CA Vinod Kaushik
Almost all the dealers registered under Delhi VAT must have faced heat from their buyer due to mismatch in the sales shown by seller and purchased booked by buyer. This concept is commonly called as mismatch in form 2A and 2B which is creating trouble for the buyers and department in terms of unnecessary litigations and consequential demands of tax and penalties. In order to curb the unnecessary litigations and burden of mismatches the department has issued a circular (No. 21) dated 01-09-2015 which will work as an antivirus for above said diseases. In this article an effort has been made to correctly convey the spirit of this circular and major shift in earlier practice followed by dealers for revision of data in form 2A and 2B.
Why this circular is issued:
If the figure of sales shown by selling dealer matches with that of buyer there is no possible mismatch for the buyer and issue is settled once the seller files the return. But in case the seller either inadvertently or maliciously revise their return the mismatch will be generated for matched transaction also and that will open box of litigations for the buyer without any of his fault. To mitigate the difficulties, it has now been decided that matched transaction of a tax period would be hard coded meaning thereby that after the filling of return such transactions would be unaffected by revision of return. In this way, buyer would not be burdened with unnecessary mismatches, caused due to revision of return by selling dealers, in respect of already matched entries.
Possible cases where transaction will be hardcoded:
Case I: Where the buyer has shown purchase of Rs. 100 with input tax of Rs. 5 and seller has shown the same amount of sales i.e. Rs. 100 with output tax of Rs. 5. This case will be hardcoded by the system and will not be affected by revision of return by selling dealer as the transaction has been matched.
Case II: Where the buyer has shown purchase of Rs. 100 with input tax of Rs. 5 and seller has shown sales of Rs. 80 with output tax of Rs. 4. In this case the mismatch can be rectified by the selling dealer after revising their return and form 2b within the time frame given in section 28 of DVAT Act.
Case III: Where the buyer has shown purchase of Rs. 100 with input tax of Rs. 5 and seller inadvertently skipped to show any sales in his return. In the above case mismatch can be rectified by filing revised return by selling dealer and case will not be hardcoded.
Procedure to decode the hardcoded transaction:
Where the transaction has been hardcoded by system and mistake has been committed by both the buyer and seller in their respective returns. This case is very rare to happen where buyer has shown purchase of Rs. 50 with input tax of Rs. 2.50 and seller has shown the same amount of sales i.e. Rs. 50 and output tax of Rs. 2.50 but actual transaction was for Rs. 100. In this case revision cannot be done easily by revising the original return filed. In this case the buyer has to approach the assessing authority of his ward with a clear message from his selling dealer admitting the mistake committed. The Assessing Authority after checking the copy of invoices and other documents may open the particular hardcoded transaction and allow both buyer and seller to revise their return.
Really this is a welcome circular issued by VAT department in order to curb the practice of revising return once the transaction has been matched. As of now many cases pending at OHA level where the selling dealers has revised their return maliciously which caused a mismatch in ITC at buyer’s end and leads to avoidable difficulties. After issuance of above circular the matched transaction will not be affected by revision of return subsequently and will mitigate the difficulties faced by buyers.
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