Co-relation between Mvat audit report and GST !

CA Umesh Sharma , Last updated: 18 December 2018  

Arjuna (Fictional Character): Krishna, Is there any information asked regarding GST in MVAT audit report also is there any correlation between them?

Krishna (Fictional Character): Arjuna, In the financial year 2017-18, 3 months were of Vat while the remaining 9 months were of GST. Therefore, taxpayers would be required to get their books audited as per their Turnover under both the laws. Hence while finalizing financials taxpayers might face problems. So let us discuss on the same.

Arjuna: Krishna, In GST credit of earlier law like VAT, service tax has been claimed by filing Trans-1 .what issue can arise while doing the Mvat audit?

Krishna: Arjuna, it would be interesting to note that if during MVAT audit it is observed that the credit claimed by filing TRANS-1 is more than amount that can be carried forward in the earlier law, then the excess amount claimed in TRANS-1 needs to be deposited along with the interest to the government.

Similarly if the amount carried forwarded is less, then the excess amount not carried forwarded in GST needs to be claimed as refund in the earlier tax regime.

Arjuna: Krishna, Whether Credit claimed in TRANS-1 readily available or are there any issues?

Krishna: Arjuna, Trans-1 has been filed by the taxpayers on the basis of the return filed in earlier law. While filing TRANS-1 it was not mentioned which kind of return (original or revised). Many registered person have filed TRANS on the basis of the revised return in earlier law.

But now the department have come up with the thing that credit mentioned in original returns only can be claimed and not on basis of revised returns. This is incorrect, as this was not intimated earlier. It is injustice to the taxpayers who have duly filed revised returns as per the law.

Arjuna: Krishna, Would any difficulty arise while calculating ratios required in MVAT Audit?

Krishna: Arjuna, Annexure 'F' of Form 704 requires calculation of ratios. But this time VAT law was applicable for the period April 2017-June 2017. But Even then the taxpayers are required to give information for period upto March 2018 for calculating GP/NP ratio. That means even GST turnover would be included in MVAT audit report.

Arjuna: Are is there any special thing for dealers dealing in petroleum products, liquor and like?

Krishna: Arjuna, Diesel, petrol , aviation turbine fuel, liquor etc is kept out of GST purview as of now. On these goods VAT is applicable and hence VAT audit would be required to be done if VAT audit conditions are fulfilled. Similarly, these commodities are NON-GST supply under GST and if the turnover of the same exceeds 2cr, then even GST audit would be required, as this would be considered for calculating GST Turnover.

That means both audits VAT as well GST would be required to be done.

Arjuna: What one should learn from this?

Krishna: Arjuna

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CA Umesh Sharma
Category GST   Report

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