DVAT- Resolve mismatch in Annexures 2A and 2B

CA Pratik Anand

DVAT- Only two months left to resolve mismatch in Annexures 2A & 2B for FY 2013-14

The problems with mismatch in annexures 2A and 2B are very common with respect to filing of vat returns under the Delhi VAT Act.

The time-limit for revising the returns under the DVAT Act for the financial year 2013-14 Is 31st March’2015 after the amendment in the DVAT Act in 2012 wherein the period prescribed for revising the return under DVAT Act is within financial year following the end of the financial year of tax period to which the original return relates i.e one year from the end of the financial year to which the return relates.

The Mismatch in the Annexure 2A & 2B of the VAT Return occur due to the following reasons:

1. Quoting the wrong TIN by the selling dealer

This is a common mistake which happens while filing Annexure 2A & 2B of DVAT Return. Where the selling dealer quotes wrong TIN in the Annexure 2b, the mismatch between the data of selling & purchasing dealer is created in 2A & 2B and purchasing dealer is denied credit of input tax on the purchase just because of mismatch in TIN i.e a typographical error.

Remedy is to check all the TINs from the DVAT Website to ensure the TINs are correct.    

2. The selling dealer showing the sales in the next Quarter or month

This Commonly occurs in case of invoices with the last date as the invoice date.

Many times the selling dealer takes the sales invoice in the next tax period as the invoice is made late i.e after the due date of payment of VAT.

The purchasing dealer also does not claim input tax on the purchase invoice sometimes due to invoice being received after the due date of payment of VAT and in turn claims the input tax credit in the next tax period which gives rise to mismatch due to excess input being taken in the next month.

The remedy for this kind of mistake is the timely issuance of invoices by the sellers and back-dated invoices should not be made.

If in case the invoice is received late then it should be claimed only in the period to which it belongs.

3. Debit/Credit Notes being given

Many times the Debit/Credit notes are issued for sales/purchase returns, discounts, change in bill amounts etc. However, while filing the Annexure 2A/2B, one party considers such debit/credit note and shows the sale/purchase by the reduced amount but the other party shows it by the whole amount not considering debit/credit note. This gives rise to mismatch and demand being raised.

4. Filing the Annexure 2A/2B with the wrong rate of taxes

This error commonly occurs in case of dealers which are purchasing multiple items from a single dealer attracting different rates of taxes. For example, while entering the data for the return, the purchase @ 5% is shown as being purchased at a different rate viz. 12.5%, this results as excess input being claimed and resulting in mismatch.

Care should be taken in case of multiple rate items being purchased from single dealer to enter at the rate charged in the invoice.

5. Claiming input tax credit on retail invoice

Many times by mistake, input tax credit is taken on the tax charged on a retail invoice. This occurs commonly in case of purchases from dealers issuing both Tax Invoice and retail invoice. Care should be taken that input be taken only on tax invoices issued by the selling dealer.

6. Cancellation of TIN of the selling dealer

Sometimes, the TIN of the selling dealer is cancelled due to various reasons and input tax credit is taken case of invoice of such dealer. This results in excess input being taken where it should not have taken and there is mismatch. Although, in this case there are High Court cases which say that inspite of TIN of selling dealer being cancelled, the input on genuine purchase invoice can be taken issued before date of cancellation of TIN.

Care should be taken to check the TIN status of the purchasing dealer while entering the data in Annexure 2A and 2B.

Remember that due the above mistakes, there is a mismatch and demand is raised by the DVAT deptt. The said mismatches can be rectified by filing revise returns for the relevant tax periods. However, for FY 2013-14 the revise returns can be filed only upto 31^st March’2015. Therefore, only two months are left to revise and rectify the errors in the returns for FY 2013-14.

After the expiry of the above-mentioned time period, the only remedy will be to appeal against the order of the VATO in respect of the mismatch.

Hope you find the above information relevant and useful in your daily practice

(The author is a CA in practice at Delhi and can be contacted at: E-mail: capratikanand@gmail.com, Mobile: +91-9953199493)

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