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Non payment of tax consequence

VAT (Legacy) 1562 views 3 replies

K ltd is company which is selling a product "xyz" which attract an VAt input tax of 5 % but they not taking input credit and charge entire amount as purchase value. they are selling that product to various customer for which they are not collecting and paying such output tax to govt. if we calculate approximately it comes around 50 lakhs. Like this past 3 to 4 year they are not paying such tax and statutory auditor is also not reported in his report for all those years.

          Now what are all that consequence that company and statutory auditor has to face if that matter comes to knowledge of sales tax authority.

Replies (3)

 Mr sasi kumar,

 There are many such tax evaders.Some auditors also collude with those traders ,so that they would not lose a client. If they are caught by intelligence staff it will be horrible for m/s K ltd.On the strength of VAT intelligence report concerned auditor can be blacklisted from practising as a CA. The intelligence people try to harass the offending trader by making their own estimation of sales far above the actuals and proposing huge penalty and interest and initiating prosecution as well. In order to minimise the levies some bribing and influencing may have to be resorted to. Also,heavy fees to an auditor/advocate have to be paid.After the orders appeals 1st and 2nd may arise. For recovering huge amounts of assessed tax attaching the bank accounts and property may be done b the deprtment. The department will keep watching this dealer for some more years with repeated inspections,verifications,assessments etc. There will be enough disturbance and loss of time and peace. In some cases business has been ruined as result totally. So,it is better to obey the law than avoid it........MJK

1. you should 1 see whether the assessee is filing the vat return, and which collunn he is showing sale and same for the purchase. see the R.C whether is a dealar, composition scheme, works contractor. 2.then we can comment on it.

@ Krishna Answer for ur First Question Assessee is filling VAT return for other items and incase of product "XYZ", company is not showing both purchase and sales in return and treating the same as consumable expense but it is sold to customers.


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