DVAT Registration procedure Simplified-CS Kundan Mishra

Delhi Value Added Tax Act, 2004, (hereinafter called DVAT Act)  is a multi-stage tax on sale of goods, work contract, lease and hire purchase in Delhi.  Delhi Value Added Tax Act, 2004 replaced four statutes: Delhi Sales Tax Act, 1975, Delhi Sales Tax on Works Contract Act, 1999, Delhi Tax on Entry of Motor Vehicles into Local Areas Act, 1994 and Right to Use Goods Act, 2002.

DVAT Act was passed by the Legislative Assembly of the National Capital Territory of Delhi on the 22nd December 2004 and received the assent of the President of India on 15th February 2005

The Act has come into force with effect from 1st April 2005 vide Notification No.

F.101(318)/2005-Fin.(A/Cs)(i)/8581, dated 30th March 2005.

Rates of tax under DVAT Act

The DVAT Act prescribes the following rates of tax on different types of goods:

a)      1% Rate: Goods listed in the Second Schedule

b)      5% Rate: Goods listed in the Third Schedule and the printing works contracts.

c)      20% Rate: Goods listed in the Fourth Schedule.

d)     12.5% Rate: Goods involved in the execution of works contracts except printing works contract.

e)      12.5% Rate: Any goods not mentioned in the Second, Third and Fourth Schedules or in the First Schedule (exempted goods)

Type of Registration under Delhi Value Added Tax Act, 2004

1.    Mandatory registration

As per section 18 of DVAT Act,  every dealer is required to apply for registration under this Act if the dealer’s turnover in the current year exceeds twenty lakh rupees or the dealer is liable to pay tax, or is registered or required to be registered under Central Sales Tax Act, 1956.

2.    Voluntary registration

Any person who is not required to get registered, but intends from a particular date to undertake activities which would make him a dealer may apply for voluntary registration under DVAT Act.

A dealer who is required to apply for registration under section 18 shall make an application for registration to the Commissioner in Form DVAT-04 within a period of 30 days from the date of his becoming liable to pay tax under the Act.

Procedure for Registration:

1.      Dealer to intimate PAN and brief particulars including email, mobile phone etc., on line to begin with.

2.      PAN shall be verified from Income Tax data base maintained by NSDL. The process will be streamlined further and PAN verification would be done on real time basis shortly.

3.      On successful PAN verification, user ID and password would be communicated to the registrant on the same day.

4.      Dealer can file registration application under DVAT and/ or CST, as the case may be, and deposit fee of Rs. 1025 online.

5.      Scanned requisite documents are required to be uploaded with the application online.

6.      Registration number/TIN would be generated on submission of application.

Registration Certificate would be made available in the login of dealer on the same day. It would be a Provisional Registration till physical verification is made.

7.      The application(s) would be made available in the login of concerned ward. VATO

who will examine the application documents and get the physical verification done through ward VATI within 7 days.

8.      On satisfactory inspection and due verification of requisite documents, signed copy of the RC would be dispatched to the dealer by post.

9.      In case of adverse report, show cause notice in form DVAT-10 would be issued and disposed of.

10.  In the aforesaid process, Registration number/TIN would be issued within a

day to the dealer pending physical verification. Registration Certificate (RC) which

would be provisional would also be made available in the login of the dealer.

Documents required In case of Proprietorship firm :

1. Aadhar Card and pan card of Proprietor-Self Attested
2. Duly certified copy of registration certificate (if any)
3. Copy of proof of Address of Proprietor – Self Attested
4. 2 passport size photograph of Proprietor

5.      Bank Account Details of the firm (Cancelled Cheque)

6. Registered Office Address Proof

·         If Rented: Rent Agreement and utility bill likely electricity bill, telephone bill, etc & No Objection Certificate from land owner.

·         If Owned: Ownership proof. Receipt of Municipality tax paid.

7. Rubber Stamp.
8. Mail id and Mobile number of  firm.
9. List of main Items of Business
10. Description of top 5 items the firm want to deal
11. Copy of Purchase and Sales Bill (if transaction is done).
12. Details and proof of Number of additional places of business within or

outside the state

13. Expected turnover in coming year.

Documents required  n case of Partnership Firm

1.      PAN card of the Firm and the Partners

2.      Partnership Deed.

3.      Address Proof of Partners.(Voter ID, Passport, Driving License)

4.      Aadhar Card / UID application slip of Partners. ( Mandatory)

5.      Bank Account Details of the firm (Cancelled Cheque)

6.      Registered Office Address Proof

·         If Rented: Rent Agreement and utility bill likely electricity bill, telephone bill, etc & No Objection Certificate from land owner.

·         If Owned: Ownership proof. Receipt of Municipality tax paid.

7.      2 passport size photograph of all the partners.

8.      Rubber Stamp.

9.      Mail id and Mobile number.

10.  List of main Items of Business

11.  Description of top 5 items the firm want to deal

12.  Copy of Purchase and Sales Bill (if transaction is done).

13.  Details and proof of Number of additional places of business within or

outside the state.

14.  Expected turnover in coming year.

Documents required In case of Private Limited Company.:

1. Duly certified copy of registration certificate & Memorandum & Articles.
2. Copy of PAN card, Aadhar Card & address proof of authorized signatory –  Self Attested

Copy of  PAN card of Company

3. Board Resolution and Power of Attorney in favour of person signature the form (if other than Director)
4. 2 passport size photograph of Authorised Signatory

5.      Bank Account Details of the Company(Cancelled Cheque)

6. Registered Office Address Proof

·         If Rented: Rent Agreement and utility bill likely electricity bill, telephone bill, etc & No Objection Certificate from land owner.

·         If Owned: Ownership proof. Receipt of Municipality tax paid.

7. Two passport size photograph of all directors.
8. Copy of PAN Card and & One address proof of all directors.
9. List of Director’s / Share Holders
10. Mail id and Mobile number of Company.
11. List of main Items of Business
12. Description of top 5 items the firm want to deal
13. Copy of Purchase and Sales Bill (if transaction is done).
14. Details and proof of Number of additional places of business within or

outside the state

15. Expected turnover in coming year.

Source: DVAT Act and Rules.

Disclaimer:     Statements and opinions expressed in articles are those of the author’s personal views. While every care has been taken in the compilation of this information and every attempt made to present up-to-date and accurate information, we cannot guarantee that inaccuracies will not occur. Readers are advised to refer relevant provision of law before applying or accepting any of the point mentioned above. Author accepts no responsibility whatsoever and will not be liable for any losses, claims or damages which may arise because of the contents of this write up

The Author is an Associate Member of the Institute of Company Secretaries of India.

KUNDAN KUMAR MISHRA

Practicing Company Secretary

New Delhi

Mob: +91-9899208090

cskundanmishra@gmail.com.


Purchase from flipkart or Amazon via Studycafe special link and get Discounts on every product

Follow @studycafe1

Read more »

Simplifying Delhi Value Added Tax – Legal & Procedural Relaxations Expected

Simplifying Delhi Value Added Tax – Legal & Procedural Relaxations Expected

By CA Ankit Gulgulia (Jain)

ankitgulgulia@gmail.com

Delhi Value added tax simplification has been one of major agendas of all state governments. It has been largely felt and outlined that procedural relaxation is a must to ensure smooth trade in the city or outside. At the same time it is well understood that blanket relaxations would have the other side of the coin also and can lead to undesirable situation for the government including unethical revenue leakages.

Considering the upcoming Delhi budget, few of the relaxations on both legal and procedural ends can be as under:-

A) Procedural Changes

1) 2A-2B Mismatch Assessment

Mismatch assessments based on 2A-2B filed by purchasers and sellers have been a major obstacle for traders in Delhi. One needs to keep a check literally on the all vendors he deals with and even enquire on his tax filing status and tax paid by his vendor. The situation is clearly undesirable as even the bonafide purchasers are being made to suffer on non-compliances by selling dealers.

Even the law backs this undesirable situation as the input tax credit can be disallowed to purchasing dealer if the selling dealer has not paid tax and not filed his return correctly allocating buyer’s TIN in his returns.

A simple solution to this can be linking 2A-2B on invoice based mechanism. Once individual invoices can be generated and linked directly from dvat system this hassle can be neutralized effectively. Though making such infrastructure can be challenging.

2) T-2 Relaxation

Currently Form T-2 is required to be filed for all the goods entering in Delhi except in few cases including GTO being less than 1 Crore. It is noteworthy that recently even Haryana government abolished its similar transit form VAT D-3 in light of its cumbersomeness. T-2 can be either abolished and state tracking can be maintained at border level or the limits can be raised to say a GTO of 5 Crores or more.

3) Hard Copy filing of DVAT-56

Currently in Delhi, if you have filed a return without using digital signature then one must deposit the hard filed copy of dvat-56 within prescribed time to avoid the late fees. This hard filing can be eliminated to move to paperless concept on similar track of ACES (Service tax and Central Excise return filing).

4) WCT Certificates hard copy submission

In case of contractee WCT returns, normally the wct certificate issued to contractors are also seeked at the hard copy. This can be dispensed away.

5) Comprehensive DVAT System – Need of the day

It is crucial the dvat systems evolves into a system which is transparent and user friendly at the same time. Department has done commendable efforts to improve its systems. As a part of further evolving process, the system can be made to :-

• Generate TIN based linked invoices
• Automate Returns (subject to manual adjustments, if any) based on generated and punched invoices and credit notes
• Email Notifications for mismatches based on 2A-2B.
• Maintenance of all statutory registers on the portal itself. This would allow real time access to the information to both the dealer / officials, which in turn can reduce departmental interventions in routine course of dealer.

6) Registration

The registration processes have been simplified to a great extent by the department. Further, the process can be streamlined further on following aspects:-

• Randomization of inspection officials.
• Closure of RC Issuance or notice for cancellation within 48 Hours (for example)
• To ensure more smooth registration, the TIN shall be provided along with RC only. The time gap between TIN number issuance and RC issuances may result in several transactions in the intervening period which have its effects.

7) Amendment in Registration

This can be further simplified. Currently, the complete DP-1 / DVAT-07 has to be filed for amendment. As a process, the amendments can be identified in different categories viz, change in name, constitution, contact details, items etc. If only that amended portion is seeked and filed online, it can radically reduce the time frame and hassles.

8) Ward Change – Based on Address Change

In my view, this requires thought process at the strategical level. In an ideal sense, where the address has changed and ward jurisdiction shall change accordingly or not cannot be a blanket decision. In normal cases and subject to outgoing jurisdictional VATO confirmation it can be allowed straight away.

B) Legal Changes

9) Very Heavy Late Return filing fees

It is noteworthy that per day of delay in filing a return attracts a late fees of Rs 500/- day in Delhi. If you are registered in both VAT / CST then late fees would be Rs 1,000/- per day (VAT & CST Return are separate returns). This quantum of per day late fees can be re-considered in light of many dealers including small retailers filing very low tax returns or even nil returns.

10) Works Contract Composition Scheme

· Composition scheme currently is sub-distributed based on category of works contracts and modalities of operation choosed by the dealer into three parts and two sub-schemes.

· Further, a specific clause or clarification can be issued on applicability of scheme in case of non monetary consideration agreements of works contract like in case of area sharing agreements.

11) Flat rate of tax i.e. 12.5% in works contract can be revisited

In Delhi, if the material is sold pursuant to the works contract then the rate of tax shall be always 12.5% unless in case of printing contracts or declared goods. Such a provision can be relooked and the items shall be made taxable as per their listing in the schedules to DVAT Act to bring parity between tax cost of normal sales and deemed sales of works contract.

Similar provisions of taxing the items as per schedule rates even if transferred pursuant to works contract exists in states like Haryana & Uttar Pradesh as well.

12) Rule 3 of DVAT Rules

As per proviso to Rule 3(2),

“PROVIDED that where amount of charges towards labour, services and other like charges are not ascertainable from the books of accounts of the dealer, the amount of such charges shall be calculated at the percentages specified in the following table”

The above provision instead of being a second resort to department (where the books of accounts cannot be utilized for computation of labour and service charges) can be made optional at dealer’s end. This can reduce litigation largely and provide certainty to works contract valuation.

13) Limitation period for filing objection against mismatch assessments

The Section 74 of the Act provides a deadline of 2 months from the date of service of notice and further condonation of delay of 2 months. In cases of mismatch assessments being newly implemented and required immense external documentation since demand / objection of purchasing dealer will depend on documents / returns / invoices and challans of selling dealer is always a time consuming effort.

In view of the above, the mismatch assessments objections can be separately dealt with in the Act, may be vide a proviso insertion to this effect.

14) Input tax credit hindrance

The biggest problem the dealers are facing today is undoubtedly the 2A-2B mismatches. As per section 9, the input tax credit can be denied to the purchasing dealer if:-

“ to the dealers or class of dealers unless the tax paid by the purchasing dealer has actually been deposited by the selling dealer with the Government or has been lawfully adjusted against output tax liability and correctly reflected in the return filed for the respective tax period”

This provision requires a revisit in all means. Where the purchasing dealer in all bonafide intention has paid his tax to the selling dealer and selling dealer has then not discharged his obligations of tax payments and return filing, the purchasing dealer shall be not be denied the input tax credit. The tax shall be recovered from the selling dealer only.

Traders cannot be expected to obtain return copies of each and every vendor they transact with.

15) Composition scheme for retailers

The threshold limit of composition dealer can be revisited and if required further increased. A suitable rate and threshold turnover for eligibility would prompt more tax compliance from small retail dealers much to the benefit of economics and sentiments.

16) Audits & Search – Seizure related matters

For audits and search / seizure / survey matters, it is essential to note that these matters are to play a balancing roles between avoiding harassment to tax paying dealers and making tax evading dealers to comply the law of the state. Though no blanket provisions can be introduced to this effect, audits can be exempted to a suitable threshold gross turnover and it is can made once in three / five years for certain class of dealers.

Before parting…

The Delhi VAT department has evolved in very significant manner over a period of time. Further evolving is always the desired route for both state government and Delhi dealers. The above can be few areas among many where the processes and rules require a revisit and the interest in large of dealers and revenue both needs a equivalent safeguard.

I intend to receive constructive comments and views of esteemed readership.

--

About the Author:

CA Ankit Gulgulia (Jain)

Author is Practicing Chartered Accountant in New Delhi/NCR and his area of interest includes Indirect Taxes, Corporate Laws and Transfer Pricing. He can be reached at ankitgulgulia@gmail.com.

DISCLAIMER: This article is provided purely for your information only and you should check other information sources before taking any action based on any of the content in this article. Neither the authors nor website hosting the article make any warranty as to the quality or currency of the information contained in any of the site's articles.

Read more »

Matter for circulation- Sales of car not taxable under DVAT

Recently, Hon'ble Delhi High Court in the matter of Anand Decors & Ors. v. CTT, New Delhi, has pronounced that the cars, even though fall within capital goods, but sale of used cars is not subject to VAT under Delhi VAT Act, by virtue of section 6(3) of ibid.

Brief facts of the case:

The appellants were manufacturing certain commodities & were registered dealers under DVAT Act. They purchased motor vehicles(though non-dealing in the trading of motor vehicles) but didn't avail ITC thereon under DVAT. The revenue authorities considered the subsequent sale of said vehicles(post use thereof) as chargeable to VAT. The Tribunal also upheld the view of department. Thereafter, the appellant moved to High Court. And following observations were made by the Court:

1) Capital goods & capital assets are distinguishable;

2) Motor Vehicles would be a capital good, since the expression used is "directly or indirectly used in manufacturing......" & its purchase thereof would form part of business, but ITC thereon is not available by virtue of section 9(2).

3) Four conditions have be met out for excluding sale of car from the ambit of taxability under DVAT(i.e. exemption u/s 6(3) of ibid):

• There should be a sale of capital goods;
• The said capital goods should have been used by the dealer from the time of purchase till sale;
• The purpose for which the capital goods were used should be for making sale of taxable goods or taxable goods and non-taxable goods. The capital goods should not be exclusively used for making sale of non-taxable goods.
• The dealer should not have taken tax credit in respect of such capital goods under Section 9.

4) In the instant case, all these conditions have been duly fulfilled by the appellant, accordingly, the benefit of exemption from VAT can't be denied.

The said judgement may be accessed from the following link:

Download Judgement

Comments:

This verdict has emerged as a breather to the industry. Undue litigation from departmental side would be halted till the time any overruling verdict by the Apex Court is pronounced.

Such types of litigation prone areas should also be taken up by the Ministry of Finance at the time of framing GST laws.

Follow @studycafe1

Read more »

DVAT (Mismatch of 2A & 2B)

GOVERNMENT OF NATIONAL CAPITAL TERRITORY OF DELHI

DEPARTMENT OF TRADfi:AND TAXES

(POLICY BRANCH)

VYAPAR BHAWAN, I.P.ESTATE, NEWDELHI-110 002

CIRCULAR NO 20 OF 2014-15

No.F.3(480)/PolicyNAT/14/ 571-577                                                                         Dated: 09-12-2014

In partial modification of this department's' Circular NO.18 of 2014-15, the following Asstt. Commissioners (mentioned at CoI.No.4) are hereby authorised as Spl.OHAs for hearing the objections with respect to 2A-2B mismatch of 2012-13 instead of the Assistant Commissioners mentioned at CoJ.No.2 , in addition to the wards allocated in the said circular till further orders :-

Rest of the contents of the above said Circular shall remain the same.

Follow @studycafe1

Read more »

Dvat: Filing of reconciliation return for the year 2013-14.

GOVERNMENT OF NATIONAL CAPITAL TERRITORY OF DELHI DEPARTMENT OF TRADE AND TAXES

(POLICY BRANCH)

VYAPAR BHAWAN, I.P.ESTATE, NEW DELHI-110 002

No.F.7(420)/VAT/Policy/2011/PF/536-542 Dated: 27/11/2014

CIRCULAR NO. 19 of 2014-15

Sub: Filing of reconciliation return for the year 2013-14.

In exercise of the powers conferred under Rule 49A of the Delhi Value
Added Tax Rules, 2005 read with section 9(2) of Central Sales Tax Act, 1956, I,
Sanjeev Khirwar, Commissioner, Value Added Tax, do hereby extend the last date of filing of online return in Form 9 for the year 2013-14, prescribed under Rule 4 of Central Sales Tax (Delhi) Rules, 2005 to 09/01/2015.

The return is to be filed by dealers who have made interstate sale at
concessional rates against statutory forms ‘C’ or stock transferred against ‘F’ forms or sold the goods against ‘H’ forms to dealers (other than Delhi) or claimed deduction from taxable turnover against E-I/EII forms or I/J forms etc.

The dealers who have not made the sale as mentioned above need not
file reconciliation return in Form 9.  

Read more »

D-VAT: Due date for filing of online return for 2nd Quarter has been extended to 17/11/2014

GOVERNMENT OF NATIONAL CAPITAL TERRITORY OF DELHI

DEPARTMENT OF TRADE AND TAXES

(POLICY BRANCH)

VYAPAR BHAWAN, I.P.ESTATE, NEW DELHI-110 002

No.F.7(420)/VAT/Policy/2011/PF/482-488                          Dated: 10/11/2014

CIRCULAR NO. 16 of 2014-15

Sub: Filing of online return for 2nd quarter of 2014-15 – extension of 
period thereof.

In partial modification to this department’s Circular No.14 of 2014-15 on the 
subject cited above, and in exercise of the powers conferred under Rule 49A of the  Delhi Value Added Tax Rules, 2005, I, Sanjeev Khirwar, Commissioner, Value Added Tax, do hereby extend the last date of filing of online/hard copy of second quarter return for the year 2014-15, in Form DVAT-16 ,DVAT-17 and DVAT-48 along with required annexures/enclosures to 17/11/2014.

However, the tax due shall continue to be paid in the usual manner as per the 
provisions of section 3(4) of the Delhi Value Added Tax Act, 2004. The dealers filing the returns through digital signature need not be required to file hard copy of the return/Form DVAT-56.

Read more »