New Delhi: VAT Bill Notified as An Act The Value Added Tax (Amendment) Bill, 2016 passed by the Delhi assembly on June 13 has been approved by LG Najeeb Jung last week. The VAT Bill has been eventually notified as an Act by the Delhi government. The enforcement date of the same will soon be notified. Significantly, since the AAP government took charge in February 2015 this is the first legislation that has been notified as a law.
As per the amendment, a mechanism has been introduced according to which the imported goods that will enter Delhi, after customs clearance will be brought under the advance tax net that would help in preventing tax evasion. Along with the introduction of such mechanism it also provides for the creation of special courts for VAT cases and an amendment to allow the government to launch an amnesty scheme for settling small penalty dues and pending cases in the future. Once the law takes effect, a specified percentage of tax would be collected in advance from the person who imports goods into Delhi based on the presumption that the goods are meant for sale. An official explained: “The VAT department will now prepare and notify the percentage at which the advance tax will be levied. The payment of tax in advance will be counted towards the final tax liability of the person.”
The modalities with the coordination of customs department are being worked out for levy of advance tax. The justification is given by the officials on the grounds that it would help keep track of imported goods coming into the city. It will also help to keep a track of their movement and sale which would be recorded with VAT department. The amendment, besides introducing e-communication and monitoring measures, provides for a special court with the concurrence of the Chief Justice of Delhi high court.
Besides introducing e-communication and monitoring measures, the amendment makes a provision for a special court with the concurrence of the Chief Justice of Delhi high court. A public prosecutor would be appointed to such courts by the government. Most likely an additional public prosecutor might also be appointed.
It is considered to be the most interesting amendment as it opens up an option to introduce an amnesty scheme in future. This is done in view of following with the AAP government’s budget promise of focusing on better tax compliance as a way to bolster collections.
Last year, in Delhi assembly, the VAT amendment Bill was passed which like other 14 bills got caught in the centre-state tussle due to lack of prior approval from the LG. However, the bill was reintroduced during the three-day special session of the assembly this year in June after getting the approval of the LG who sought some changes in it.
March 30 of this year was the turning point when chief minister Arvind Kejriwal stated that he was ready to get prior approval for the Bills from the LG, provided the responsibility to get the Centre to pass the Bills on priority is taken by BJP MLAs.
In April, things got moving with the Centre and state engaging on the issue. “The Bills were sent by the MHA to the LG, asking him to take a stand on these draft legislations. The latter sent back the Bills related to the salaries of MLAs to the Delhi government and one pertaining to amendments to the VAT Act.”