The PIL states that going by the provisions of the Maharashtra Value Added Tax Act 2002 (Sec 16 - 1), no dealer is allowed to collect VAT unless he possess a valid certificate of registration. However, “the states’ sales tax department is yet to issue necessary certificates to dealers across the state,” the PIL notes. The Aurangabad bench of the Bombay High Court has issued notices to the state government and the sales tax department in this regard.

According to the petitioner, the original certificates of registration became invalid when the sales tax commissioner issued a notification on April 1, 2006, announcing the unveiling of the new system. Soon after this, the sales tax department should have issued new certificates of registration to the dealers, consistent with the norms of the new system. The petitioner’s says the sales tax department just implanted new numbers on old registration, which, according to him, is not permissible under the Act.

The PIL points out that the Maharashtra VAT Act requires ‘registration certificate numbers’, whereas the sales tax department has kept on issuing the Tax Identification Number (TIN), which has no validity under the VAT Act. It also draws attention to the sales tax department’s own admission that the “TIN itself is not a registration certificate number”. The petition claims that over seven crore dealers have collected VAT since April 1, 2006 despite having no legal sanctity.

When contacted, the state’s sales tax commissioner refused to react saying that the matter was sub judice. His office, however, admitted the existence of “some issues” pertaining to the “administrative mechanism”, but not the VAT Act as such. According to a senior sales tax official, the department decided to continue with the old registration numbers and certificates issued to dealers under the Bombay Sales Tax Act to avoid “administrative complications” while ushering in VAT.

“We started re-numbering from April 2006 onwards as required under the VAT Act. Considering the enormity of the job, wherein over five lakh dealers across the state were to be given new numbers, some mistakes did take place. In many cases, we didn’t reach out to dealers in time. But these are all issues about the administrative apparatus and not about the Act per se,” he said.

The sales tax department argues that allotment of TIN has been done based on the recommendation of the empowered committee of state finance ministers that oversaw the successful roll-out of the new tax system. However, the petitioner says that the empowered committee in its white paper published on January 17, 2005, had specifically stated that “its recommendations are to be incorporated/amended in local VAT Act”, which the Maharashtra government has failed to do.