CA Rajesh Saluja Lunawat & Co.

Transcription

1 DVAT Latest Case Laws & DVAT Third Amendment Bill & Proposed Amendments in Budget CA Rajesh Saluja Lunawat & Co. Chartered Accountants

2 Latest Case Laws LARSEN AND TOUBRO LTD. Search misuse of sec 60(4) read with Rule 22 (2) INGRAM MICRO INDIA PVT. LTD. Issuance of C Forms PROGRESSIVE ALLOYS (INDIA) PVT. LTD. Default Assessment Purchase from Bogus Dealers

3 Larsen and Toubro Ltd. Facts of Case: A survey was conducted on (Friday), around 5:30 pm, at three premises of the dealer at Nehru Place, Moti Nagar and Peera Garhi The VATO demanded important documents The representative of petitioner requested for some time as the dealer was in the process of shifting its premises and bulk of documents were packed in boxes and even their systems were not connected to central server VATO was not willing to grant time, therefore as a consequence sealing order Dt were passed. Petitioner moved application on de-sealing on Application was disposed off on same day with a pre-condition requiring the petitioner to deposit a sum of 600 cr., per section 60(4), read with Rule 22(2) of DVAT.

4 Larsen and Toubro Ltd. Section 60(4) - Where any premises have been sealed under clause (f) of sub-section (2), of this section or an order made under sub-section (3) of this section, the Commissioner may, on an application made by the owner or the person in occupation or in charge of such shop, godown, box, locker, safe, almirah or other receptacle, permit the desealing or release thereof, as the case may be, on such terms and conditions including furnishing of security for such sum in such form and manners as may be directed. Rule 22(2) - A person required to pay security under sub-section 4 of section 60 for de-sealing or release of any premises including the office, shop, godown, box, locker, safe, almirah or other receptacle, shall furnish security of a sum equal to one per cent of the maximum of GTO of last three years or a sum equal to five lakh rupees, whichever is higher.

5 Larsen and Toubro Ltd. Rule 23 (2A) - The security required to be furnished by a person under sub-section 4 of section 60, shall be, at least 50% in the form of security specified at sl. no.1 of the Table Forms of Security below and balance may be in any of the forms of security specified in the said table. Sl. No. 1 - Cash

6 Larsen and Toubro Ltd. Other Facts: The dealer went to court stated that their annual tax liability is around cr, and till date they had deposited 24 cr and were willing to deposit 5 cr more as security for de-sealing of premises Court agreed and thereafter on 22 nd January 2016, court was told that the relevant files of the case were not traceable. The file presented in court did not have any noting prior to the survey date. The Deployment Order mentioned three addresses of the dealer, whereas the dealer has moved from two of three addresses mentioned in DO. The team sealed the two new premises also.

7 Larsen and Toubro Ltd. Observations: As per Rule 65 of DVAT Rules, 2005, where the commissioner wishes to appoint an officer to exercise powers in Chapter X of the Act, the same shall be done through Form DVAT Whereas, the DVAT team instead of DVAT 50, was only carrying Deployment Orders. Rule 65 also requires every officer or other person authorized by Commissioner, to produce the authorization in Form DVAT 50, if requested by the owner or occupier of any premises. Also, the above mentioned power is jurisdictional power - Whereas, in this case the team visited three different premises under three different jurisdictions Section 60(2) start with Where the commissioner has reasonable grounds.to avoid or evade tax or concealing tax liability Section 60(2)(f) Seal the premises of the dealer

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9 INGRAM MICRO INDIA PVT. LTD Facts of the case: Vide Order Dt , The Assistant Commissioner rejected the request made by Petitioner for issuance of C forms for 3 rd and 4 th Quarter of Earlier by order Dt , in writ petition no of 2015, the department had cited 10 reasons for rejecting the Petitioners request. Some important reasons were: - The said purchases were not shown in returns of respective quarters. - Said purchases were not entered in Purchase Register (DVAT 30) - Said purchases were not shown during the special audit conducted for and At the time of passing of Assessment Order, the said purchases were not declared.

10 INGRAM MICRO INDIA PVT. LTD - The bank statements and stock registers were not produced in the course of the hearing pursuant to the order of the court.

11 INGRAM MICRO INDIA PVT. LTD Observations: Under Rule 5(4) of CST Rule, 2005 There are four contingencies whereby request for issuance of c forms may be refused by the commissioner. After affording the applicant an opportunity of being heard, for reasons to be recorded in writing. Rule 5(4) (i) C Forms can be refused where the dealer has defaulted in furnishing a return, including a reconciliation return or returns in accordance with the provisions of law or in the payment of tax due according to such return. Rule 5(4)(iv) C Forms can be refused if some adverse material is found by the commissioner suggesting any concealment of sale or purchase or furnishing inaccurate particulars in the returns.

12 INGRAM MICRO INDIA PVT. LTD Observations: As far as purchasing dealer making a request for issue of C forms under the CST Delhi Rules, there appears to be no such inflexible condition as to the time within which the request should be made. The department did not state that the rejection of the dealer request is on account of any fictitious interstate purchase transaction. Therefore in this case there is nothing to indicate the Rule 5(4)(iv) of the CST Delhi Rules is attracted. The department agreed that there was no adverse impact if the C forms were to be furnished even at this stage. State of A.P. Vs Hyderabad Asbestos Cement Production Ltd. (SC) Late submission of C forms.

13 PROGRESSIVE ALLOYS (INDIA) PVT. LTD. Facts of the case : Order Dt. 9 th March 2015 of Default Assessment of tax, interest U/s 32 of the DVAT Act Order Dt 9 th March 2015 levying penalty U/s 33 of the DVAT Act Two penalty notices Dt 16 th December 2014, issued U/s 86(14) of the DVAT Act Notice U/s 59(2) Dt. 19 th June 2015 and order of the same date, which was subsequently withdrawn by order Dt. 17 th July 2015 As this order was withdrawn by the department treating them as non est. Show cause notice DT 5 th January 2015 and Order Dt. 5 th January 2015, cancelling the registration of the Petitioner.

14 PROGRESSIVE ALLOYS (INDIA) PVT. LTD. Respondent (D T & T) Contention: That despite three notices U/s 59(2) on 21 st Oct, 18 th Dec and 29 th Dec 2014, the petitioner failed to produce BOA, records and registers Also failed to file a reply to the said notices That registration of both GSA and OSC (Bogus Dealers), have been cancelled and neither have sought revival of their respective registration. The respondent also submitted that if the petitioner was aggrieved by the order, he should have filed an appeal instead of filing a writ petition.

15 PROGRESSIVE ALLOYS (INDIA) PVT. LTD. Petitioners Contention: When a notice was issued on 19 th June, for the very same period for which the order dated 9 th March 2015 was passed, there was confusion as to whether the order dated 9 th March 2015 survived at all. Even though the order dated 19 th June was subsequently declared invalid (non est), still the last portion of the said order required petitioner to appear before the VATO in terms of the earlier notice dated 19 th June That penalty notices and orders dated 9 th March and 19 th June 2015, levying penalty U/s 86(9) and 86(11), whereas neither of provisions applied in the instant case.

16 PROGRESSIVE ALLOYS (INDIA) PVT. LTD. Observations: Section 32(1): Default assessment of tax payable (1) If any person (a) has not furnished returns required under this Act by the prescribed date; or (b) has furnished incomplete or incorrect returns; or (c) has furnished a return which does not comply with the requirements of this Act; or (d) for any other reason the Commissioner is not satisfied with the return furnished by a person; Once a subsequent notice is issued and order passed, it makes the previous assessment null and void.

17 PROGRESSIVE ALLOYS (INDIA) PVT. LTD. Also the order dated 9 th March 2015, has been passed without indicating reasons for concluding that the purchase in question have been made from bogus dealers. Why not Appeal? Given the fact that so many mistakes have been committed by the VATO concerned, with respect to just one period of the third quarter of 2013, this is an appropriate case for the court to interfere in exercise of its powers under Article 226 of the constitution of India.

18 PROGRESSIVE ALLOYS (INDIA) PVT. LTD. Decision: The Court sets aside the impugned orders dated 9 th March 2015, under section 32 and 33 of the DVAT Act and the notices of penalty Dated 16 th December The proceedings emanating from the notice dated 29 th December 2014 issued U/s 59(2)

19 PROGRESSIVE ALLOYS (INDIA) PVT. LTD. Now What? In all such cases, the VATO is required to mention reasons for issuing notice 59(2), on the basis of which he is issuing such notice. A Dealer can ask for cross examination of the selling dealer. A dealer will have to prove that the transaction actually took place. Now the order should be a speaking order, rather than a preprinted fixed matter.

20 DVAT (Third Amendment) Bill, 2015 Collection of tax in advance (Advance Tax) Insertion of sub section 3(11) Section 29(2) Signing of Returns Insertion of section 50A Electronic communication of sale information Amendment of subsection 89(1) to 89(6) Enhancement in quantum of fine and imprisonment Insertion of section 91A Special Courts and Public Prosecutor Insertion of proviso to section 93(1) Compounding of Offence Restriction

21 Collection of tax in advance Notwithstanding anything contained in this Act to the contrary, powers have been given to the Government (L.G.) to notify the goods on which a person shall pay tax in advance Rate of Advance Tax : To be notified by the Government, but not exceeding the rates applicable on such goods under the DVAT Act. Applicable on Imports of specified goods into Delhi from a place outside India. Adjustment of Advance Tax so paid: It shall be counted towards the final tax liability of the taxable person. Exemption by the Govt. : The Govt. may by notification exempt any person or class of persons from payment of tax in advance or reduce the rate of payment of tax in advance subject to such conditions as may be notified. Exemption by the Commissioner: Application shall be made by the person to the Commissioner or an officer authorized by him, and after verifying all aspects of the case, the Commissioner would arrive at a decision that such person should be exempted from payment of tax in advance or that the rate of payment of tax in advance should be reduced, subject to imposition of such terms and conditions as he may deem fit.

22 Collection of tax in advance Presumptions (Unless it is proved otherwise by Importer) a. Imported goods are meant for the purpose of sale or for use in manufacture or processing of goods meant for sale, and b. Such goods or any product manufactured there from shall not be sold below the price at which such goods have been purchased and imported. Notwithstanding anything contained in this Act to the contrary, powers have been given to the Government (L.G.) to notify the goods on which a person shall pay tax in advance

23 Signing of Returns Sub section(2) is inserted to empower Commissioner to notify class of Dealers will file returns through digital signature

24 Electronic communication of sale information The Government may require any dealer or class of dealers to install such physical compliance devices or software, as may be considered necessary for instantaneous communication of the information of sale invoices to the Commissioner. The cost of equipment and installation of such device and the software shall be borne by the dealer

25 Amendment of subsection 89(1) to 89(6) with a fine of not less than the amount equal to tax deficiency involved or fifty thousand rupees, whichever is higher but not exceeding four times of the amount of tax deficiency involved has been added in all sections from 89(1) to 89(6) Fine U/s 89(6) has been increased from Rs. 100/- to Rs. 500/- per day on continuance of offence U/s 89(1) to (5)

26 Insertion of section 91A Special Courts and Public Prosecutor The Govt. may, if considers expedient or necessary, constitute, by notification in the Official Gazette, a Special Court with the concurrence of the Chief Justice of the Delhi High Court for the purposes of the trial of offences under this Act. For the Special Court, the Govt. shall appoint a person to be the Public Prosecutor and may appoint more than one person to be the Additional Public Prosecutors.

27 Compounding of Offence Restriction Composition of offence shall not apply in case of second and subsequent offence of the same nature.

28 Budget Some Facts & Figures Budget of Government of NCT of Delhi in is proposed at ` crore a. Plan Budget crore b. Non-Plan Budget crore VAT constitutes nearly 65% of total tax revenue of Delhi Government The per capita income of Delhi at current prices is likely to increase to in which is 11% higher over the per capita income of in The per capita income of Delhi is about three times higher than the per capita income of at the national level. The rate of inflation in Delhi was 4.9 percent as compared to 7.8 percent in Chennai, 7.4 percent in Mumbai and 5.7 percent at national level in the year 2015

29 Budget List of Items on which VAT rate is changed Battery operated transport means i.e. e-rickshaws, battery operated vehicles and Hybrid Automobiles (i.e. Battery driven with other fuel option) reduced from 12.5% to 5%. Sweets and namkeens reduced from 12.5% to 5%. Readymade garments value more than Rs.5,000 reduced from 12.5% to 5%. Marble in Delhi reduced from 12.5% to 5%. Watches valued more than Rs.5,000 reduced from 20% to 12.5%. All textiles and fabrics except khadi and handloom fabrics Now 5% (Now exempted fabrics are also made taxable). (Now has been rolled back by the government) Plastic waste increased from 0% to 5%. Footwear Footwear upto Rs.500 increased from 0% to 5% (now has been rolled back by the government). Footwear value more than Rs.500 reduced from 12.5% to 5%. School bags value more than Rs.300 reduced from 12.5% to 5%.

30 Budget List of Items on which tax rate is rationalised Sch. III, Entry no. 41A(3) - Inverters and UPS are taxable at 12.5%. However, there is a duplicate entry of UPS in schedule III leading to confusion. This entry has been removed. Sch. III, Entry no Ferrous and Non-ferrous metals entry has been changed to Ferrous and non-ferrous metals and alloys thereof including their sheets, foils and extrusions. Non-ferrous metals includes aluminium, copper, zinc etc to remove the ambiguity. Sch. IV, Entry no Tobacco and Gutkha, unmanufactured tobacco, bidis and tobacco used in manufacture of bidis and hooka tobacco entry changed to Un-manufactured tobacco, tobacco and tobacco products in all forms such as cigarettes (irrespective of form and length), chewing tobacco, gutkha, cigars, hookah tobacco, khaini, zarda, surti, bidis etc.

31 Budget Unique Reward Scheme A scheme introduced to encourage market and trade associations who contribute revenue more than the targets set for the year. Such associations will get 10% of the revenue over and above the target set for the year. Beside this, top 10 performing associations will get cash reward of Rs.5 lakhs each. The award money would be utilised for overall market improvement. This budget has given a powerful impetus to the public participation in tax management by launching a new scheme of Bill Banwao Inaam Pao'

32 THANKS FOR YOUR PATIENT HEARING!