10 February 2011
Dear Sir Our company is located in Karnataka. WE are unable to collect C forms from our customers for CST sales made during the year 2008-2009, 2009-2010. therefore we expect a demand notice for recovery of concessional rate availed for CST sales. In The year 2010-2011 we have Purchased machinery and have huge input credit from the machinery purchased. Is it possible to set off the liability for Year 2008-2009 & 2009-2010 against the input credit on machinery purchased during the year 2010-2011. please help me out
First of all Collection of Certificate in form "C" from the purchasing dealer is mandatory if you charge the tax at concessional rate. Secondly if you fail to collect the respective "C" form for preceding years then you have to pay Balance amount of with the interest rate applicable in Karnataka State. Thirdly in your case You purchase the machinery in FY- 2010-11 and all those liabilities are pertains to past years. Moreover, even if the liabilities had related to FY-2010-11 , you could not have adjusted against the credit. Excess credit can be adjusted against the CST or State Vat Rate in case of interstate (as if unregistered dealer). Hence my advice to you, if possible try to collect the C Forms or Wait till final assessment and Shift the liability along with interest to party by way of raising Debit Note.
CAclubindia
