CA Umesh Sharma
Arjuna (Fictional Character): Krishna, this Year “Makar Sankranti” is on 15th January and also the last date of submission of Maharashtra VAT Audit Report. There is Happiness everywhere because of “Makar Sankrati”. Many are busy in flying kites and buying gift (Vaan). Accordingly, how interesting Kite fight between department and VAT dealer?
Krishna (Fictional Character): Arjuna, on this auspicious occasion of Makar Sankrati it is joyfully said that “Til Gul Ghya God God Bola” but the Sales tax department says ‘’Til Gul Ghaya VAT Audit Report Upload Kara”. If we correlate VAT and Kite Flying then the “Kite Flyer” means Businessman, “Kite” means VAT Return, “Chakri” means the Records of Clients or Audit Report, “Hawa” means the Annual Turnover of Businessman, “Pej Taker” means VAT Audit Officer and “Manja” means Law. VAT Auditor means the one who solves the “Gunta”. We will learn the VAT Audit provision considering the occasion of Kite flying of “Makar Sankrati”.
Arjuna: Krishna, VAT Audit applies to whom?
Krishna: Arjuna, the Kite flies if there is Air, likewise considering the Annual Turnover it is decided whether to file return and conduct VAT Audit. If the Annual Turnover exceeds Rs. 1 Crore then the Taxpayer has to conduct VAT Audit compulsorily. For Financial Year 2012-13 this limit was Rs. 60 lakhs but from Financial Year 2013-14 it was increased to Rs. 1 crore. Also from Financial Year 2013-14, in case of liquor Dealer the limit is Rs. 1 crore for conducting VAT Audit. In Audit by solving the tangles it is checked whether the kite has flied properly or not that means it is checked whether the Returns are filed properly according to books of accounts. Many times the Taxpayer gets trapped because of improper maintenance of Books of Accounts.
Arjuna: Krishna, What is the most important thing in VAT Audit Report?
Krishna: Arjuna, In Kite Flying the most important is “String” and so as in VAT Audit the important is compliance of Law and accordingly annexure J1, J2 of VAT audit report. In Annexure J1 the taxpayer has to mention customer wise annual sales, VAT on such sales along with TIN. Similarly in Annexure J2 the taxpayer has to give details of supplier wise purchases, VAT on them along with TIN. If this information is submitted wrongly then the VAT authorities will take the “Pej” of dealer and levy penalty and interest on the differential amount. The VAT authorities take away the Kite of the dealer and collects Taxes without allowing setoff. Day by day the Department is increasing the Computerization. Recently department has made available the facility of “Dealer information System” on the website of Mahavikas. In this the differences between J1 and J2 will be displayed from F.Y. 2014-15. This means it is most important to match Sales and Purchases. In this the Bogus and Hawala purchases come to notice. Due to mismatch of sales and purchase, “Page” / “Kata kati” never end and it results into loss of set off to the purchasing dealer. Many businessmen’s take law in hand and then run in the difficulty like the string cuts the Hand.
Arjuna: Krishna, What other care Taxpayer should take during Vat Audit?
Krishna: Arjuna, Taxpayer should pay attention towards the following: 1) The Taxpayer should reconcile the sales and purchases given for Vat Audit with the Audited Balance Sheet as we check the “Kanna” of Kites. If it is not proper then the Kite may not fly. 2) Setoff should be availed only o purchases made in Maharashtra. CST declaration forms i.e. C, F, H, etc. Forms should be mentioned according to the Sales Invoice. If there is Air then only the Kite flies otherwise we have to give “Thunkya” to the kite or it gets “Behawa”. It becomes difficult to collect Forms otherwise Tax has to be paid. If all this Information is not properly mentioned then the Dealer has to go to department again and again and has to pay tax and Interest. 3) Taxpayer should keep ready the information related to Tax, Challans and returns of VAT. That means all things required for Kite flying i.e. Patang, Manja, Chakri etc. otherwise the problems may arise at the time of Kite flying. Similarly all this things are essential for VAT Audit, otherwise difficulty may arise.
Arjuna: Krishna, What will happen if the Taxpayer has not filed the VAT Audit report on time?
Krishna: Arjuna, VAT Audit report should be submitted on time i.e. before 15th January, if not then penalty amounting 1/10th of total Sales Turnover is required to be paid. That means while flying kite (Doing Business) if Band Aid is not applied (VAT Audit Report is not submitted) the hand may get cut (Penalty may be imposed).
Arjuna: Krishna, what should be done if the Taxpayer has filed original return but during the Audit differences occurs in the sales and purchase turnover?
Krishna: Arjuna, if differences arise in the turnover and original returns filed then taxpayer can file Revised Return under section 20(4) (a) according to its periodicity, otherwise taxpayer in VAT Audit Report may disclose the differences between Returns and Audit and then can file Annual Revised Return under section 20(4) (b).
Arjuna: Krishna, What taxpayer should learn from this?
Krishna: Arjuna, now days it is not possible for everyone to fly Kite. Many cut the kite of others from “Sadi”. In Business Practices everyone should check the Tax compliance of opposite party. Otherwise problem may have to be faced and Sales Tax Department will help or not is unpredictable. Like in Kite Flying the expert only stay on the field to the end similarly in business the one who follows law will stay. Sales Tax Department should protect the Taxpayer following Law and should punish the Law evader. But many times this may not happen, businessman gets injured due to legal battles like while flying kite many Birds get injured. On the Makarsankrati “Til Gul Ghaya God God bola” is said, like this the dealer may keep the said hopes with sales Tax Department and will say “Refund Dya Aani Premane Bola.”
Dear Tax guru lovers, your comment please, as they are very valuable and precious.