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Arjuna (Fictional Character): Krishna, Sankranti festival brings the atmosphere of enthusiasm. Everyone is involved in flying kites and all ladies are busy in the preparation for giving gifts. The Sales tax department extended the date of filing of VAT Audit report. So tell me how kite of VAT Audit of dealers will be filed?

Krishna (Fictional Character): Arjuna, If we compare VAT and kite flying then the person who is flying kite is Trader, "kite" is VAT Return, "Chakri" means books of accounts or Audit report, "Air" means Annual Turnover, The person taking "Page" is VAT officer, "Thread" means Law, VAT Auditor is the person who solves the jumbled thread. We can understand the different provisions of VAT audit as they can be co-related to the rules of flying kites in Makar Sankranti. Generally the due date of filing of VAT Audit Report is 15th January. The Sales Tax department have extended the due date of filing VAT Audit report by 25 days because of GST Registration, VAT returns etc. So now VAT Audit Report can be filed till 9th February 2017.

Arjuna (Fictional Character): Krishna, VAT Audit applies to whom?

Krishna (Fictional Character): Krishna, the Kite can fly if there is Air, likewise considering the Annual Turnover, the dealer has to file VAT return and it is decided whether to conduct VAT Audit or not. If the Annual Turnover exceeds Rs. 1Crore then the dealer has to conduct VAT Audit compulsorily. In Audit by solving the tangles it is checked whether the kite is flied properly or not, that means it is checked whether the Returns are filed properly according to books of accounts or not. Many times the dealer gets trapped because of improper maintenance of Books of Accounts.

Arjuna (Fictional Character): Krishna, What is the most important thing in VAT Audit Report?

Krishna (Fictional Character): Arjuna, In Kite Flying the most important is “Thread” and so as in VAT Audit the important is compliance of Law and accordingly annexure J1, J2 of VAT audit report. In Annexure J1 the dealer has to mention customer wise annual sales, VAT on such sales along with TIN numbers. Similarly, in Annexure J2 the dealer has to give details of supplier wise purchases, VAT on them along with TIN numbers. If this information is submitted wrongly then the VAT authorities will take the “Page” of dealer and levy penalty and interest on the differential amount. The VAT authorities take away the Kite of the dealer and collects Taxes without allowing setoff. Day by day the Department is increasing the Computerization.

The department has made available the facility of “Dealer information System” on the website of Mahavikas. In this the differences between J1 and J2 will be displayed. That means it is most important to match Sales and Purchases of the business. In this the Bogus and Hawala purchases will come to notice. Many dealers take law in their hand and then run into difficulty like the thread can cut our Hands.

Arjuna (Fictional Character): Krishna, What other precautions dealer should take during Vat Audit?

Krishna (Fictional Character): Arjuna, the dealer should pay attention towards the following:

1) The Taxpayer should reconcile the sales and purchases given for Vat Audit with the Audited Balance Sheet as we check the “Kanna” of Kites. If it is not proper then the Kite may not fly.

2) Setoff should be availed only on purchases made in Maharashtra. CST declaration forms i.e. C, F, H, etc. should be taken according to the Sales Invoice. If there is Air then only the Kite flies otherwise we have to give “Thunkya” to the kite or it gets “Behawa”. It becomes difficult to collect Forms otherwise Tax has to be paid. If all this Information is not properly mentioned then the Dealer has to go to department again and again and has to pay tax and Interest.

3) Taxpayer should keep ready the information related to Tax, Challans and returns of VAT. That means all things required for Kite flying i.e. Patang, Manja, Chakri etc. otherwise the problems may arise at the time of Kite flying. Similarly all these things are essential for VAT Audit, otherwise difficulty may arise.

Arjuna (Fictional Character): Krishna, What will happen if the dealer does not file the VAT Audit report on time?

Krishna (Fictional Character): Arjuna, VAT Audit report should be submitted on time i.e. before 9th February, if not then penalty amounting 1/10th of total Sales Turnover is required to be paid. That means while flying kite (Doing Business) if Band Aid is not applied (VAT Audit Report is not submitted) the hand can be cut (Penalty can be imposed).

Arjuna (Fictional Character): Krishna, what should be done if the dealer has filed original return but during the Audit differences occurs in the sales and purchase turnover?

Krishna (Fictional Character): Arjuna, if differences arise in the turnover and original returns filed then dealer can file Revised Return under section 20(4)(a) according to its periodicity, otherwise dealer can disclose the differences between Returns and Audit in VAT Audit Report and then file Annual Revised Return under section 20(4)(b).

Arjuna (Fictional Character): Krishna, What taxpayer should learn from VAT Audit and Makar Sankranti?

Krishna (Fictional Character): Arjuna, The dealer will get into trouble if he does not follows the laws properly. As the Competitor shouts "Kate, Chal Lapet, Dusta Mar" when he cuts the kite, in the similar manner the VAT Authorities will shout "Common, now pay the penalty" if the dealer does not file the VAT Audit report on time. The dealer should pay tax (Kar) on time if he doesn't want the "Kar" of Sankranti to be applicable.


Published by

CA Umesh Sharma
Category VAT   Report

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