Tax Bar Association
Ref: 005/2021 (Date: 25th July 2021)
The Hon’ble Chief Commissioner
Sub: – Request for clarification of category of outstanding demand or disputed demand with reference to the Amnesty Scheme -2021
Reference: Notification No. No.F.12(29) FD/Tax/2021-269 dated 24th February 2021
At the outset, we would like to place on record our sincere appreciation and thanks to our State Govt of Rajasthan and your good self for introduction of such an unprecedented Amnesty Scheme under Rajasthan VAT. The Amnesty Scheme 2021 has been introduced with dual objectives to clear backlog of all the pending demand and providing maximum relief to dealers through recovery of very reasonable amount of outstanding principal amount of tax. (90%/95%/100%).
In normal cases, where there is a demand of admitted tax (demand pertaining to regular assessment or escape assessment) the government is accepting 90% of tax amount in the 1st Phase. Whereas in category – 3 (Outstanding or disputed demand related to Rate of tax, Classification of goods or Interpretation of Act other than concealment, fraud or misrepresentation) dealer had to deposit only 50% of the disputed tax.
Here, we would like to bring to your kind attention the cases of Input Tax Credit mismatch due to which there is outstanding demand in almost all the years since 2011-12. Till then Government has issued number of notifications describing the procedure for matching of the mismatched Input Tax Credit but the results are very negligible. Please note that, here the outstanding demand is due to the clerical error either on the part of the seller or the buyer while filing their quarterly returns. Moreover, there are some cases where sellers have defaulted in filing of returns and Department has recovered the outstanding demand by passing Ex-parte Assessment Order but the buyers are not aware of this fact and do not know the amount which has been recovered from the seller. Further, when seller does not file returns, he also looses the benefit of Input Tax Credit claim.
The issue of ITC mismatch clearly falls in the category 3 of table A Outstanding demand due to interpretation of Act. Here dealers claim that they had already paid the full amount of tax to the seller, therefore, they are entitled for the claim of Input Tax Credit but the Assessing Officer says that there is a mismatch on the portal. Further, Assessing Officers are reluctant to consider the demand of ITC Mismatch under category 3 of table A.
We further wish to submit that, due to the reasons mentioned above, now dealers are trying their best in getting their demand rectified through procedure of matching of mismatch ITC and finding it very difficult to pay the tax again on their purchases under the Amnesty Scheme.
Therefore, either there are not showing their interest in filing of willingness in clearing the outstanding demand under Amnesty scheme or even if they have shown willingness they are not accepting the demand shown by the department and are waiting for the disposal of their ITC mismatch application. Further, please note that, due date for matching of ITC Mismatch has been extended up to 30.09.2021 due to which the matter is being delayed. News published in the “Dainik Bhaskar Jodhpur edition” dated 24.07.2021 regarding the issue of ITC Mismatch is attached herewith for your reference.
Further, we would like to bring to your kind attention on the decision given by double bench of the Hon’ble Rajsthan High Court, Jaipur in case of R.S. Infra Transmission Ltd. on dated 11.04.2018 “that if the buyer pays the amount of tax along with the value of the goods to the seller he will be fully entitled for the amount of Input Tax Credit irrespective of the facts that the seller has deposited the tax or not or the seller has filed the returns or not.” This decision was given relying on the judgment of double bench of Delhi High Court in the case of Arise India Ltd.
It is pertinent to mention that, the Special leave Petition (SLP) filed by the Delhi government against the decision of the Hon’ble Delhi High Court as mentioned above was dismissed by the Hon’ble Supreme Court of India.
Here, please note that, if dealers decides and knock the door of the Appellate Authority the matter will go in the favour of assessee on the basis of decision of the Rajasthan High Court. But to avoid undue cost of litigation, wastage of time and energy and to purchase piece of mind they will still prefer to pay 50% amount by availing the benefit of Amnesty Scheme 2021.
Further, we wish to highlight that, relief has been granted by your good self in the matter of ‘Entry Tax’ by allowing the assessee to deposit 50% of the amount due, therefore, on the same lines here benefit should have been allowed to the dealers under Amnesty Scheme – 2021.
On the basis of facts mentioned above and in order to grant relief to the dealers, we Tax Bar Association at Bhiwadi humbly requests your good self to advise / direct the Assessing Authority to consider the demand of ITC Mismatch in category 3 of table A and accept 50% of the disputed tax under Phase-1 of the Amnesty Scheme 2021.
It will help in fast disposal of the applications filed under Amnesty Scheme 2021 by depositing the amount of disputed ITC Mismatch.
In case your honor require any other information/clarification/suggestions in this regard we shall be pleased to furnish the same.
Tax Bar Association, Bhiwadi