The main intention of Govt., to repel old Sales Tax and introduce VAT was to remove cascading effect and thereby make Indian goods more competitive and marketable and in turn to raise good amount of taxes for the benefit of common man.

The Govt., later realised in a country like ours success of this story is only possible through self policing method as there is no suitable resources or man power with any Govt’s to watch huge number of dealers and assess bulk data.

In the process Govt., has brought in the following provisions to achieve its objective

1. E-sugama

2. E-filing of returns

3. E-Registration

4. E-statutotory forms

5. E-Audit

And the latest one is E-upass

Lastest e-upass in Karnataka is like old wine in new bottle as its history goes back to 2008.The first notification of asking the additional information in support of VAT return dates back to June,2008, vide Notification Sl.No. 105 KSA CR 155/2007-08,B’lore dt.23.06.2008.

Further it is to report that Karnataka is not the one state or first state in the country to seek this kind of information many other states in our country have successfully introduced with similar initial difficulties as of now we are facing.

And the present e-upass notification was issued on in exercise of powers conferred on Commissioner u/s. 35(1) of KVAT Act,2003 vide Notification No.-CCW/CR 44/2013-14 dt.29.04.2014 making mandatory submission of dealer’s whose total turnover in previous year exceeds Rs.50 lakhs. Owing to widespread protest the Govt. Announced upto 20.10.2012 as educative period to certain dealers.

After elapse of educative period was ended on 20.10.2012 and now the hot topic is regarding levy of penalty for non submission.

Everybody is interpreting in their own style and the Dept is simply avoiding the question of penalty by simply saying that at present we are not interested in levying/talking of about penalty provisions.

And now after completion of educative period few Dept officials started issuing notices of levying penalty without specifically mentioning under which proviso they are empowered to do so.

Hence to through some light on this issue and to analyze provisions which directly and indirectly speaks of penal provisions for non submission of e-u-pass statements in time are listed below.

1. Sec. 35.Returns

(1) Subject to sub-sections (2)to (4), every registered dealer, and the Central Govt., a State Govt., a statutory body and a local authority liable to pay tax collected under sub-section (2) of Sec.9, shall furnish a return in such forms and manner, including electronic methods, and shall pay the tax due on such return within twenty days or fifteen days after the end of the preceding month or any other tax periods as may be prescribed

Provided that the specified class of dealers as may be notified by the Commissioner shall furnish particulars for preparation of the return in the prescribed form or submit the return in the prescribed form, electronically through internet in the manner specified in the said notification”

Sec.72 Penalties relating to returns and assessment

(1) xxxxx

(2) xxxxxxx

(3)  A dealer who furnished a return which is incomplete or incorrect in any material particular as informed in notice issued to him, shall be liable to a penalty of fifty rupees for each day the return remains incomplete or incorrect”

(4) xxxx

(5) xxxxxx

(6) xxxxxxx

(7) Any dealer who fails to submit returns as required by the provisions of the Act continuously for three months or two quarters, as a case may be, shall on convinction, in addition to recovery of any tax or penalty or interest or other amount that may be due from him or levied on him, be punishable with simple imprisonment which may extent to six months or with a fine which shall not be less than five thousand rupees but which may extend to twenty five thousand rupees or with both and when offence is a continuing one, with a daily fine not exceeding two hundred rupees during the period of continuance of the offence.

Sec.34.Requirement to provide documents and information

Notwithstanding anything, to the contrary contained in this Act, the prescribed authority may, for any purpose related to the administration or enforcement of this Act, by notice, require any person to provide the prescribed authority, within such reasonable time as is stipulated in the notice, with any information or additional information, including a return under this Act, or any other documents, whether inside or outside the State. (Ref. Rule 148)

Sec.79 .Fraudulent evasion of tax

Without prejudice to the provisions of Sec.71 to 77, if any person is knowingly concerned, in or in the taking of steps with a view to the fraudulent evasion of tax by him or any other person, he shall be liable to a fine of one lakh rupees or double the amount of the tax evade, whichever is the greater or to imprisonment for a minimum term of six months but not exceeding five years, or to both.


(2).Failure to file return/returns or



(5).Non production of books of accounts, documents and non furnishing of information or



(8). Fraudulent evasion of tax

Last but not least it is fact that that only 3-4% of total collections of our State Govts., were collected through by enforcement and by penal provisions and the rest 95% of our total collections were out of best compliance of our consumers, dealers and the tax practitioners.

In this regard my humble request to my dealer community is kindly co-operate in submission of e-upass statement because it is purely in our interest and this is going to be the big strength of ours in discharging burden of proof u/s70(2) of KVAT Act,2003 before the court of law.

And my last humble request to the don’t make it one more VAT 100 in the dept vat soft folder, pl make use of data trace defaulters, punish and ease the life of best tax compliancer.

B.C. Guru SwamyB.C. Guru Swamy

Sales Tax Practitioner

Guru and Associates,Ballari

Cell:9448074876, e mail:[email protected]

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  1. s.v.Hundekar STP Hukkeri says:

    Good morning
    Without filling of e-upass in educate period there is compulsory penalty or descriptionery power to concerned LVO

  2. Nimesh says:

    Respected B. C. Guru Swamy Sir,

    Very well drafted article.

    With respect to above, I have a query. Please consider the following:

    1) We are a dealer registered under the Karnataka VAT Act.
    2) Our turnover from sale (in the current year as well as previous years) from Bangalore office to client is below INR 50 Lacs
    3) Our turnover from sale (in the current year as well as previous years) from Delhi office, i.e. to say interstate sale, to clients in Bangalore is above INR 50Lacs.

    Are we required to file our detail of sales to clients in Bangalore by way of E-Upass?

    Please guide.

    Further, will the position differ if we have surrendered the dealer registration in the current year?

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July 2022