Cabinet clears VAT bill again, includes Lieutenant-Governor’s suggestions

After lieutenant-governor Najeeb Jung returned the Delhi Value-Added Tax (Third Amendment Bill 2016) to the AAP government, the Delhi Cabinet once again cleared it on Wednesday. Before the proposed bill is again tabled in the Delhi Assembly, it will be put up for prior approval before the lieutenant-governor.

The proposed bill gives power to the VAT department to impose tax on imported items. The new bill has, however, withdrawn its previous amendment that proposed policing powers to VAT officers to prosecute offenders/defaulters even under various provisions of the IPC. It has also proposed maximum punishment from six months to three years for violation of the VAT Act.

A source said that it was on the directions of Mr Jung that the Delhi government has withdrawn Section 92 sub-section (3), which said that while investigating any offence under this Act, the officer so authorised should be competent to investigate any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. The previous bill had authorised policing power to VAT officers. This means VAT officials could arrest any businessmen found violating payment of tax and provisions of the VAT Act.

According to the proposed bill: “The government may issue a notification specifying the goods on which a person shall pay tax in advance at the rates notified by the government, but not exceeding the rates applicable on such goods under this Act, when they import such goods into Delhi from a place outside India, subject to such conditions as may be specified in the notification. The aforesaid payment of tax in advance should be counted towards the final tax liability of the taxable person.”

A senior officer said that the person who imports goods into the NCT Delhi should pay tax in advance, on the presumption that such goods are meant for the purpose of sale or for use in manufacture or processing of goods meant for the purpose of sale or for use unless it is proved otherwise by such persons. It is presumed unless it is proved by people involved that such goods or any product manufactured there from shall not be sold below the price at which such goods have been purchased and imported.

The existing Act has provisions of imprisonment of six months, but now the new amendment has proposed three-year imprisonment for violation of tax valued over Rs 1 crore. The proposed bill said: “All records, books of accounts, registers and other documents, maintained by a dealer, transporter or operator of a warehouse shall, at all reasonable times, be open to inspection by the commissioner.”