VAT return- The most basic document under VAT- An analysis

VAT RETURN – THE MOST BASIC DOCUMENT UNDER VAT

An analysis with reference to Haryana VAT Law

1. Introduction

A tax return is a form which is filed with a government body to declare liability for taxation. Return is required to be filled by the assessee on timely basis giving the entire detail of the income and the tax paid thereon, along with the interest and penalty (if any). Though filling of return is considered as harrowing activity by the assesses but it is mandatory to be filled. Filing of return helps the government to keep check on evasion of tax by the defaulters.

A return is the most basic document of any compliance under any law. You would always see that the preparation and filing of a return is the responsibility of the assessee himself. Even the return is sent by authorised signatory, still for any misstatement or a clerical error penalty etc. are imposed only on the assessee, not others. This is reason why I always read every word stated by me or any of my staff for and on behalf of my client. In this regard I would like to share some of my experiences, knowledge and some rulings on this subject and the basic provision of the law would be taken up on the Haryana Value Added Tax, 2003.

2. Basic

Value Added Tax is paid by the dealers registered under State VAT and such dealers are also required to file the VAT Return on timely basis. Output VAT is payable on the taxable turnover, calculated according to the provisions respective section under state VAT Act. Registered dealers are also eligible to get the credit of input tax paid on purchases of inputs. All such details are required to be given in return.

As VAT is the state concept and all the states have their own VAT Act, hereby for the sake of convenience I am considering Haryana VAT Act, 2003 (“HVAT Act”). In this article I have thrown light on the provisions related to filling of VAT return under HVAT.

3. Payment of Value Added Tax

Tax payable under HVAT Act shall be paid in the manner and at such intervals as given below:-

Serial No.	Description of class or classes of dealers	Tax Quantum	Day on and from which the dealer is liable to tax.
1	Dealer who sells or purchases any goods in the course of inter-State trade or commerce or in the course of export of the goods out of, or the import of the goods into, the territory of India.	Nil	On and from the day he makes such sale or purchase for the first time.
2	Dealer who imports any goods into State.	Nil	On and from the day he imports any goods into State for the first time
3	Who resides outside the State but delivers for sale in the State, supplies or distributes in the State, any goods other than those specified in Schedule B of Haryana VAT Act.	Nil	On and from the day of first supply or distribution in the State
4	Brick-Kiln Owner .	Nil	On and from the day his gross turnover in any year first exceeds the taxable quantum.
	Liquor licensee under the Punjab Excise Act, 1914 .
	Who deals in minerals, lottery Tickets.
5	Any other class or classes of dealers.	Rs. 5,00,000/-	On and from the day following the day his gross turnover in any year first exceeds the taxable quantum

4. Filing of VAT return

Dealers registered under HVAT Act are liable to file return in the manner as given below:-

Serial No.	Description of class or classes of dealers	Return period and interval	Return Form
1.	Dealers who are required to file return through notice by the assessing authority.	Quarter	VAT-R12
2	Registered dealers holding registration certificate or whose application for registration is pending	Quarter	VAT-R1
		Annually	VAT-R2
3	Government agencies, public sector undertakings or corporations procuring food grains in the State at the minimum support price who are liable to deduct tax in advance under rule 33(1)	Quarter	VAT-R4
4	Contractees who are liable to deduct tax in advance under rule 33(2)	Quarter	VAT-R4A
5	Casual Trader	Quarter	VAT-‘R-5’
6	Lumpsum Contractor	Quarter	VAT-R6
7	Lumpsum retailer	Quarter	VAT-R7
8	Lumpsum BKO	Quarter	VAT-R8
9	Lumpsum ply board manufacturer	Quarter	VAT-R11

5. Additional requirements

5.1 Additional return to be filled

Every dealer of the description specified in column 2 of entry against serial No. 3 in Table above under section 14(1) shall in addition furnish an annual return for the last preceding year in Form VAT-R2 on or before   31st October. The annual return shall be accompanied with:-

(i) a copy of final accounts including balance sheet as at the end of the year, profit and loss cum trading/manufacturing account for the year and

(ii) a statement reconciling the difference, if any, between such accounts and the turnover reported in the annual return verified in prescribed manner.

5.2 Dealers having tax liability exceeding Rs.1 lacs

Every dealer whose aggregate liability to pay tax under Haryana General Sales Tax Act, 1973 and Central Act for the last year or part thereof according to the returns filed by him is equal to or more than Rs. 1,00,000/- or such other sum, shall, in the manner prescribed, pay on or before the fifteenth day of each month the full amount of tax payable by him for the previous month, computed by him in accordance with the provisions of this Act and the rules made thereunder.

However, if he is not able to quantify his tax liability accurately by that time, he shall pay an amount equal to monthly average of his tax liability in the last year (or such shorter period for which he has been liable to pay tax in that year) as tax provisionally, and he shall pay the balance, if any, on or before the 25th day of the month, and the excess, if any, he may adjust with his future tax liability.

5.3 Dealers having tax liability not exceeding Rs.1 lacs

Every dealer on whom section 14(3) does not apply, shall, in the prescribed manner, pay in the month immediately following each quarter, the full amount of tax payable by him for the quarter, computed by him in accordance with the provisions of this Act and the rules made thereunder.

6. Revision of return

If a dealer discovers in any return furnished by him, any omission or other error, which he could not have rectified after the exercise of due diligence before furnishing the return, he may at any time before the date prescribed for furnishing of return for the next period by him, furnish a revised return, and if the revised return shows a greater amount of tax to be due than was shown in the original return, it shall be accompanied by a receipt showing payment of the extra amount along with simple interest thereon for the period the amount remained unpaid calculated in accordance with the provisions of section14 (6), in the State Government treasury in such manner, as may be prescribed.

7. Uncompleted return

Each return, which is required to be furnished under these rules, shall be incomplete unless accompanied with lists, statements, declarations, certificates and documents mentioned therein or which are required to be filed with the return under these rules. The return shall be signed by

(i) Karta in case of an HUF,

(ii) proprietor in case of a proprietorship concern,

(iii) a partner in case of a partnership firm, or

(iv) a whole time employee authorized by Karta, proprietor or partner, as the case may be, in writing in this   behalf,

(v) head of the department or an officer authorised by him in case of a Government department

(vi) chairman, director, secretary or principal officer in case of a society or a company.

A return which is unsigned or is signed by any other person, shall be treated as no return. An authorized signatory alone shall sign each list and statement accompanying the return. Any list or statement, which is unsigned or is not signed by an authorised signatory, shall be treated as no list or statement.

8. Case laws

i. Dealer shall be liable to pay tax at normal rate along with the interest from the due date of return if such dealer fails to produce the forms during assessment proceedings on the basis of which exemption was claimed as decided in the case of Commissioner, Trade Tax v. Control Switch Gears Company Ltd. (2010) 36 VST 130 (All)

ii. In case of Vallabhdas Kanji Ltd. v. Intelligence Officer (2010) 36 VST 521 (Ker) Hon’ble court held that penalty is leviable in case bills are not serially numbered and bills were not available for verification and the return is filed on the basis of sales register which is not in conformity with the details contained in the personal account.

iii. If the dealer has paid excess tax, such excess payment can be adjusted against dues of other periods and demand of interest for failure to pay tax in accordance with returns. Such adjustment cannot be denied by the department as decided in case of Colgate-Palmolive (India) Ltd. v. Deputy Commissioner of Commercial Taxes (2010) 34 VST 454 (WBTT)

iv. Hon’ble court held that penal interest is not leviable if assessee had neither furnished a return nor any tax paid on self-assessment basis, in case of MARUTI WIRE INDUSTRIES PVT. LTD v. SALES TAX OFFICER

Assessee is required to file a return of total turnover and taxable turnover accompanied by proof of payment of the amount of tax due within 20 days of the previous quarter. The liability of the assessee-appellant to pay sales tax could have arisen either on return of turnover being filed by way of self-assessment or else on an order of assessment being made. Required return was not filed by the assessee. A failure to file return of taxable turnover may render the assessee liable for any other consequences or penal action as provided by law but cannot attract the liability for payment of penal interest on the ground that, if a return of turnover would have been filed on the date then the tax as per return would have become due and payable on that date.

v. Where assessee challenged time-limit for filing revised return under VAT on ground that it was lower than that for filing VAT audit report and was, thus, arbitrary, as errors could be corrected only after audit, High Court admitted challenge thereto.

Vires of a statutory provision cannot be gone into by Appellate Authority; it has to be gone into by High Court in its jurisdiction under Article 226 of Constitution of India and, therefore, such a writ cannot be dismissed on ground of alternative remedy.

Assessee furnished monthly return in Form VAT-100 and claimed input tax credit therein. Since assessee's turnover exceeded prescribed limit, assessee also got his account audited and it was found that claim of input tax credit made in his return for January to March 2008 was understated. Assessee furnished said audit report within time-limit of 9 months from end of financial year viz. in December 2008 and, on 30-12-2008, assessee filed revised returns for January to March 2008 claiming actual input tax credit available. Department rejected said revised return on ground that same were filed after expiry of 6 months from end of relevant tax periods.

Assessee argued while time-limit for filing revised return was merely 6 months from relevant tax period, audit was to be done up to 9 months after close of financial year and, therefore, it was not possible to file revised returns prior to completion of audit. Accordingly, assessee filed a writ petition for declaration that either time-limit for filing revised return was to be read harmoniously or was to be declared void. Single Judge dismissed said writ on ground of effective alternative remedy by way of appeal against said rejection.

Hon’ble high court of Karnataka held that, if rejection of revised return has been done in accordance with law, there is nothing an Appellate Authority can do. If assessee succeeds in showing that said provisions are ultra vires or if High Court puts forth a harmonious interpretation, then rejection of revised return gets set aside automatically. Hence, dismissal of writ petition on ground of alternative remedy was incorrect and, therefore, matter was remanded back to single judge to decide writ petition on merits.

Such ruling was given in the case of Kirloska Ferrous Industry Ltd. v. Assistant Commissioner of Commercial Taxes.

Delay in furnishing return under Gujarat Sales tax Act may attract penalty u/s 45(3A) as decided in case of State of Gujarat v. Narendrakumar Revachand Kotak.

Penalty was charged to assessee for delay in furnishing of return under sales tax law. However, tribunal  reduced such penalty below that prescribed as minimum. Department argued that penalty was mandatory on account of use of word 'shall' and could not be reduced below that prescribed as minimum.

Hon’ble court held that, if a penalty is not mandatory, authority may chose not to impose penalty; however, whether mandatory or otherwise, authority for valid reasons decides to impose penalty. Now question would be 'could such penalty be reduced below minimum prescribed under law'. For this appeals were dismissed keeping question of law open.

9. Conclusion

I hope I would have been able to share all my knowledge in this field of filing of returns under VAT law. Here in I would also share one of my personal experience is even though return is the most important document of your interaction with the VAT department but still for some reasons, I do not understand why it is the area which is being constantly being undervalued by almost all your clients. Thereby remuneration in this field is always very basic and minimal. I think this scenario atleast in India, will continue even if we have GST in play. Infact it is being felt that under GST law there would be one return for all the units in India belonging to a single concern. Thereby this field as a professional opportunity will not be a shining star in future and I advise you to look the other way in the field of consultancy and the assessments.

CA. Rajat Mohan

www.fixet.in

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