Vat very urgent
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
17 July 2012
DEAR SIR
THERE IS ONE REGISTERED DEALER CANCLLED THE TIN NO AS NO 31.03.2012.SO WHAT ABOUT THERE STOCK TREATMENTW, WHEN HE PAY THE VAT AMOUNT AND WHAT IS THE CIRCUMSTANCES FOR THAT. PLEASE REPLAY
THERE IS ONE REGISTERED DEALER CANCLLED THE TIN NO AS NO 31.03.2012.SO WHAT ABOUT THERE STOCK TREATMENTW, WHEN HE PAY THE VAT AMOUNT AND WHAT IS THE CIRCUMSTANCES FOR THAT. PLEASE REPLAY
17 July 2012
You have not mentioned your state of operation in the query. But i give below the general rule.
1) First of all find out the value of the closing stock
2) Whether it is taxable product or not?
3) If it is exempted, no botheration about vat payment.
4) Let us assume the value of closing stock is Rs.4,00,000.00 and your state registration for a vat dealer is Rs.5,00,000.00 in a year. In this case, the selling dealer has no liability even if he cancelled his TIN RC because the sale value in the year 2012-13 is below 5 lacs.
After 01.4.2012, he becomes URD (unregistered dealer) and only the buyer of the product is liable to pay the purchase tax and can set off.
1) First of all find out the value of the closing stock
2) Whether it is taxable product or not?
3) If it is exempted, no botheration about vat payment.
4) Let us assume the value of closing stock is Rs.4,00,000.00 and your state registration for a vat dealer is Rs.5,00,000.00 in a year. In this case, the selling dealer has no liability even if he cancelled his TIN RC because the sale value in the year 2012-13 is below 5 lacs.
After 01.4.2012, he becomes URD (unregistered dealer) and only the buyer of the product is liable to pay the purchase tax and can set off.
17 July 2012
The dealer will have to pay the VAT on the stock mainly because of following two reasons:-
1. He has taken input against local purchases and the goods are not sold.
2. He has goods in stock which are purchased against C form and the condition attached is the purchase is for the purpose of resale, but due to cancellation of RC condition is not fulfilled.
1. He has taken input against local purchases and the goods are not sold.
2. He has goods in stock which are purchased against C form and the condition attached is the purchase is for the purpose of resale, but due to cancellation of RC condition is not fulfilled.
17 July 2012
Mr Mittal saab, The query is not explaining any thing. The person says, he is having a closing stock as on 31.03.12 and cancelled the RC. He never says that all his closing stock is out of ITC availed material or interstate purchases. The value of the closing stock, his state of query not available.
I also agree that even after closing, if the stocks are out of interstate purchase or input availed materials, then he has the liability. But we have to assume things. What to do?
I also agree that even after closing, if the stocks are out of interstate purchase or input availed materials, then he has the liability. But we have to assume things. What to do?
Querist : Anonymous
Querist :
Anonymous
(Querist)
03 October 2012
sir my state is Maharashtra and all closing stock is local purchase
03 August 2025
When a **VAT-registered dealer in Maharashtra** cancels their **TIN as of 31st March 2012**, the treatment of **closing stock** is critical and must be addressed as per **MVAT Act provisions**.
Here's a clear breakdown of what must be done:
---
### 🔹 Scenario Recap:
* Dealer’s **TIN cancelled on 31-03-2012** (voluntarily or by department).
* **Closing stock is locally purchased**, possibly with input VAT credit claimed.
* You want to know:
1. How to **treat the stock** on cancellation.
2. When and how to **pay VAT on that stock**.
---
### 🔸 1. **Stock Treatment on VAT Cancellation**
Under **Section 10(3) of the MVAT Act**, if any **input tax credit (ITC)** was claimed on **closing stock**, and the **goods are not sold/resold**, then:
> **VAT must be reversed** on the **unsold stock** on the date of cancellation.
#### What to do:
* Calculate the **input tax credit originally claimed** on the **closing stock**.
* Reverse the **entire ITC amount** on those goods.
* Pay the **reversed VAT amount** as **output tax** in the final return.
---
### 🔸 2. **When & How to Pay VAT on Closing Stock**
* This VAT (on stock) must be **paid along with the final return**, i.e., for the **period ending 31-03-2012**.
* File **final MVAT return** using **Form 231 (monthly/quarterly/annual depending on your category)**.
* Show reversal under **"Deductions from input tax credit"** section or as **output tax** (depending on filing software layout).
* **Pay through MVAT portal** and generate **Challan (MTR-6)**.
---
### 🔸 3. Example
Let’s say your **closing stock on 31-03-2012** is worth ₹2,00,000, and it includes:
* Goods purchased at 12.5% VAT → ITC claimed = ₹25,000
* Then you must **reverse ₹25,000** VAT and pay it back to the department.
---
### 🔸 4. Circumstances of Stock Disposal (if not reversed)
If you do **not reverse the VAT**:
* The department can **initiate recovery proceedings**.
* **Interest and penalty** under Section 30 and 29 of the MVAT Act may apply.
* If goods are later sold **without registration**, that becomes an **unauthorized sale**, and penalties may increase.
---
### ✅ Summary
| Aspect | Action Required |
| ----------------------- | --------------------------------------------------------- |
| Closing stock treatment | Reverse input tax credit taken on closing stock |
| Payment timeline | Along with final MVAT return for period ending 31-03-2012 |
| Form | Form 231 |
| If not paid | Interest + penalty under MVAT Act |
---
If you need help calculating or filing the final VAT return for cancellation, I can assist with a format or checklist. Let me know.
Here's a clear breakdown of what must be done:
---
### 🔹 Scenario Recap:
* Dealer’s **TIN cancelled on 31-03-2012** (voluntarily or by department).
* **Closing stock is locally purchased**, possibly with input VAT credit claimed.
* You want to know:
1. How to **treat the stock** on cancellation.
2. When and how to **pay VAT on that stock**.
---
### 🔸 1. **Stock Treatment on VAT Cancellation**
Under **Section 10(3) of the MVAT Act**, if any **input tax credit (ITC)** was claimed on **closing stock**, and the **goods are not sold/resold**, then:
> **VAT must be reversed** on the **unsold stock** on the date of cancellation.
#### What to do:
* Calculate the **input tax credit originally claimed** on the **closing stock**.
* Reverse the **entire ITC amount** on those goods.
* Pay the **reversed VAT amount** as **output tax** in the final return.
---
### 🔸 2. **When & How to Pay VAT on Closing Stock**
* This VAT (on stock) must be **paid along with the final return**, i.e., for the **period ending 31-03-2012**.
* File **final MVAT return** using **Form 231 (monthly/quarterly/annual depending on your category)**.
* Show reversal under **"Deductions from input tax credit"** section or as **output tax** (depending on filing software layout).
* **Pay through MVAT portal** and generate **Challan (MTR-6)**.
---
### 🔸 3. Example
Let’s say your **closing stock on 31-03-2012** is worth ₹2,00,000, and it includes:
* Goods purchased at 12.5% VAT → ITC claimed = ₹25,000
* Then you must **reverse ₹25,000** VAT and pay it back to the department.
---
### 🔸 4. Circumstances of Stock Disposal (if not reversed)
If you do **not reverse the VAT**:
* The department can **initiate recovery proceedings**.
* **Interest and penalty** under Section 30 and 29 of the MVAT Act may apply.
* If goods are later sold **without registration**, that becomes an **unauthorized sale**, and penalties may increase.
---
### ✅ Summary
| Aspect | Action Required |
| ----------------------- | --------------------------------------------------------- |
| Closing stock treatment | Reverse input tax credit taken on closing stock |
| Payment timeline | Along with final MVAT return for period ending 31-03-2012 |
| Form | Form 231 |
| If not paid | Interest + penalty under MVAT Act |
---
If you need help calculating or filing the final VAT return for cancellation, I can assist with a format or checklist. Let me know.
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