My books for the year 2007-08 are under scrutiny by the VAT deptt. at mazgaon. My business is 100% exports and only 2 local sales for which i hv paid the tax as applicable. the issue is one supplier who supplied me the material during that period gave me a bill which i hv paid him including vat @ 12.5 percent by normal banking channels. But that supplier has closed his shop and disappeared and not paid the vat to the govt. However, i hv exported the materil supplied and have relevant proof of the same including the bank receipt of export proceeds.
now the Vat deptt. says that they will disallow that purchase and also, i have purchased same year from another supplier against form H which also they say will be disallowed as his purchase amount of his raw material is lower than the sale proceeds of his during that year.
my contention is that in what way i am connected with what material he purchased or how much he sold. i amconcnered iwth my recipt of the mateiral, payment and export and export realisiaiton.
i have not used the services of any CA for handling and am told that it is a way to frighten me by the sales tax officers to obtain some personal favours.
can any one help me to understand if they can force me to show how the supplier brought mateiral, or how he is doing busienss. in no way i am connected to this ???
i shall be grateful if any oen can help me
thanks
swaminathan
CAclubindia
