Audit Report to be filed by developers in form 704 for 2012-13.

Office of the

Commissioner of Sales Tax

8th floor, Vikrikar Bhavan,

Mazgaon, Mumbai 400010.

TRADE CIRCULAR

No.   Build-Devep/Adm.Relief.06-10/Adm-8  No. Trade Cir. No.    1 T of  2014

Mumbai, dated  Olt -0 1- ::2.0 I't

Sub: Audit Reportto be filed by developersin form 704 for 2012-13.

Background :

1.   The  Maharashtra  Chamber  of  Housing  Industries  (MCHI),  Promoters and BuildersAssociation and 10 other petitioners filed Special Leave Petition(SLP) beforethe Hon. SupremeCourt against the order of Hon. Bombay High Court (WritPetition no. 2022).The Supreme Courthas decided these petitions by its commonorder dt. 26/09/2013.  The Supreme Court while upholdingthe Constitutional validity  of the amendment to the definitionof Sale of MVAT Act, has clarifiedthat-

(i)      • The activity of construction undertaken by thedeveloper would be

works contract only from the stage when the flat purchaser enters into a contract with the developerand that the value additionto the goods transferred after such agreementcan only be made chargeable to tax by the State Government."

(ii)The Court has further stated that, •taxing the sale of goods element

in a works contract is permissible even after incorporation of goods provided tax is directedto the value of goods at the time of incorporation and does not purport to tax the transfer of immovable property. The modeof valuation of goods prouidedin Rule SB{lA}has to be read in the manner that meets this criteria.» The Court has directed the State Govemmentof Maharashtra to bring clarityin Rule 58 (1A) as indicatedabove.

2.   In order to give effect to the Supreme Court judgment, it is necessaryto amend Rules 58(1) and 58(1A)of the Maharashtra Value AddedTax Rules,2005. The amendmentto these rules is under consideration. However, it may take some time to effect the amendment.

3.   The prescribed date for filing the report of the audit under section 61 in Form 704 for the financial year 2012-13  is  15"' January  2014.  ln absence of amendment to rule 58(1) and rule 58(1A), it may not be possible to complete the audit of developers.

4.   In view of the above, it is  administratively decided that if  an Audit Report in form 704, pertaining to developer for the period 2012-13, is filed within one month from the due date i.e. on or before 15th February 2014, then penaltyufs 61(2) shall not be imposed.

lf any member of the trade has any doubt, he may refer the matter to this office for further clarification.

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.c::::>(NI'tlN KAREER)

Commissioner of Sales Tax, Maharashtra  State, Mumbai.

No. Build-Devep/Adm.Relief.06-10/Adm-8  Trade Cir. No. 1T of 2014

1.    Copy forwarded To :

Mumbai, Dt. Olj-01-2.011-j

The Joint Commissioner of Sales Tax (MAHAVlKAS) with the request to upload this Trade Circular on the Departments web-site.

2.      Copy forwardedwith compliments for information to:

a.   The Officeron Special Duty, Finance Department, Mantralaya, Mumbai.

b.  The Under Secretary, FinanceDepartment,  Mantralaya, Mumbai.

c.  The AccountsOfficer, Sales Tax Revenue Audit, Mumbai and Nagpur.

Joint Commissioner  of Sales Tax (HQ) 1,

Maharashtra State, Mumbai.