Dealer friendly e-C Tax Web site and Changes in TNVAT Act, 2006

Introduction:

In order to curb tax evasion of selected notified commodities which are brought into the State and sold without any tax payment to the exchequer, the Tamilnadu State Government has brought a new advance Inward way bill format to be generated through online, like e-sugam as in force in the state of Karnataka, in the newly created web portal viz., e-C Tax with effect from 29.01.2016. This Road Permit Form should accompany the consignment for such notified commodities when they are brought from other States for any purpose. In addition to this, the State Government has amended many provisions in the Act and Rules by implementing dealer friendly Total Solutions Project. Though it has many welcoming measures like online new Registration, online replies, online Annual Audit Report in Form WW, Digital Signature etc., Option for Revised Return, the users of this new website need training to get them acquainted to operate the e-services and to file the necessary Monthly Returns online, as the dealers have only very short duration. The Dealers have to sign up as a new user and create a new login password before operating the website. The Dealers in the State have to apply for a Tax Deductor Identification Number to deduct Works Contract TDS also. The changes in the recent amendments are discussed in this article.

Amendment in the various TNVAT Act 2006 and its Rules 2007:

 Act 13/2015 dt 14.10.15 – Second amendment Act 2015 – with effect from 29.01.2016 (GO No.15)

Section 2(12A) : Insert: definition of “Clearing and forwarding agent”

Section 2(24) Substitution: “input tax” means tax PAID under this Act (deleted the word ”payable”)

Section 2(35A) Insert: “Tax deductor identification number” means the number obtained u/s 13A

Section 3(4)(a) For” Sale of goods purchased within the state” substitute “sale of goods purchased from REGISTERED dealers within the state”

Section 6(1) :For “every dealer, other than the dealer who purchases goods from outside the state”, substitute “every dealer, other than the dealer who purchases or receives goods from outside the state”

Section 13(A) Insert:”Tax deductor identification number” to obtain for those who are liable to deduct tax u/s 13

Section 18 (i)(ii) : For “SEZ” in the state, substitute “for the purpose of use in manufacture, trading, production, processing, assembling, packaging or for use as packing material or packing accessories “

Section 18(2): For “ITC paid or payable” substitute “INPUT TAX PAID”

Section 19(1), 19(4), 19(5)(b), 19(9)   For “tax paid or payable” substitute “TAX PAID” (Insert: “provided that the registered dealer, who claims ITC, shall establish that the tax due on purchase of goods has actually been paid in the manner prescribed by the regd dealer who sold such goods and that the goods have actually been delivered”

Section 22A: Insert: “casual traders –first and last year, return scrutiny along with books of accounts”

Section 24(1), S 64(2), S 84(1): for “five years” substitute “six years”

Section 27(4): substitute: “in addition to tax determined u/s 24(2), penalty a sum of 300% of tax due

Section 39(1) (i) For “five hundred rupees” substitute “One thousand rupees” (RC fees)

Section 39(1)(ii) For “fifty rupees” substitute “One thousand rupees” (branch RC fees)

Section 39(11) Omitted (as exist: If the RC is destroyed to apply duplicate copy with Rs 100)

Section 39(12) for “or a duplicate” shall be omitted

Section 39(15) For “no application for regn or for a copy or duplicate of the certificate” substitute “no application for regn of dealer under this section”

Section 67A: Insert :production of ADVANCE INWARD WAY BILL: vehicle entering the state from outside the state carrying on specified goods, to produce the above way bill, in such form and in such manner as may be prescribed

Section 70(2) For “seller or consignor or transferor” substitute “seller or consignor or transferor or clearing and forwarding agent”

Section 71(9) For “any dealer to claim exemption” substitute “any dealer to claim input tax credit, exemption “

Section 79A- Insert “IT Act 2000 applicable”

Act 14/2015 dt 14.10.15: (Third amendment) Basic price in TASMAC

Act 15/2015 dt 14.10.15: IT Act 2000 applicable to Entertainment tax (GO 16)

Act 16/2015 dt 14.10.15: IT Act 2000 applicable to Luxury tax

Act 17/2015 dt 14.10.15: Entry tax return for Motor vehicles is online (GO 17,19/29.1.16)

Notification IV: SEZ unit to produce a certificate as per format.

GO 18/29.01.2016:

Rule 4(1):for “within 30 days from the date of commencement of act” substitute” within 30 days from the date of commencement of business”

Rule 4(9), substitute: Registration in ELECTRONIC Form A, along with fees

Rule 4(9A) substitute: PAN to submit along with Electronic form A

Rule 4(10) substitute: Every registered dealer to produce IE code along with Electronic Form A, along with proof of the same. Dealers already registered under the Act to produce within TWO MONTHS from 29.01.2016,. Provided if IE code is assigned after registration, to produce within 15 days from the date of assignment

Rule 4(9B) ID PROOF: Copy of the ANY TWO of the following documents to produce along with registration application (i) Voter ID (ii)Driving licence (iii) Company CIN (Iv)Passport(v)Bank account passbook along with photo (vi) Aadhaar Card

ADDRESS PROOF: Any two of the following (i) Voter ID (ii) Passport (iii)Gas connection with latest receipt (iv) Parent’s passport in case of minors (v)Personal SB from a schedule bank

PLACE OF BUSINESS: (i) Registered title deed in case of own building (ii) Lease deed or Rent agreement copy (iii) Licence issued by Local authority (iv) EB card with latest receipt

Rule 4(10) Partnership :Addition or retirement deed along with electronic Form B

Rule 5(1) (a): If registering authority satisfied on electronic Form A, assign TIN in Electronic Form D with his digital signature, WITHIN TWO WORKING DAYS from the date of receipt of the application

R 5(1)(c) : If registering authority not satisfied to send notice, if no notice is received, applicant shall be deemed to be registered, and assign TIN within Two days after expiry of the said period

R 4(b) for “Form E” substitute “electronic form B along with connection documents”

Rule 4(8) Insert: Any application to amend RC shall be in Electronic Form B along with connected documents submitted electronically

Rule 6(1) Add the following Proviso: Provided that the dealer maintain accounts in electronic form shall furnish the details to the registered authority in Form G1. Provided G1 to be submitted with 30 days from 29.01.2016, or within 30 days from the date of commencement of business /with in 30 days from the date of installation of software. Modification, deletion or addition to be informed to Registered authority within 30 days.

Rule 7(1)(a) : substitute: Those who are liable to pay tax OTHER THAN u/s 3(4),6,6A,8 in Electronic Form I along with Electronic payment of fee

R 7(1)(b) Option u/s 3(4) is final for the financial year , to give Form K-1, with 30 days from the commencement of financial year, or 30 days from the commencement of business

R 7(1)(c) Those who are opted to pay tax u/s 3(4),6,6A,8 to file electronic Form K along with proof of payment of tax

Rule 7(2): HO to include goods consigned to the Agent in Form I

Rule 7(5) OMITTED (as exist: every dealer to file return in duplicate )

Rule 7(7) substitute:: Fourth schedule goods dealers to file Electronic Form I-1 before 20^th May of the succeeding year

Rule 7(10) Insert: if failed to claim ITC, other than inspection, audit etc., he can claim the same by FILING REVISED RETURNS before the end of the FY, or before 90 days which is later

IN Rule 8(6) add : Sec 25 (as exist: revision of assessment u/s 22,24,27,28,29)

Rule 9(1) Any person liable to deduct TDS,. Shall apply TAX DEDUCTOR IDENTIFICATION NUMBER (TDIN) in electronic Form XX, and to obtain the same before making deduction. For those who already deducted TDS, to apply Electronic Form XX within 30 days from 29.01.2016

Rule 9(1)(b) TDS deduction in Electronic Form R before 20^th of the succeeding month

Rule 9(2) :Electronic form S generated by the AO to obtain

Rule 9(3) Electronic Form T to submit based on Electronic Form R

Rule 10(2A) Insert: Those who are claiming ITC, whenever it is deemed necessary by the Assessing Officer, THAT THE TAX DUE ON SUCH PURCHASE OF GOODS HAS ACTUALLY BEEN REMITTED INTO GOVERNMENT

Rule 10(2B) refund shall not exceed the actual payment of tax, on the purchase of goods effected by him

Rule 10(7)(a):substitute: The Principal is entitled for the ITC of the goods transferred to the Agent, and it is adjustable to any liability of the Principal

Rule 10(7)(b)substitute: Principal is entitled for ITC with his TIN number and agent cannot claim ITC

Rule 10(9)(a) Omitted (as exist: ITC can be claimed on Interstate sales if C is filed)

Rule 11(1) :for Notice Form P, substitute: notice in Form P1

Rule 11(2) for “Form W” substitute “electronic Form W” in two places

Rule 12A: Every application in Sec 48A (ACAAR) in electronic VV to submit

Rule 14(1)(a) substitute : Appeal u/s 51 or 52 filed either manually or electronically in Form X, if electronically done, to file ONE hardcopy along with original order

Rule 14(2): substitute “electronic payment of fee”

Rule 14(7)(a) substitute: Revision petition :either manually or electronically in Form Y, if electronically done, to file ONE hardcopy along with original order

Rule 14(10)(11)(12) substitute: Appeal u/s 58 in STAT, file either manually or electronically in Form Z, if electronically done, to file TWO hardcopy along with original order

Rule 14(11)(a) STAT-Review petition in Form BB –manually or electronically

Rule 14(11)© “Electronic payment of Appeal fees 2% of the disputed tax, penalty OR Rs 500 minimum

Rule 14(12) Enhancement petition in Form CC –manually or electronically

Rule 15(3) : substitute: Delivery Note in Form JJ, generated from the site, along with transporter’s way bill in Form MM generated from the site

Rule 15(14) substitute: If Export is made from the state or from other state : (a) Sale invoice(b) Trip sheet or log book (c) Electronic Form KK. FOR IMPORT: After clearance in Customs,(a) copy of B/E (b) Electronic Form KK (c) Trip sheet

Rule 15(15) The Printout of Electronic Form KK can be used by the Clearing agent

Rule 15(17) to produce electronic Form LL transit pass, for those goods in Sixth schedule

Rule15(18) substitute: Goods vehicle to carry: (a) Trip sheet/Log book (b) Electronic Form JJ along with Form MM/KK (c) if agricultural produce, certificate from VAO

Rule 15(19)(a) OMITTED (as exist: Notice, summons etc., by giving or tendering it to such dealer or his manager or agent or AR or legal practitioner)

Rule 15(22) Insert: DCTO/CTO/AC/DC under the control of JC may exercise power u/s 72

Rule 16A- Electronic Form WW to file within nine months from the end of the FY

Rule 17 (2)(e)(i) VAT practitioner application in Electronic Form UU

Rule 19(1)(d) Insert: By electronic mode, thro the Registered electronic user account of the dealer in the Website or thro the Registered electronic mail address of the dealer

Rule 23 –Mode of payment: Tax fees or any other amount due under this Act shall be paid by means of Electronic payment in online or offline

Rule 25- For reply to notice and such other documents shall be submitted only in the appropriate electronic forms generated from the website. Electronic submission with digital signature of the dealer. If does not posses DSC, to take hardcopy, sign it and submit to the AO, failure to file the hardcopy, SHALL INVALIDATE SUCH ELECETRONIC SUBMISSION. All persons registered under the Companies Act, shall submit the application and connected documents in electronic form with DSC ONLY

 NEW SECTION 67-A of the TNVAT Act, 2006

“67-A. Production of Advance Inward Way Bill. – The driver or any other person in charge of the goods vehicle entering into the State from a place outside the State to a destination within the State, carrying any of the goods as may be notified by the Government, from time to time, shall, on demand, produce at the checkpost on its route or before such authority as may be prescribed in this regard, advance inward way bill in such form and in such manner as may be prescribed.”

NOTIFIED GOODS:

In terms of the Notification G.O.(Ms) No.15 dated 29.01.2016 the following are the notified goods for the purpose of Inward Way Bill.

• Refrigerators, air-conditioners, air-coolers and water-coolers;
• Alcoholic Liquors of all kinds for human consumption falling under the Second Schedule to the Act;
• All kinds of non-ferrous scraps;
• All types of plastic granules, plastic raw materials including master batches, and scraps and all kinds of plastic products;
• Tobacco products falling under the Second Schedule to the Act;
• Cement, including white cement and their substitutes and concrete mixture;
• Granite blocks, ceramic tiles, and marbles of all kinds;
• Electrical goods of all kinds;
• Iron and Steel as specified in clause (iv) of Section 14 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), including scrap, stainless steel sheets, iron and steel products;
• Cellular Telephone (Mobile Phone) including smart phones and its accessories;
• Oil seeds as specified in clause (vi) of section 14 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956);
• Raw Rubber of all grades and qualities;
• Sanitary equipment and fittings of every description;
• Timber, plywood and wood based products;
• Vegetable oils including refined vegetable oils; and
• Cotton and Readymade garments.

The Main Impacts

• Those dealers who source their goods from unregistered dealers and pay no input VAT on these purchases, shall not be eligible to opt for composition scheme
• The sourcing goods from other states via purchase in those other states and stock transfers made to Tamil Nadu shall not be allowed the payment of VAT at beneficial rate under the composition scheme.  Thus, dealers availing composition would have to 100% source their goods from within the state of Tamil Nadu only.
• There shall be no purchase tax on sugarcane
• Introduction of Tax identification Number for Works Contract TDS
• Only those goods sold to SEZ units for use in their authorized operations i.e. for use in manufacture, trading, production, processing, assembling, packing or for use as packing material or packing accessories shall be eligible for zero-rating benefit. Further, it has been proposed to make only the input tax actually paidby the dealers on the goods sold for the above mentioned purposes to the SEZ units, to be eligible for refund
• The proposed amendments seek to provide credit only to the extent of input tax actually paid by the dealers and on the establishment of the delivery of goods and of the payment of VAT by the selling dealer to the government.
• The sub section inserted to clarify the position relating to assessments of casual dealers and dealers for whom the assessment year is the first or last year of business.
• Maintenance of Records for 6 years
• Uniform penalty of 100% for tax evasion
• No issue of duplicate Registration certificate
• e-governance in the administration of VAT Departments and preparation, maintenance and submission of electronic records using digital signatures, as may be notified.
• VAT shall be payable on the full price of the alcoholic liquors.
• Online Revised Returns, Form WW Audit Report, Inward way bill etc.,

Conclusion:

The Department of Commercial Taxes of Tamilnadu has revamped the entire system and seems to provide dealer friendly website for the sake of the trading community. It has to be seen as to whether it really benefits the assessees in implementing the total solutions project.

(Author is associated with Lore Tax Professionals Private Limited and can be reached at [email protected] )