In exercise of the powers conferred by sub-section (2) of Section 1 of the Madhya Pradesh VAT (Second Amendment) Act, 2007 (No. 26 of 2007), the State Government, hereby, appoints the 24/12/2007, as the date on which the provisions of the said Act shall come into force.

THE MADHYA PRADESH VAT (SECOND AMENDMENT) ACT, 2007

Act No. 26 of 2007

An Act further to amend the Madhya Pradesh Vat Act, 2002.

Be it enacted by the Madhya Pradesh Legislature in the Fifty-eighth year of the Republic of India as follows:

1. Short title and commencement

(1) This Act may be called the Madhya Pradesh Vat (Second Amendment) Act, 2007.

(2) It shall come into force on such date as the State Government may, by notification, appoint.

2. Amendment of section 17.

In section 17 of the Madhya Pradesh Vat Act, 2002 (No. 20 of 2002) (hereinafter referred to as the principal Act), for sub-section (4), the following sub-section shall be substituted, namely :-

"(4) (a) On receipt of the application for grant of registration certificate,-

(i) the said authority shall, if it is satisfied that the application is in order, grant the applicant a certificate of registration in such form and manner as may be prescribed;

(ii) if the said authority is not so satisfied, he shall reject the application, not later than thirty days from the date of receipt of the application.

(b) If the certificate of registration is not granted or the application is not rejected within the aforesaid period of thirty days, the applicant shall, on expiration of the said period, be entitled to a certificate of registration in accordance with his application and the said authority shall issue a certificate of registration accordingly.".

3. Amendment of section 19.

In section 19 of the principal Act, -

(i) sub-section (3) shall be omitted ;

(ii) for sub-section (6), the following sub-section shall be substituted, namely :-

"(6) After such audit, if the return or returns filed by the dealer are not found to be correct or the dealer has not filed return or returns, the commissioner shall by issue of a notice in prescribed form require such dealer to make the payment of tax and / or interest payable by him, at such rate as may be prescribed, within the period specified in such notice.".

4. Amendment of section 24.

In section 24 of the principal Act, after sub-section (12), the following sub-section shall be inserted, namely:-

"(13) If any amount of tax, interest, penalty, or any other amount due under this Act or the Acts repealed by section 52 of Act No.2 of 1959 or the Act repealed by section 81 of Act No. 5 of 1995 or the Act repealed by section 72 of this Act or the Central Sales Tax Act, 1956 ( No.74 of 1956) is determined to be irrecoverable and pertains to a period prior to five years preceding the year in which the amount is to *[be written off], they may *[be written off] in accordance with the procedure prescribed by the State Government for this purpose, and after such write off the amount shall be deemed to have been recovered and shall no longer remain outstanding against such dealer or person."

5. Insertion of Section 26-A.

After section 26 of the principal Act, the following section shall be inserted, namely :-

"Sec. 26-A : Deduction of tax at source in respect of certain goods

(1) Notwithstanding anything contained in any other provision of this Act, every registered dealer (the purchaser) who purchases such goods as may be notified by the State Government for sale or consumption from another registered dealer, shall deduct input tax from the amount payable by him to the selling registered dealer (the seller) for such purchase.

(2) On deduction of the amount under sub-section (1), the purchaser shall issue a certificate of deduction of tax to the seller in such form and manner as may be prescribed.

(3) The certificate of deduction of tax shall constitute a good and sufficient discharge of the liability of the seller to pay tax in respect of such transaction and the amount so deducted shall be adjusted by him in such manner as may be prescribed, and this certificate shall not be used for discharge of the liability of any other transaction.

(4) No input tax rebate shall be claimed or be allowed in respect of the goods notified under sub-section (1).

(5) In the event of disposal of,-

(a) (i) goods purchased; or

(ii) the goods specified in Schedule II, manufactured out of the goods purchased,

otherwise than by way of sale within the State of Madhya Pradesh or in the course of inter-state trade or commerce or in the course of export out of the territory of India; or

(b) the goods specified in Schedule I, manufactured out of the goods purchased, otherwise than by way of sale in the course of export out of the territory of India,

the purchaser shall deposit the amount at the rate of 4 percent of the purchase price, net of input tax, of the goods purchased.

(6) The provisions of Sections 18, 20, 21, 24, 25 and 39 shall mutatis mutandis apply to the amount payable under sub-section (5).

(7) The purchaser shall retain as refund the amount deducted under sub-section (1) which is equal to the amount of input tax rebate [notionally] admissible under section 14 on such purchases.".

6. Amendment of Section 33.

Section 33 of the principal Act shall be renumbered as sub-section (1) thereof and after sub-section (1) as so renumbered, the following new sub-section shall be added, namely:-

"(2) Notwithstanding anything contained in this Act, where a dealer or person is in default or is deemed to be in default under clause (a) of sub-section (11) of section 24 and whose property is being sold by a bank or financial institution for recovery of its loan, the Commissioner may forgo the right of first charge as mentioned in sub-section (1) against the property sold on the following conditions:-

(a) if the arrears of tax, penalty, interest or part thereof or [any other amount] is up to 25 percent of the total auction value, the arrears shall be paid in full by the bank or financial institution;

(b) if the arrears of tax, penalty, interest or part thereof or any other amount, is more than 25 percent of the total auction value, the 25 percent of the total auction value and the amount in the same proportion of the remaining auction value as the remaining arrears bear to the total dues of the bank or financial institution, shall be paid by the bank or financial institution."

7. Amendment of Section 40.

In section 40 of the principal Act, after sub-section (1), the following sub-section shall be inserted, namely :-

" (1A) The bill, invoice or cash memorandum pertaining to the goods notified by the State Government, shall be authenticated in the prescribed manner."

8. Insertion of Section 55 A.

After section 55 of the principal Act, the following section shall be inserted, namely :-

"Sec. 55-A : Special provision for assessment of cases relating to detection and prevention of tax evasion.

Notwithstanding anything contained in any other provisions of this Act,-

(a) where a requisition is made under clause (a) of sub-section (3) of section 55 or an inspection is conducted under clause (b) of the said sub-section against a dealer, the dealer, subject to such restrictions and conditions and in such manner as may be prescribed, may opt to pay in lieu of tax, interest and penalty payable under this Act, a lump sum amount equal to twice the amount of evasion of tax agreed to by the dealer relating to the block period on the basis of evidence found as a result of requisition or inspection, of books of account or other documents and such other materials or information as is available with the Commissioner and [relatable] to such evidence, at the time of requisition or inspection;

(b) once the dealer has exercised the option under clause (a), he shall not have any right to challenge the evasion of tax agreed to by the dealer in any forum;

(c) the commissioner shall proceed to assess the amount of tax evaded by the dealer during a block period in accordance with the provisions of this Act and the amount in respect of which option to pay lump sum has been exercised under clause (a) shall be excluded from the amount of evasion of tax assessed under this clause;

(d) the total evasion of tax relating to the block period shall be assessed irrespective of the year or years to which such tax relates and irrespective of the fact whether regular assessment for any one or more of the relevant years is pending or not;

(e) the assessment under this section shall be in addition to the regular assessment in respect of each year included in the block period;

(f) the total evasion of tax relating to the block period shall not include the tax assessed in any regular assessment or the tax paid along with the returns filed by the dealer, as tax of such block period;

(g) the tax assessed under this section shall not be included in any regular assessment of any year included in the block period;

(h) where the dealer proves to the satisfaction of the Commissioner that any part of the tax referred to under this section relates to a year for which the year has not ended or the date of filing returns has not expired, and the transactions relating to such tax are recorded on or before the date of requisition or inspection, in the books of account or other documents maintained in the normal course relating to such [year], the said tax shall not be included in the block period;

(i) the provisions of section 20 shall mutatis mutandis apply to the assessment made under this section.

Explanation.For the purpose of this section the expression "block period" shall mean the period comprising of six years preceding the year in which the requisition was made or the inspection was conducted and shall include the period up to the date of requisition or inspection."

9. Amendment of Section 71.

In section 71 of the principal Act, in sub-section (2),-

(i) after sub-clause (ii) of clause (j), the following sub-clause shall be inserted, namely:-

"(iii) the restrictions and conditions subject to which and the manner in which option to pay lump sum amount in lieu of penalty under section 21, 52, 55 and 57 or in lieu of tax, interest and penalty under section 55-A shall be exercised;";

(ii) after sub-clause (viii) of clause (l), the following sub-clause shall be inserted, namely:-

"(viii-a) the form of certificate to be issued under sub-section (2) of section 26-A and the manner in which it is to be obtained and the manner in which any amount deducted by the purchaser shall be adjusted under sub-section (3) of Section 26-A;"

(iii) clause (p) shall be renumbered as sub-clause (i) thereof and after sub-clause (i) as so renumbered, the following new sub-clause shall be inserted, namely:-

"(ii) the manner in which authentication shall be done under sub-section (1-A) of section 40;" .