CA Umesh Sharma

CA Umesh SharmaArjuna (Fictional Character): Krishna, the festival of Raksha Bandhan is coming soon. On this occasion Maharashtra Sales Tax Department has issued a Trade Circular for businessman for collecting taxes.

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 2012-13. The department has brought a system of “Computerized Desk Audit” in which the mistakes of the defaulting supplier’s taxes were recovered from the businessman who has purchased goods and follows tax laws.      

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

Krishna: Arjuna, the businessman who has purchased goods and availed set off in the year 2012-13 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 then Mr. A will have to pay taxes along with interest.

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

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. Interest is levied according to section 30(2) and if the Tax payable is more than 10% of Tax paid then 25% of additional Interest is required to be paid under section 30(4). If Tax is 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” that means when and how he should file compliance report and what after that?

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 18th September 2015. 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. The one who is following laws should not be penalized they should be saved.

Author Bio

Qualification: CA in Practice
Company: R.B. Sharma and Co
Location: Aurangabad, Maharashtra, India
Member Since: 27 Jan 2018 | Total Posts: 421
1. Central Council Member of ICAI. 2. Vice-Chairman of WIRC of ICAI for the period 2015-2021. 3. Youngest Chairman of Aurangabad Branch of WIRC of ICAI in 2002. 4. Author of Popular Tax articles series based on Krishna and Arjuna conversation i.e “KARNEETI” published in Lokmat on every View Full Profile

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December 2023