Issue based Audit/Assessment cases for 2009-2010 and 2010-2011
Issue based Audit/Assessment cases for 2009-2010 and 2010-2011.
Welcome to the enlisting of the cases of issue based audit/assessment cases for 2009-10 & 2010-11. However, having experienced to the issue based audit/assessment for the period 2008-09 which had been completed by 30th June this year and experienced by both the department authorities and we practitioners faced many difficulties. Accordingly, we would like to put forth following suggestions/grievances before taking up the issue based audit/assessment for the period 2009-10 & 2010-11. Those are briefly narrated below-
- Most of those issue based cases could have been taken up for audit/assessment only because of mismatch between the supplier dealer and purchasing dealer.
- The maximum jurisdiction officers who are going to take up the case for audit/assessment have been displayed on the website. It is a welcoming thing. However, it could be better if the assessing/ audit officer could convey his jurisdiction for the said assessment/audit to the relevant dealer before taking up the case.
- The issue of one nodal officer for each dealer is under consideration with the department. Accordingly, if any proceedings of audit or assessment under any other section of the MVAT Act is in process for the said period 2009-10 & 2010-11 with a particular officer. In this situation the issue based audit/assessment may please be conducted by the same officer. It will save duplication of work and time.
- Since, the issue based audit/assessment is taken up u/s. 23(5) of the MVAT Act and no time limit for such assessments had been given in the MVAT Act to complete those assessments. It is requested to give sufficient opportunity to the dealer to submit maximum possible details.
- As per section 23(11) where a dealer had been assessed under sub section (2), (3) & (4) of section 23, he had an opportunity for the cancellation of the said assessment without going into an appeal. It is requested to avail the similar chance to the dealer who is assessed u/s. 23(5) for cancellation of the said assessment. It will reduce the load of appeals which had already been arisen in the case of the issue based audit/assessment completed by this 30th June of the year 2008-09.
- According to our previous experience the cases of issue based audit/assessment have been selected by only looking at the mismatch of data from J-1/J-2 of the respective dealers. It is requested that the concerned officer may please contact to the supplier dealer through internal mechanism of the department and collect the total details which are required to allow the input credit to the dealer the authority is assessing.
- It is because the dealer who had claimed input credit through his J-1/J-2 however, prevented from the said claimed because of the mismatch; he is not in a position or having no machinery to contact the selling dealer to get the correct details of the supplies made to the dealer.
- It is because the Hon. Authority of the department had himself committed in the case of Mahalaxmi Ginning cotton Spinning Mills Ltd. v/s. State of Maharashtra 51 VST (1) at Bombay High Court in the point no. 51 of the said order that the department is duty bound to first following of the selling dealers who is primarily responsible to paid the vat dues.
- The dealer has to undergo for such issue based audit/assessment u/s. 23(5) only because of the mismatch of J-1/J-2. It could happen that there can be any mistake from both the side i.e. the selling dealer and the purchase dealer. However, the purchasing dealer is penalized by disallowance of input credit. It is therefore suggested that the department should takes steps to assess the selling dealer first through its mechanism to ascertain the correct liability of such dealer. Based on which the purchasing dealer could be justified.
- The purchasing dealer should have been given an opportunity to cross examine the selling dealer during the course of audit/assessment. In this case the department is requested to help out the purchasing dealer by issuing summons to the selling dealer to produce the entire details required to give proper input credit to the purchasing dealer.
- The dealer who is undergoing an audit/assessment may please be allowed to claim his refund even if Form 501 is not filed and at the time of such audit/assessment. Such dealer may be allowed to claim of adjustment of refund against any liability arises in the current issue based audit/assessment.
- Once, a dealer had been undergone of audit u/s. 22 or assessment u/s. 23 of the MVAT Act 2002. The re-opening of the cases on issue based u/s. 23(5) is unjustified.
- The issue base audit/assessment u/s. 23(5) should also be time bound as per limitation act. It is because under the MVAT Act itself the dealer is required to maintain books of accounts and record for 8 years only.
- It is been experienced that the dealer had to pay additional tax for the disallowance of input credit along with interest and penalty. It is unjustified because normally the interest is charged on the accepted liability by the dealer whereas; the penalty could be levied for the concealment or inaccurate particulars.
- However, in the case of issue based audit/assessment u/s. 23(5) many times the purchasing dealer is unable to provide necessary details and documents for the purchases made by him. Whereas, the input credit is denied because of silly mistake of the selling dealers. In this situation the purchasing dealer is asked to pay full tax twice along with interest and penalty it is not justified because of none of his fault.
- Therefore, in the case of issue based audit/assessment u/s 23(5) the liability arising out of the disallowance of input credit may please be treated as current liability of such dealer. Therefore, such dealer may please be given immunity from interest and penalty.
- Therefore, in the case of issue based audit/assessment u/s. 23(5) the liability arising out if disallowance of input credit is not because of any independent inquiry made by the department. Therefore, penalty in such cases could not be justified.
- It had been experienced that the dealer is asked to pay the dues of disallowance of input tax credit along with interest till date and penalty of 25% u/s. 30(4). If it is not been accepted by the dealer, there is a cortion of levy of 100% penalty u/s. 29(3). It is totally an injustice on the innocent dealers. Therefore no penalty either u/s. 30(4) or u/s. 29(3) may please be levied.
- The issue based audit/assessment for the year 2009-10 & 2010-11 had been taken up at the gape of 2 to 3 years. Meanwhile, many of the selling dealers are not traceable or could have changed their location of business or cancelled their registration number. In such circumstances it is requested to have linent view for the purchases made from such dealers. Because the purchasing dealer as well as the department are unable to prove the non-genuineness of such purchases.
- Many times the department had enlisted certain dealers as Hawala dealers only on the basis affidavit of such dealers. A linent view for the purchases made from such dealers may please be taken if the purchasing dealer provides the details and documents required to establish the purchases as genuine as per the sale of goods act. It is also because that the affidavit could not be form a part of evidence u/s. 3 of Indian Evidence Act 1972 as per Hon. Supreme Court ruling, and no other efforts have been made by the department to establish the so called Hawala dealer as a Hawala dealer.
- In the case if issue based audit/assessment u/s. 23(5) if the purchasing dealer submits the requisite details to justify his purchases then such dealer may please be assessed by introduction of summary assessment concept.
- It is further requested that the dealer who had been assessed with disputed liability u/s. 23(5) may please not be pressed for the recovery of such dues.
- It is further requested that the dealer who had been assessed with disputed liabilities u/s. 23(5) may please be allowed to pay the disputed tax only in suitable installments.
- The department may please be taking balanced judgment to complete the assessment of such dealers on the basis of the fact and in the principal of natural justice.
- Even the department had issued circular no. 8T of 2012 enumerating the line of action to be taken in such cases. The same may please be adopted and followed for the issue based audit/assessment u/s. 23(5).
- The sales tax department had provided the list of Hawala Dealers to the CBDT New Delhi. Upon which the Income Tax department had opened up the cases of beneficial dealers and started taxing such purchases whether genuine or not and levying interest and penalty. Ultimately the innocent dealer are punished very heavily. In some cases the survival of the assessee is very difficult. Therefore it is earnestly requested to the sales tax department not to handover the details of such issue base audit/assessment cases displayed on the website of the department to the CBDT New Delhi like previously done. It will definitely harm the innocent dealers in such a way that some of them could be forced to commit suicide and nothing more.
- The department of sales tax is sincerely requested to look in to the above points before issuing the notices for issue based audit/assessment u/s. 23(5) positively.