 "Maha losing VAT revenue due to non registration of builders & developers: CAG")
Maharashtra government has incurred a revenue loss due to the non registration of builders and developers in the state. Comptroller & Auditor General (CAG) in its report for the year ended March 2012 said 941 builders and developers out of 1,219 whose turnover of sales was Rs 2,301.12 crore, though liable for registration were not registered under Maharashtra Value Added Tax (MVAT). Further, 66 out of 278 registered builders and developers, did not pay any tax on turnover of sales of Rs 733.50 crore. Nine builders and developers had paid VAT on a part of their turnover : Rs 57.50 lakh only, against Rs 3.08 crore on turnover of sales of Rs 307.85 crore.
CAG made these obseervations based on cross verification data obtained from the offices of the sub registrars of Stamp Duty and Registration at Amravati, Mumbai, Nagpur, Pune and Thane. In 2007, the levy of tax on builders and developers was challeged by the Maharashtra Chamber of Housing Industry in the Mumbai high court. However, the high court in its order dated April 10, 2012 held no merit in the challenge to the costitutional validity of the composition scheme introduced by the state government. MCHI filed special leave petition in the apex court. In Augusut 2012, the Supreme Court gave a stay order towards the coercive process for recovery of tax, interest and penalty and also extended the time period for registration by builders and developers upto October 31, 2012.
The sales tax department has informed that nearly 10,227 builders and developers have obtained registration under MVAT in view of the interim order of the apex court. Further, information from the Inspector General of Registration, Pune in respect of builders from 2006 onwards would be obtained and processed which would take some time, CAG said in its report. However, whether all the builders and developers were registered by October 31, 2012, which was the cut off date prescribed by the apex court, has not so far been confirmed by the sales tax department.
Further, CAG said cross verification of data during April 2005 & March 2011 obtained from Konkan Irrigation Development Corporation (KIDC) revealed short reflection of turnover of sales. "Seventeen registered contractors had received payments of Rs 509.98 crore from KIDC but had disclosed turnover of sales of Rs 187.11 crore only in their VAT returns. This resulted in short reflection of turnover of sales of Rs 322.87 crore. Four contractors had received payments from KIDC for the work done but they were not registered with the sales tax department. They were liable to pay tax of Rs 66.50 lakh but tax of Rs 33.02 lakh only was recovered. This resulted in short recovery of TDS of Rs 33.48 lakh.
CAG made these obseervations based on cross verification data obtained from the offices of the sub registrars of Stamp Duty and Registration at Amravati, Mumbai, Nagpur, Pune and Thane. In 2007, the levy of tax on builders and developers was challeged by the Maharashtra Chamber of Housing Industry in the Mumbai high court. However, the high court in its order dated April 10, 2012 held no merit in the challenge to the costitutional validity of the composition scheme introduced by the state government. MCHI filed special leave petition in the apex court. In Augusut 2012, the Supreme Court gave a stay order towards the coercive process for recovery of tax, interest and penalty and also extended the time period for registration by builders and developers upto October 31, 2012.
The sales tax department has informed that nearly 10,227 builders and developers have obtained registration under MVAT in view of the interim order of the apex court. Further, information from the Inspector General of Registration, Pune in respect of builders from 2006 onwards would be obtained and processed which would take some time, CAG said in its report. However, whether all the builders and developers were registered by October 31, 2012, which was the cut off date prescribed by the apex court, has not so far been confirmed by the sales tax department.
Further, CAG said cross verification of data during April 2005 & March 2011 obtained from Konkan Irrigation Development Corporation (KIDC) revealed short reflection of turnover of sales. "Seventeen registered contractors had received payments of Rs 509.98 crore from KIDC but had disclosed turnover of sales of Rs 187.11 crore only in their VAT returns. This resulted in short reflection of turnover of sales of Rs 322.87 crore. Four contractors had received payments from KIDC for the work done but they were not registered with the sales tax department. They were liable to pay tax of Rs 66.50 lakh but tax of Rs 33.02 lakh only was recovered. This resulted in short recovery of TDS of Rs 33.48 lakh.