Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More



Wish you all a very Happy Independence Day, the mood in our country is set against the corruption right now. Let’s discuss and raise voice against the issues arising in MVAT on this occasion.


The basic principle followed by State Government while enacting the Sales Tax Act, in the State was described as “Government in the capacity as PRINCIPAL has appointed businessmen  i.e., DEALERS as “GOVERNMENT AGENTS” to collect Sales tax levied on the Sale of Goods in the State and pay it to the State.


With this basic principle of collection and payment of taxes by the dealers, they are legally entitled to receive COMMISSION OR REWARD on taxes collected and paid in Government Treasury.


Both the Government and Dealers has forgotten this basic principle of duty envisaged on dealers for collection of taxes affected by the dealers.


Now days, the sales tax department is treating every refund claiming dealer as robber of govt exchequer. There are unrealistic delays in giving the refund orders, relief from unjust cancellation of MVAT numbers, condo nation of delay of URD period, granting of CST forms, etc.


Some Issues faced by the dealer mutely are mentioned below; individually every dealer may have other issues also. Time has come to make a voice and get the Sales Tax departments view rectified against the dealers has come.

(1)     No appeal Orders :Restriction or withdrawal of powers of Appellate Authorities in giving relief to the dealers on the basis of unlawful Interest amount levied as per provisions of the MVAT Act, is against the constitutional rights of the public/dealers to get justice at the hands of appellate Authorities like Tribunal, High Court etc. Whoever the tax authorities fail to give justice decoding to law. Strict and higher introduction of penalties, levy of interest at higher rates for every failure on the part of the dealers without considering the human element of commissions and omissions while implementing or acting according to legal provision of law.  This amounts to hunting who had given golden eggs to the Governments. However, there are no such penalties for the tax officials who commit omissions and commissions while executing the law of MVAT Act, 2002.

(2)     Levy of Penalty Increased From Rs 100/- to Rs 1000/- since 01-05-2010 for non compliance of conditions prescribed for Tax Invoice i.e. writing of Tin Numbers of purchasers of Goods, their full names and address.  This makes it impossible to carry on trade with a dealer who does not hold TIN numbers, which means that the Government has brought Restrictions or prohibition for carrying on trade smoothly and effectively. Levy of Penalty arbitrarily of Rs 5000/- for Non compliance of Notice issued by Stales Tax Department on the prescribed date.  Similarly levy of penalty of Rs 5000/- for failure to file return on or before prescribe due date. These penalties are very harsh and unjustifiable and appeasable in the circumstances of the case where the dealers have valid and fair grounds/ reason for such failures.  At the most it should be restricted to Rs 100/- only. And the right to appeal should be provided.

(3)     E-Payment of VAT Tax, Interest and Penalty: E-Payment of tax, interest and penalty has been informed recently.  Dealers have stated following this provision:

However there is no departmental machinery prescribed by the Sales Tax Department.  For correction of the human errors committed while making e-payment.  There are number of dealers who are committing different taxes of mistakes while making e-payments.  It is essential to credit a special authority for correcting such mistakes and given immediate relief to the dealers.

For Example Through Human error while uploading the e-payment challan wrong tin numbers has been mentioned.

No remedy provided under the act for the such human errors to rectify such errors and to give relief to the dealer.

(4)     Time limit for Assessment: The extension of period for completing assessment from 5 years to 8 years amounts to harassment of dealers by keeping heavy records of accounts with invoices and sale bills which is not possible physically.

This is in reality a concession to the tax authorities who fail to carry on their job of completion of assessments within the prescribed period. In spite of Computerization of Department, the benefit are not given to dealer, rather used a tool to punish.

(5)      TIN Numbers on all Invoices: The computation of recording Tin Numbers of the buyers on the Sale Bills is again a great harassment of the dealers and further increase in penalty From Rs 100 to 1000/- per bill is a climax of punishment of Sales tax Department on the dealers who really collect taxes and pay to the Government without any remuneration for this job.

(6)      Further there is no machinery with the registered dealers to verify the correction of the TIN Number provided by the Purchaser.  In such cases of dealers providing wrong Tin Numbers, the Registered Dealer will be held liable for such penalty.  The dealer has to executed hundred and thousands of Sale Bills.  As such the contravention of this provision will result in a penalty.

(7)     Repayment or adjustment of Security Deposit made at the time of Voluntary Registration reviles the unfaithfulness of the Dept on the new upcoming dealer. It’s like a donation for entering in the School. Rather than giving a welcome note, the new dealer is fined.

(8)     The restriction for filing Revised Return only once in three circumstances is also unjust as mistakes apparent from Record or non availability of information regarding business transactions in time on or before end of the year.

(9)      The State Government should provide machinery for survey of dealers who have not obtained registrations under MVAT Act.  This machinery of Survey of New case will solve the problems of Registration of unregistered dealers.

(10)  Refund of VAT TAX Payment : Unjustified delay on the part of Sales Tax Department for payment of refund, even when all the provisions and information provided by the dealer in compliance of the  notice from Department.  The issue raised is of Cross checking in MAVT software. The department should set right his home first by way of correcting their software for checking of cross entries between the dealers.  In some cases the were the Appeal order by JCST Appeal is given for repayment of part payment made by dealer while filing appeal against penalty levied, the same amount is not given by lower authorities. They are treating it as refund and issuing the cross checking notice to such dealers.

(11)   No Time Restriction for Application and issue of CST Forms :  In spite of no such restriction under Central Sales Tax Act, 1957, the State Government has put administrative restrictions for issue of various Forms under CST Act.  Further unjustifiable delay are made by the department in issuing “C” Forms and illegal demands are made by the staff Sales tax Dealers.

(12)    No Time Restriction for Application of Refund and Payment of Interest on refund: The application of refund is not required when the dealer has filed the return. The return itself is a complete claim of refund. Then why there is restriction of time for claiming refund, unless Form No. 501 is submitted no claim for refund is entertained by the Department. On filing of Form 501 in time, if there is any rectification the claim of refund is rejected by the Department. If the period of filing of 501 is over, Form 501 can not be filed for that period. Which is a hardship to the dealer. Further no interest is paid by the Sales tax Department on refund due. Actually Govt. is using the sum and in true business sense interest should have been paid by Govt on refunds. But there is no such provision for grant of interest on refund.

(13) Unconstitutional tax on builders and developers: Builders and developers are forced to pay MVAT on the sale of immovable properties. The sales tax department is forcing these dealers to comply the law, when it is challenged on all grounds at different High Courts. The Sales Tax department should provide remedy and time to such dealers, who are under dilemma.

(14)Any mistake committed by Chartered Accountant or by the dealer while submitting Audit Report, levy of harsh penalties for human failure through over sight is unjustifiable.  As such there should be provision for rectification of Audit Report filed by the Chartered Accountant on behalf of the dealer in the interest of equity justice. A Auditor is servant of the Govt, to whom no fees is paid by the Govt, rather it is paid by the dealer. The MVAT Audit report format is a format of Assessment Order. There is vast difference in treatment given to an Assessing officer and a Auditor now a days. Rather than giving a reward the auditor is punished, is that same happing with Assessing officer?

The industry, trade and we professional bodies should make comment efforts to stop the unjust treatment to dealers. We have read in newspaper a lot on the delay in giving refund to big dealer, but what about the small dealer who cannot make a voice.  The law should punish the defaulter but should also reward the obedient. But the approach seems now a day vise a versa.


By: CA Umesh Sharma

Published by

CA Umesh Sharma
Category VAT   Report

2 Likes   48 Shares   13863 Views


Popular Articles

Follow taxation Exam20 Book Book

CCI Articles

submit article

Stay updated with latest Articles!