called TIN (Taxpayers Identification Number) is allotted he has to file periodic return of sale and deposit the amount of tax collected/payable along with the Challan.
Consequence of delay in making application for registration
If the application is not made in time, the dealer will be treated as unregistered dealer up-to the date of application. His registration will be valid from date application.He will be permitted to collect tax only from the date on which he has applied for registration. Tax collected during the unregistered period will be forfeited. He will also be liable for interest and penalty. Also vat credit available during the period will be denied.
Fees payable along with application for registration
Application for Mandatory Registration my be accompanied with challan of payment of fees of Rs.500/-. For voluntary application the application has to pay fees of Rs.5,000/-. If application for registration under Central Sales Tax is made along with MVAT registration, the fees of Rs.25/- is to be paid for CST Application. All fees must be paid before making application.
Documents/Details required for Registration under MVAT Act, to be accompanied with Application Form.

  1. Two latest passport size photographs of the applicant
  2. Demand Draft for payment of Registration Fees and deposit of advance sales-tax in case of voluntary registration. In Mumbai city Demand Draft should be draw in favour of "Bank of Maharashtra A/c. MVAT" payable at Mumbai. In other location demand draft shall be in name of "State Bank of India A/c. MVAT" and payable at respective location. The demand draft for registration shall be for Rs.500/- in case of Mandatory registration and for Rs.5,000/- in case of Voluntary Registration. Deposit for voluntary registration is Rs.25,000/-
  3. Proof of PAN i.e Copy of Income Tax Assessment Order having PAN mentioned on it or copy of PAN card. In case of Proprietary business, PAN of Proprietor is required ; in case of partnership business,: PAN of partnership firm and of all partners is required,  and in case of registered company PAN of the company; in case of HUF : PAN of HUF and Karta etc.
  4. Application must be in business name even for proprietary business
  5. Details and proof of bank accounts, like leaf of cancelled cheque as proof of Bank Account.
  6. Proof of constitution of business, like Copy of partnership deed in case of partnership firm, Copy of Memorandum of Association and Articles of Association in case of company and in case of other persons necessary document of formation/constitution.
  7. Proof of permanent residential address : at-least any two of the following 1. Copy of ration card,ii. Copy of passport, iii. Copy of driving licence, iv. Copy of election photo identity card, v. Copy of property card or latest receipt of property tax of Municipal Corporation / Council / Gram-panchayat as the case may be, vi. Copy of latest paid electricity bill in the name of the applicant. In case of partnership firm, proof of residence has to be provided for all partners shall be required and  in case of body corporate, proof of residence of applicant shall be only required.
  8. Proof of place of business : i) In case of ownership premises, Proof of ownership of premises, viz. copy of property card or ownership deed or agreement with the builder or any other relevant documents. ii) In case of tenant / sub-tenant : Proof of tenancy / sub tenancy like copy of tenancy agreement or rent receipt or leave and licence or consent letter, etc.
  9. Statement of Turnover in case of mandatory registration,
  10. Proof of up-to-date payment in case application is made for succession of business, change in constitution or purchase of business.
  11. Books of Accounts, Sales-Purchase bills for verification in case of mandatoriy registration,
  12. Application for Enrolment with Profession Tax Department,
  13. Introduction form other MVAT registered dealer who is holding valid registration certificate continuously for five year, or by a advocate, chartered accountant or cost accountant.

Procedure for Registration
Registration for MVAT is to completed on the day the application for registration is made. Application for registration must be submitted to Counter Clerk at Registration office. The Counter Clerk will verify that the application form is properly filled and all necessary documents are attached. Before accepting the application, if he finds any defect he will ask the applicant to rectify the defects. After numbering the application received, he shall make necessary entries in his records and forward the application to Sale-tax Officer (STO) of Registration Branch. At the STO's office the Sale-tax Inspector  (STI) will one again check the application for any defects. He shall make necessary data entry in MAHAVIKAS system. After making data entry the STI shall verify the records and prepare report and forward to STO. The STO may confirm the report of STI and ask the applicant to clear the defects. He shall also ask the applicant to sign the photo of the applicant before him. All the defects are to be cleared on the day of application. Applications where defects are not cleared on the day of application are liable to be rejected.
When the application is accepted the applicant is allotted TIN (Taxpayers Identification Number) immediately and the registration certificate is send in due course. The applicant has to mention this TIN on all the bills and invoices issued by him.
If the application is rejected the applicant has right to appeal before the higher authority.
After the applicant is allotted TIN, an officer from Advisory Department will visit the applicant at his officer and explain the provision of MVAT law to the dealer. The dealer can also ask the officer any questions regarding related to MVAT law. STO shall give explanation relating to questions put forward by the applicant.

eApplication after 1-10-2009

Commissioner of Sales Tax has issued notification dated 26-8-2009, whereby all application for Registration in Form 101 shall be made online at mahavat website. Online application have to be made after 1-10-2009. Paper application will not be accepted after this date.

On making eApplication receipt will be generated give the date on which the applicant has to appear before designated officer and submit details required for registration. If the applicant fails to attend on that date he will have to appear on Friday following the date allotted on e-receipt. The designation officer and address of the officer will be given on eApplication receipt. After allotment of Registration on acceptance of application, officer from Advisory Cell will follow-up with dealer with advisory visit

About Advisory Visit under MVAT

Application Form