JATIN MEHTA & CO Tax Consultants.

Transcription

1 JATIN MEHTA & CO Tax Consultants. 5, Panchvati, 1 st Floor, Corner of SV Road and Bajaj Road, Kandivali West, Mumbai Tel: / info@jatinmehtaco.com Website: Date: 22 nd March, 2016 For Private Circulation Only. Automation of Sales Tax Department with effect from 01 st April The Sales Tax Department has issued a notification with regards to Automation of the Department which according to the department will enable hassle free compliances and scrutiny of the dealers and bring down the number of visits by the dealer or his authorized representative to bare minimum levels. The Automation of various functions will be taken care by the Nodal officer who has been assigned to all the dealer who will be in charge to handle all functions such as registrations, amendments, issue of declarations, Assessment, Recovery and issue of refunds if any. The new system is based on SAP model. The web portal will offer different e services to the registered dealers through a common window. A dealer will be able to Edit the profile to make certain in the registration record. Comply with the filing obligations including returns, Audit reports, Refund Applications, Application for CST Declaration. File Appeals. Appoint his authorized representatives, auditors. See pending assessment and recoveries. Seek appointment for hearing. Seek clearance certificate. Pay Taxes online through electronic payment gateway. Issue MVAT TDS certificate.

2 We have tried to explain some of the important and relevant issues in brief 1. Returns. Current Scenario Currently we are filing returns in form 231,232,233,234 and 235 (as applicable) on monthly or quarterly or half yearly basis depending on the periodicity assigned by departments website such returns are being filed after filing sales and purchase annexure in form J1 and J2. Currently a validation is operational on website which prevents return from being uploaded in case the figures in annexure filed do not match with the same in returns. The trade at large had got familiar with these formats of J1 and J2 wherein party wise details of Local Sales and Purchase were submitted. Similarly when the dealer wants to revise the returns the annexure also will be required to be revised. Please note for the returns ending for period 31/03/2016 i.e. returns for March 2016, January 2016 to March 2016 and October 2015 to March Returns are to be filed in the same current format i.e. with J1 J2 annexure for Audit dealers and J1,J2,G,H,I for non Audit Dealers. Scenario for returns pertaining to periods from 01 st April For periods starting from 01/04/2016 the new returns format is being prescribed where the dealer is expected to fill in invoice wise detail for each and every transaction of sales and purchase which in turn will get populated in return forms. A provision (by providing column) has been made to classify the sales transaction type such as Taxable Sales, Tax Free Sales, Interstate Sale, Exempt Sales etc. similarly the purchase transaction details too are classified as Imports, OMS, High seas, Branch Transfer Inward, Tax Free Purchase, Taxable Purchase etc. Our View: The dealer is required to file whole of his Purchase, Sales, Debit Note and Credit Note register with the returns in the given format and has to classify each and every transaction accordingly It would be a bit difficult work for small dealers operating with part time accountants or do the accounting job on their own will have to gear up to meet compliances. Advice to Accountants: Please ensure that the ledger masters of the creditors and debtors are regularly updated on your accounting software s please ensure that you use proper licensed software s and keep it updated as each and every software provider is expected to incorporate changes and provide updates for this new compliance. Creation of ledgers and entries therein will generate accurate reports from your accounting software. In case of any help regarding the same please feel free to contact us.

3 2. The process of Verification of ITC Claim Current Scenario Currently the process of Verification of ITC i.e. set-off is done at the Assessment stage wherein the officer in charge generates a mismatch statement from his system and asks for further details with regards to mismatch transaction hence the claim for ITC will be finalized at the stage of assessment. Scenario for the return periods from 01/04/2016. The dealers will have a facility to view their ITC report wherein they will be able to see the transactions of sales made to them by their vendors who have uploaded their sales annexure for a particular return period. Dealer may find mismatches in the transactions shown by the vendors as against claimed by him. Dealers are supposed to reconcile the same with the vendors for actual disclosure of facts. Where the vendors have not shown any sales to the claimant dealer the claimant dealer may ask the vendor to disclose the actual transactions. It is possible that despite the follow-up, the discrepancies in disclosure of transaction between the claimant dealer and his vendors shall remain un-reconciled. Irrespective of such discrepancies, the claimant dealer would be able to claim the ITC as per his own disclosures for the particular return period. The ITC of mismatched or unreconciled transactions claimed by the dealer if not rectified or reconciled before filing of the next return than such ITC will be reversed and the purchasing dealer will be liable to pay the amount to the extent of ITC mismatch with the return for that particular period. This reversal for example will happen in the following manner: Let us take a case of monthly return filer X who has claimed ITC in the month of April for the purchases affected from a quarterly return filer Y. The dealer X will keep on enjoying the ITC claimed from Y till 21 st July If the dealer Y fails to file the return for the quarter April to June on or before 21 st July then the ITC register of the dealer X will show reversal of ITC claimed from Y. When the ITC claimant dealer X files the return for July the said excess claimed ITC will be reversed. However if the dealer Y files the return for the period April to June before the dealer X files the return for the month of July or 21 st August whichever is earlier then such reversal shall not take place. The ITC register of X in this case will have shown the confirmation of the ITC passed on by the dealer Y. Similar will be the case where both X and Y have filed their returns for the month of April and for the quarter Apr-Jun respectively. But the dealer Y does not confirm the purchases claimed by the dealer X. In this case also the ITC claimed by the dealer X from dealer Y will be reversed in the July return to be filed by the dealer X. However if the dealer Y files revised return for the quarter Apr June before the dealer X files

4 his July return or 21 st Aug whichever is earlier and confirms the transactions claimed by the dealer X then the ITC reversal shall not take place. 3. Claims of Goods Returns Current Scenario: The selling dealer claims goods return in the returns which is scrutinized at the stage of Assessment. Scenario from 01 st April The seller will be able to claim the deduction on account of goods returned etc. allowed as claimed in return. If the buyer does not confirm this transaction through debit note to be shown in the purchase annexure then the liability to the extent of tax element involved in the claim of goods returned will be added in the next returns of the seller. Our View: With view of automated credit mechanism the dealers will have to see that the matters and dispute pertaining to goods return etc are dealt with on priority basis. It is generally observed that many dealers have a tendency of not booking debit notes until they resolve the issue with the vendors. Such type of delays will result into mismatch. 4. Payment of Taxes: Once the returns are prepared the system will generate challans which will be provided as HTML link which will be forwarded to the clients by our office for payments. Payments are to be done through internet banking. The system will also calculate the interest payable in case of delay in making payments. Further in case of delayed return the payment of late fee will be mandatory and return will not be filed unless such late fee is paid. 5. Filing of Annual Annexure by the dealers not eligible to file 704: The dealer who are not eligible to file e704 shall file annexure of CST Forms received/not received, annexure of PAN wise URD Purchases (e.g. PAN wise in excess of Rs /-), annexure of TIN wise-hsn wise details, the annexure of the latest bank accounts and also the closed bank accounts, the annexure of imports and annexure of exports. These annexure will be required to be filed with the last return for FY onwards. 6. Assessment: Current Scenario: Presently the dealers are issued notices for transaction wise assessment as well as comprehensive assessment (full assessment) in the said assessment it is required for the dealer to attend personally or by his authorized representative. The assessment order is passed after a long series of proceedings and huge quantum of papers are needed to be submitted.

5 New Assessment Procedure: The new process of assessment will have following features i) Facility to upload required statements in particular template formats issued by the department and also uploading requisite scanned documents. ii) Facility of filing revised return in terms of finding of the assessing officer leading to closure of assessment case. iii) Facility to close the assessment without requiring the dealer to attend before the assessment authority. iv) Access to returns, audit reports etc v) Online facility to seek adjournment. vi) Online issue of Notice and Assessment Order. vii) Online tracking facility for assessment proceedings. Our View: The intention of the department to decrease the man to man contact is really appreciated however it may happen so that the dealer might not be able to represent the case and peculiar facts of the case and hence might require attendance and hearing in such cases it is the responsibility of the department to give fair chance to the dealer to attend personally and explain the facts of the case. 7. Refund: Current Scenario: The dealer needs to file Form 501 for claiming refund before 18 months from the end of financial year. After uploading the application the same is verified by the department. The ITC Verification Utility is used to verify ITC admissible to the refund claims. The old process was time consuming. New Refund Procedure: The new refund process will have following features: i. Refund Calculator: Dealer will be able to check his probable refund amount after taking into account the ITC admissible and tax payable on un-received CST declarations(if any). ii. Refund Applications will be allocated to respective nodal officer of the dealer. iii. In case of Refund assessment the dealer can upload the required documents for processing of his refund application. In such cases it may not be required for dealer or his authorized representative to attend the nodal officer. iv. Refund will be directly credited to dealer s bank account through NEFT after adjusting any dues. Details of refund or adjustment will be sent to dealers via SMS, s etc. v. Electronic Verification of Export and Interstate Sales will be done through TINXSYS and ICEGATE. Our View: The refund procedure should be devised in a manner that the dealer does not have to face hardships for getting the same. Moreover application of refund within prescribed time limits should be done away with as all the details regarding sales and

6 purchases and declarations are already available with the department either in Form of Returns or Audit Report in Form Appeals: Current Scenario: A dealer who desires to file an appeal against the assessment order is required to submit an application in Form 314 to the Assessing Officer so that the officer does not proceed and recover the dues as per the assessment order till the period of appeal is over. The appellant is needed to file this appeal within 60 days of the date of receipt of assessment order and demand notice. Once the appeal is filed, its admission needs hearing. The appeal officer issues ad interim stay order to the appellant for the preliminary hearing. On the date of hearing the part payment is fixed. This part payment is to be made by the date fixed by the appellate authority. Till such time the appellant is issued an interim stay order. Once the appellant makes his part payment his appeal is admitted by the appeal officer and the appeal officer issues a final stay order operative till disposal of appeal. The new automation system provides relief to the appellants in terms of physical effort and will save time of the appellants. New Process: The new appeal process will have following features: i. Online Appeal Application ii. iii. Online Final Stay Order provided the appellant pays the undisputed dues in full and some predetermined amount. (The facility is optional for the appellants) In cases were appellant who does not opt for Online Final Stay, an ad interim stay will be generated by the system till the first auto generated date of hearing. The appellant or his authorized representative will be required to visit the office of the concerned appeal officer for part payments if any. In these cases the stay orders, interim and/or final will be granted by the appeal officers. Our View: The online filing of appeals is a welcome step however the pre condition for payments without hearing will cause hardship to dealers where exorbitant order are passed by assessing authorities and the appellant will be required to follow manual procedure. 9. E-CST Declaration (Issue of Form C,E1, EII, F and H forms) Current Scenario: The dealers are required to file a separate application for declaration forms to be issued for purchases made by them against declaration. The current application form is quite lengthy and validations are too many. New Procedure: Since the dealers are required to submit invoice wise annexure of sales and purchase the application for Declarations can be automatically created from the system however before submitting the auto populated SOR the dealer will have to clear pending defaults and dues shown on system. Once the issues are

7 cleared the process of applying and obtaining the forms will be very convenient and simple. Our View: This is a very good step by the department wherein this will be a very good and hassle free procedure. However the department needs to clean up the long pending issues due to various problems like periodicity unmatched challans voluntary payment chalan credit etc for older years like , , and which are already time barred and in many cases comprehensive assessments have been done and no outstanding dues are pending than too the system shows outstanding dues Such dues should be deleted from the system to make it convenient and hassle free. We strongly feel that the new system will provide a single web window for various facilities compliances and proceedings under MVAT Act further it will also curb corruption to a great extent. Draconian Provision: We strongly feel that disallowing the set-off in next return period for unmatched credit where the vendor has not filed return or has skipped the transaction of sale than the purchasing dealer is expected to catch hold of the vendor and make him file revised annexure and returns. It seems so that the department has shifted the responsibility of catching the defaulters on to the dealers. The poor claimant dealer does not have any resources or power to enforce the vendor to file returns once the payment of the goods purchased has been made. This can cause mistrust unrest and payment crises in market. We strongly believe that once the dealer has issued the Tax Invoice to the customer and if the dealer does not pay the taxes due than it is the supreme duty of the department to collect tax by enforcing all the powers given to them under the Act. The selling dealer should be penalized according to the provisions of the Act. We request all the clients to take up this issue of immediate input tax credit disallowance with their respective trade organizations and ensure that this issue is represented by them at the highest level. This issue is going to cause big financial implication and hardships even in some of the most genuine cases. In case of any Queries or difficulties please feel free to contact us. Jatin Mehta Bhavin Mehta Krunal Mehta