Arjuna (Fictional Character): Krishna, is there any information asked regarding GST in MVAT audit report also is there any correlation between them?
Krishna (Fictional Character): Arjuna, in the financial year 2017-18, 3 months were of VAT while the remaining 9 months were of GST. Therefore, taxpayers would be required to get their books audited as per their turnover under both the laws. Hence while finalizing financials taxpayers might face problems. So let us discuss on the same.
Arjuna: Krishna, In GST if amount claimed in TRANS 1 is more than the amount carry forwarded in earlier return, then what should be done?
Krishna: Arjuna, it would be interesting to note that if during MVAT audit it is observed that the credit claimed by filing TRANS-1 is more than amount carried forward in the earlier law, then the excess amount claimed in TRANS-1 needs to be deposited along with the interest to the government in GST. For e.g. if credit claimed in TRANS 1 is Rs. 1 Lakh and amount carry forwarded in earlier law is Rs. 80,000/- then the taxpayer is required to pay Rs. 20,000/- along with interest in GST.
Arjuna: Krishna, In GST if amount claimed in TRANS 1 is less than the amount carry forwarded in earlier return, then what should be done?
Krishna: Arjuna, if during MVAT audit it is observed that the credit claimed by filing TRANS-1 is less than amount carried forward in the earlier law, then taxpayer is required to claim refund in the earlier law i.e. VAT. For e.g. if credit claimed in TRANS 1 is Rs. 1 Lakh and amount carry forwarded in earlier law is Rs. 120,000/- then the taxpayer is required to claim refund of Rs. 20,000/- in VAT.
Arjuna: Krishna, Whether Credit claimed in TRANS-1 readily available or are there any issues?
Krishna: Arjuna, Trans-1 has been filed by the taxpayers on the basis of the return filed in earlier law. While filing TRANS-1 it was not mentioned which kind of return (original or revised). Many registered person have filed TRANS on the basis of the revised return in earlier law.
But now the department have come up with the thing that credit mentioned in original returns only can be claimed and not on basis of revised returns. This is incorrect, as this was not intimated earlier. It is injustice to the taxpayers who have duly filed returns as per the law. Government must allow credit on the basis of revised return.
Arjuna: Are is there any special thing for dealers dealing in petroleum products, liquor and like?
Krishna: Arjuna, diesel, petrol, aviation turbine fuel, liquor etc. is kept out of GST purview as of now. On these goods VAT is applicable and hence VAT audit would be required to be done if VAT audit conditions are fulfilled. Similarly, these commodities are NON-GST supply under GST and if the turnover of the same exceeds 2cr, then even GST audit would be required, as this would be considered for calculating GST Turnover. That means both audits VAT as well GST would be required to be done.
Arjuna: What one should learn from this?
Krishna: Arjuna, in this year taxpayers will have to get books audited under both the laws. However GST audit will for the first time. Therefore as mentioned above various small big issues will have to be faced. We expect government will give clarification on these issues.