CA Umesh Sharma

Arjuna (Fictional Character): Krishna, yesterday festival of Raksha Bandhan was celebrated. On this occasion Maharashtra Sales Tax Department has issued a Trade Circular for “Computerized Desk Audit” of dealer for collecting taxes. Approximately the department has issued more than one lac intimations for this.

Krishna (Fictional Character): Arjuna, Raksha Bandhan means expressing love, strengthening relations between brothers and sisters. Elder should save the younger. But Sales Tax department has done opposite of this. The department instead of saving the dealer who follows the VAT laws brought “Bandhan” for the year 2011-12. The department has brought a system of “Computerized Desk Audit” in which the mistakes of the defaulting supplier’s taxes are to be recovered from the dealer who has purchased goods from such defaulting dealers.

Arjuna: Krishna, “Computerized Desk Audit (CDA)” applies to which dealer?

Krishna: Arjuna, the dealer who has purchased goods and availed set off in the year 2011-12 and from other information by applying 11 parameters has planned to collect additional taxes. The major parameters from 11 parameters are as under:

  1. If set off availed on the purchased from non-genuine dealer
  2. If set off availed from the supplier from non-existing TIN
  3. If set off availed from the supplier whose registration is cancelled
  4. If set off taken from the composition dealer
  5. If set off availed from the supplier who has not filed return
  6. In VAT Audit Report if VAT and CST is payable

If we see above parameter it could be observed that if the supplier has made mistake or has not followed the tax laws then the dealer who follows the laws will have to suffer. For e.g. If Mr. A Purchased goods from Mr. B, and Mr. B has not paid the taxes or is a defaulter then Mr. A will have to pay taxes along with interest.

VAT department has issued a list of dealers selected for “Computerized Desk Audit” on the website. In this dealer having refund, PSI scheme holders, Large Taxpayer Units, investigation pending cases were excluded from CDI.

Arjuna: Krishna, What dealer will have to do under “Computerized Desk Audit?”

Krishna: Arjuna,dealer should download Form 604A by mentioning User ID and Password on the website. In this CDA notice the parameter due to which notice was issued is mentioned from the 11 parameters. The dealer should verify the stated parameter with the books of accounts. If dealer agree with the CDA finding then he should download CDA Compliance form and should pay the taxes along with interest and if already paid then the information of the same should be mentioned in the CDA Compliance form.

Arjuna: Krishna, How dealer will get relieved from this “Bandhan?”

Krishna: Arjuna, dealer will have to give all information and file annual revised return u/s 20 (4) (c). After filing revised return compliance report should be uploaded. The last date for filing compliance report is 3rd September 2014. If as per sales tax department all things are completed then by giving Form 605 dealer will be relieved.

Arjuna: What dealer should do if he does not agree with the tax liability?

Krishna: If dealer has not done compliance according to this procedure then he will have to complete his assessment by visiting in the sales tax department. Further in this penalty may also be levied. It means either online or by visiting in sales tax office compliance will have to be done.

Arjuna: Krishna, what one should learn from CDA?

Krishna: Arjuna, Sales Tax Department on this occasion of Raksha Bandhan placed dealers following tax laws in “Bandhan”. Sales tax department without any mistake of the dealer asking to pay taxes along with interest. Therefore dealers thinking is changing towards department and following tax laws. The dealers situation is like “the one who follows only suffers” or “instead of catching thief good one is caught.” It means without catching the one who is not following the laws he was given the license for not following. On this one should not expect that sales tax department will give any relief. Therefore as per “Sangh Shakti Kaliyuge” all dealer are required to come together. The one who is following laws should not be penalized they should be saved. For the followers of any law there should be “Raksha” and no “Bandhan”.

Dear Taxguru lovers, your comments please, as they are valuable.

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  1. Bhavesh Mehta says:

    Sir, i would like to suggest some of my ideas for st dept. actitivity.

    1) why we need STO,if every thing on system,

    2) As per above issue govt. encourage to do transaction by cash only i.e. no quation of Bill & Vat Nos. (Forgot about Vat Amt.)

    3) Always punished to buyer, who insist for taking bills of every goods.

    Buchpan me kahavat suni thi, hamare desh me bhale sat gunegar chhut jave magar kisi begunah ko saja nahi honi chahiya.


    Bhale sat begunah ko saja ho jaye magar kisi gunegar ko saja nahi honi chahiyea

  2. P. K. jain says:

    Sales tax dept.should make efforts to collect taxes from the dealers who have collected tax ,but not paid to govt.But officials responsible to collect taxes don’t want to take efforts and want easy money for themselves and to corrupt govt. Traders must unite and it is time to throw this govt out.
    In pune sales tax dept there was car facilities for the tax payers and their representatives, but now their cars are not allowed in side the compound only sales tax officers cars are allowed . Parking lot has been converted in to garden.
    Traders who are working hard day and night and paying taxes to run the govt and to enjoy these govt officials, are being insulted and misbehaved in the dept.NOW IS TIME TO CHANGE THE GOVT ,TO BRING THE CHANGES IN THE SALES TAX DEPT OF MAHARASHTRA.

  3. devnayak says:

    we have seen these issues from last four years dealer has to pay the taxes forcefully without any fault.If the seller wrongly or unknowingly does not put tin no buyer has to suffer. No one has objected but paid money without any hesitation and wasted so much time also.

  4. Abhay Dagli says:

    In one of my clients case, his suppliers name is shown in FOrm No. 604A, but to my surprise the said uppliers name is not there in Non-Filers List for F. Y. 2011 – 12, what recourse in such cases?

  5. CA Himanshu says:

    Dear Umesh Sharma,

    Nicely narrated & compared Raksha Bandhan story with MVAT laws. But such a govt dept burocrates are like hard-skin people and for them this story is like water on stone. And they always beleive in haresment to the honest tax payers and make money by threatening provision of laws.

  6. ANIL KEDIA says:

    Tax complying dealers punishment is like promoting non compliance on the part of government. Non filers lapses should bwe got rectified at Govt level instead of asking complying dealer to pay for it. Govt can enforce the law by coercive active wuereas the common businessman can not have recourse to this path.

  7. V R Jogeswara Rao says:

    The dealers situation is like “the one who follows only suffers” or “instead of catching thief good one is caught.” It means without catching the one who is not following the laws he was given the license for not following – The department’s attitude is rightly described with your mild humor. You are a genius. My compliments to you.

  8. madan mohan gupta says:

    If I am not exceeding my authority I will like to suggest that at the time of filing on line sales tax return form 2A and 2B whenever we are filling name of dealer and TIN No If there is any problem with the same it should be coloured red on line. Suitable technology can be developed and we may be required to file 2 A and 2 B monthly basis to detect problem well in time before the dealer’s Bill is paid by customer

  9. JAYENDRA says:

    Dear Umeshji,

    Many thanks for your article on MVAT in the form of Krishna-Arjun dialogue.
    Indeed no one ever thought that you can simplify it by this question and answer form. In fact it is oldest Indian tradition of explaining complex subject through question and answer session between Guru & Shishya.

    I will take this as a small part of your MVAT Gita and look forward for explanation of other Adhyays too in similar vein.


  10. jignesh says:

    I thin this is an unique way to harrase genuine dealer. Dept it self encourage the dealer to go on wrong side as the dealer who follows rules have to pay penalty. Before makeing purchase from any nre dealer one has to make at most care that supplier is genuine or not. It is just like that dealer will be auditor of supplier. One more thing that to collect & pay the tax must be by seller then how can dept ask tax from purchaser

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June 2021