AAP government plans to charge advance VAT on some goods

The AAP government plans to charge value-added tax in advance on specific goods which are imported into the national capital. The government is also planning that businessmen dealing with non-taxable items with a turnover exceeding '20 lakh will no longer be required to register with the trade and taxes department.

These decisions will come into effect only after the revised Delhi Value Added Tax (Third Amendment) Bill, 2016, which is all set to be tabled during the two-day special session of the Delhi Assembly beginning Thursday, is passed by the House and is approved by the Centre.

Earlier, the AAP government, without seeking prior approval of lieutenant-governor Najeeb Jung, had tabled the proposed amendment bill in the Assembly and it was passed. The lieutenant-governor had returned the bill to the AAP government on the grounds that his recommendations had not been obtained under Section 22 of the Govt. of NCT Act, 1991 before it was tabled in the House. In a message to the government, Mr Jung said, “Consider amendments to the bill so as to limit it to the provisions where the Legislative Assembly of NCT of Delhi has the legislative competence under Article 239 AA of the Constitution.” After the city Cabinet made certain changes in the proposed bill, it was sent to the lieutenant-governor for his approval before it could again be tabled in the House. The L-G has reportedly given his go-ahead to the proposed bill, likely to be tabled in the next two days. The proposed bill gives ample powers to the VAT department to impose tax on imported items. If the bill becomes an Act, any person who imports goods into the city will have to pay tax in advance on the presumption that the same are meant for the purpose of sale or for use in manufacture or processing, unless it is proved otherwise by such person.

The proposed bill said that the government may by notification in the official gazette require any dealer or class of dealers to install such physical compliance devices or software, as may be considered necessary for instantaneous communication of the information of sale invoices to the VAT commissioner. It said that the cost of equipment and installation of the device and software, as may be required, shall be borne by the dealer. The proposed amendment in Section 29 will also facilitate the dealers in filing the returns through digital signatures or other electronic options, thereby dispensing with the requirement of filing Form DVAT 56 in person to the department. The revised bill has, however, withdrawn its previous amendment that proposed policing powers for VAT officers to prosecute offenders/defaulters. It had also proposed increase in maximum punishment from six months to two years for violation of the VAT Act. According to the Delhi Act, the VAT officers can lodge case and file chargesheet under the Act. They cannot now prosecute defaulters under IPC.

After the bill was returned to the government, the city Cabinet had proposed withdrawal of Section 92 subsection (3), which says while investigating any offence under this Act, the officer so authorised should be competent to investigate any offence under the IPC 1860 commission of which forms a part of the same transaction.