The recovery of Debts due to Banks and Financial Institutions Act

PAGE 102

GOVERNMENT OF TAMILNADU

COMMERCIAL TAXES STAFF TRAINING INSTITUTE

MADURAI CHAPTER

COURSE MATERIAL

ON

VAT & OTHER ACTSCOMPILED BY:

N.RAMAKRISHNAN,

DEPUTY COMMISSIONER (CT)(ENF.)

MADURAIVALUE ADDED TAX

www.tnvat.gov.in www.tn.gov.in Important Definitions:Capital goods 2(11)

Input 2(23)

Input tax 2(24)

Output tax 2(28)

Reversal of tax credit 2(32)

Tax invoice 2(36)

Works contract 2(43)

Zero Rate sales 2(44)

3(1)(a)

Every dealer whose total turnover for a year is not less than 5 lakhs Every casual dealer or agent of a non-resident dealer, whatever be his total turnover Shall pay tax.

3(1)(b)

every dealer other than a casual dealer or agent of a non-resident dealer who purchases goods within the state and effects sale of those goods within the state and whose total turnover for a year is not less than 10 lakhs shall pay tax.

3(2)

Part B and Part C of first schedule, tax payable at the rate specified on every sale.

Spare parts , components and accessories of such goods same rate, if not specifically enumerated.

3(3)

Tax payable by a registered dealer as per sec 3(2) reduced to the extent of tax paid to the regd dealer on his purchases. (rule 10)3(4)(a)Every dealer who effects second and subsequent sales of goods purchased within the state, whose taxable turnover in a year is less than Rs. 50 lakhs, on option within 30 days from the date of commencement of this act, or on or before 30th April, at 0.5 % no ITC for purchases and sales.(rule 7(1)(d) form K3(4)(b) w.e.f. 18.6.08 exceeds Rs.50 lakhs

on reaching Rs.50 lakhs, the dealer shall inform the AA in writing within 7 days on which turnover has so reached ITC eligible on stock held on reaching Rs.50 lakhs, those purchased within 90 days proviso: previous year exceeded Rs.50 lakhs no option for subsequent years.

3(5)

tax on second schedule goods, non vatable goods no ITC

3(6)

when goods are sold together with containers and packing materials, the said turnover to be included with sale price, and taxable at the same rate.

3(7) if goods exempted the packing materials and containers also exempt containers include gunny bags, tins, bottles and any other containers.

Sec 4 levy of tax on right to use any goods excluding the amounts

involved in the course of export or in the course of import

ITC eligible to the extent of output tax payable-tax as per Ist sch.

Sec 5 Levy of tax on transfer of goods involved in works contract.

In the same form or some other form- more than one item of

Work, then the rate of tax as applicable. ITC eligible.

Tax as per Ist schedule.(Rule8(5) form I SEC 6 Payment of tax at compounded rate by the works contractor.

Other than the dealer who purchases goods from outside the

State or imports goods from outside the country option

Civil works-2%of the total contract value

Civil maintenance 2%

All other works contracts 4%

Apply along with the first monthly return 6(2) either Commencement or in the financial year.

Option final for that year.6(3)

No ITC, tax should not be collected.6(5)

In the explanation civil works contract defined.(Rule6(f)& 7(1)(e) form L

Sec 7 Levy of tax on food and drinks.

Star hotels 12.5%7(1)(a), ITC eligible 7(2)

Other than star hotel 2%,whose total turnover is not less

than Rs.10 lakhs.7(1)(b)

Sec 8 Payment of compounded tax by hotels, restaurants

Sweet stalls and bakeries covers 7(1)(b) dealers

8(1)(a) Not less thanRs.10 lakhs, and not more than Rs.50 lakhs

on option rate as per third schedule

8(1)(b)every dealer in bakery products,- not less than Rs.10 lakhs

and not more than Rs.50 lakhs option- rate as per third

schedule.

Option before or within 30 days from the commencement-

Pay tax in advance along with return8(2)

Option final continue for subsequent years, until becomes

Ineligible.8(3)

No ITC 8(5) No tax collections 8(4)-rule8(2)&7(1)(e)Form L Sec 9 tax on bullion and jewellery.

Dealers in bullion,precious stones,gold,platinum and silver

Jewellery inc articles, whatever be his turnover to pay tax

as per part A first schedule.9(1)

ITC eligible 9(2)- rule 6(7) & 7 form JSec 10.

Tax on sales of goods purchased from other states on issue of C

Forms. To pay tax on whatever be the turnover.

Sec 11

Levy of tax on sugar cane.

To pay tax on the LPTO of sugarcane, excluding sugarcane sets As per second schedule. No ITC for sugarcane.

Sec 12. Levy of purchase tax. ITC eligible. 12(2) form K & ISec.13.Deduction of tax at source in works contract rate as in Sec 6 rule 9

Except, transfer of goods in works contract, in the course of inter

State trade or commerce or import.13(1)(b)

No deduction

if produces certificate from A A. as no liability or paid

Taxes u/s 5 -----13(1)(c)

No transfer of property.13(1)(a)

Transfer of property on interstate trade or on import 13(1)(b)

No such deduction if the aggregate amount in a year does not

Exceed Rs. 1 lakh proviso 13(1)(c)

Such deduction should be deposited in such manner and such

time13(2)

within 15 days of deposit, a certificate to the dealer and to the AA

with documents.13(3)

burden of proof of such deposit and tax quantum lies on the dealer13(4)

Any non payment, should be paid with interest at 1%p.m. 13(5)

If no tax is due the same to be refunded sec 13(6)

No notice for tax and interest as per sec 13(5)- sec 13(7)

If an assessee ,failed to deposit the amount,as per ACT, the same

May be recovered inc penalty and interest.13(8)

Civil works-2%of the total amount payable

Civil maintenance 2%

All other works contracts 4% rule -9 formR,S,T & USec 14 Reversal of tax credit.

If purchase return, ITC already claimed and allowed to be reversed

14(1)- rule10(6)(a) form IIf sales return or unfructified sale, Out put tax to be payable to be reversed, 14(2)- rule 10(6)(a) form I Sec 15.Exempted sales- fourth schedule.Goods exempted and dealer

Exempted. Form I Sec 16. Stage of levy of taxes in respect of imported and exported goods.

16(1) Import stage after the import of the goods.

16(2) export,stage will conclude, at export and at sales to exporters

stage u/s 5(3) of the CST.

Sec 17:Burden of Proof not liable to tax lie on the dealer.17(1)

Claiming ITC also lies on dealer 17(2)

Second schedule goods, if not tax suffered, to be taxable at the

First Sales, the burden of tax paid earlier stage lies on the dealer

17(3) -rule 10(3)(viii) & 10(5)Sec 18-Zero Rating.18(2) eligible for ITC rule 11 and 12

18(3) the ITC to be adjusted or refund claim to file within 180 days from the date of accrual of such ITC, if not lapsed to Govt.

Zero rated input tax credit claim as per Sec 18(1)should be filed within 180 days. and within 90 days of receipt of claim in form W, the A.O to give refund, further delay, interest at 0.5.% p.. has to be given. Rule 11(1)(2)

To find out tax element

Taxable turnover X Rate of Tax

Tax Fraction formula = ----------------------------------------

Rate of tax + 100

SECTION 18 ZERO RATING

18(1) The following shall be zero rate sale ,eligible for ITC or refund of the amount of the tax paid on the purchases including capital goods subject to such restrictions and conditions as may be prescribed.

18(1) (i) direct export under section 5(1) and sales to exporters 5(3)

(ii) sales to regd dealer located in special economic zone authorized by the authority specified by the Central Government.

(iii)sales to international organization as per fifth schedule.

18(2)entitled to refund of IPT paid on the purchase of those goods which are exported as such or consumed or used in the manufacture of other goods that are exported as per 18(1) restrictions and conditions.

18(3) where the dealer has not adjusted the ITC or has not made a claim for refund within a period of 180 days from the date of accrual of such ITC, such credit shall lapse to Government.

RULE 11(2)

The dealer who claims refund shall file application in form W to the AA with copies of invoices, within 180 days from the date of purchase and the AA after verification of the correctness of the claim issue refund within 90 days from the receipt of application in form W

SECTION 19

19(1) Eligible for ITC on purchases of taxable goods specified in the First Schedule. Who claims shall establish the tax due has been paid on purchases.

Rule 10(1)

The input tax can be deducted from the OPT

A) ITC carry forwardB) ITC accrued

C) ITC reversed

D) ITC refunded. Formula (A+B) (C+D)and 10(2)

to claim ITC original tax invoice

Sl.No, date of invoice, TIN Numbers, description of goods, quantity volume, Value, rate and amount of tax charged and the total value of the goods.

sec 19(2) ITC allowed for purchases of

resale within the state,

use as input in manufacturing or processing of goods in the state,

use as containers, labels and other materials for packing of goods in the state or use as capital goods in the manufacture of taxable goods.

Inter state sales under section 8(1) of CST Act.

Agency transactions by the principal within the state

rule 10(4)

Capital goods shall within 30 days from the date of commencement of commercial production intimate the said date to the assessing authority

Upto 50% in the same financial year, balance before the end of the third financial year, provided the said capital goods are in possession of the dealer. After third financial year the unavailed ITC lapsed to government.

Dealer who purchases parts and accessories for capital goods already purchased and used in manufacture of taxable goods is entitled to ITC relating to such goods in the month of purchase or thereafter.

Not entitled to claim ITC on capital goods prior to the commencement of the act.

Exempted goods manufactured no ITC.Rule 10(7)

The Principal is entitled for the ITC on those purchases which are transferred to the agent and sold by the agent on behalf of him.

The Principal is entitled for the ITC for those purchases effected by the agent on behalf of him.

The Agent is not liable to pay tax on the sale of those goods which were received by him from the Principal.

19(3) (a) capital goods used in the manufacture of taxable goods ITC eligible.

(b) within 3 years after the commencement of commercial production, after that lapsed to government.

(c) ITC allowed for the tax paid u/s 12 as (a) & (b) above

19(4) ITC allowed in excess of 2% i.r.o consignment sales to other states, Branch Transfer and Depot Transfer

for use in manufacture of the goods and transfer to other stare

if already availed ITC has to be reversed

rule10(9)(b)

6-A consignment sales, branch transfer ,depot transfer ITC

allowed if form F is filed.

19(5)(a) sales of exempted goods as per schedule IV No ITC

(b) No ITC of other state purchases

(c)No ITC for interstate sales without C forms

rule 10(4)(d)

Exempted goods manufactured no ITC.

19(6) No ITC for capital goods used exclusively for manufacture of exempted goods, if manufactured both exempted and taxable goods, reversal only for manufacture of exempted goods.

19(7) NO ITC

(a) for goods utilized for proprietor, partner employees and in residence

(b) automobiles and spare parts for own use.

(c) AC for own use

19(8) No ITC for goods given as free samples, or gifts or consumed for personal use.

19(9) No ITC

(i) goods not sold because of theft, lost, destruction , including natural calamity if availed ITC that should be reversed.

(ii) Inputs destroyed in fire, or lost in stocks before manufacture

(iii) Inputs damaged in transit or destroyed during the intermediary stage of manufacture

19(10)(a) NO ITC in the absence of original tax invoice duly signed,

billed, issued.

(b) If original invoice is lost ITC allowable with reference to duplicate or carbon copy of such invoice

(Rule10(5)

The claim shall be presented before AA within 30 days from the date of invoice is lost. Accompanied by duplicate or carbon copy- the AA to verify such claim and pass orders allowing ITC on the basis of duplicate or carbon copy or its rejection with reasons recorded and communicated and also opportunity has to be given.

19(11) ITC to be claimed before 90 days from the date of purchase or

before the end of financial year which ever is later.

19(12) ITC already claimed for inputs and then finished goods exempt

ITC availed should be reversed.

19(13) bogus bill issued to defraud Government Revenue ITC to be

denied after giving reasonable opportunity.

19(14) If business as a whole is transferred on account of

sale, merger, amalgamation, lease if liability is also transferred

the ITC also entitled for transfer.

(Rule 10(8)

The transferee claiming ITC shall furnish the following details.

Unavailed credit available as certified by a chartered accountant or cost accountant. Inventory of stock transferred with date, details of capital goods transferred. Original invoice for payment of ITC on purchases. The AA shall verify, allow or determine ITC or reject with opportunity to be heard.

19(15) ITC claimed Selling dealer RC cancelled pay from the date of

claim of ITC till payment with 1 % interest p.m.

19(16) ITC provisional to be reversed by assessing authority

for incorrect, incomplete and not in order.

19(17) On final assessment if any excess ITC, that may be

adjusted against any outstanding tax due.

19(18) If excess ITC after adjustment that to be carried forwards to the

next year or refunded.

Rule10(10)

ITC in one month exceeds then to carry forwards to next month.-ITC for a year in excess adjust for any arrears further excess issue notice in Form P- notice of assessment and refund order.19(19) ITC availed if unsold at the time of closure of business

the ITC above should be reversed and recovered.

Sec 19 Input Tax Credit

sec3(3) and 19,rule 10

1)First schedule (A)(B)(C) commodities, eligible for input tax credit, rule 9

2)Stock as on 31.12.2006details in form V before 30.1.2007

Should have been purchased within a year.

Xerox copy of purchase bills

In Purchase Bills tax should be separately noted,

Also for Resale tax goods.

3)taxable under TNGST, but exempted under VAT, no input tax credit

rule10(3)b)

4)Purchase tax paid by the dealer, eligible for input tax credit

rule 10(3)(b)(iv)

5)Input tax credit availed purchase bills to keep for five years.

6) Commodities purchased should be for the following reasons to avail input tax credit sec 19(2)

i)for resale within the state

ii)for use in manufacture or processing of goods in the state

iii)use as containers, labels, and other materials for packing of goods

in the state.

iv)use as capital goods in the manufacture of taxable goods

v)for interstate sale against C form

vi)Agency transactions by the principal within the state

7) To avail input tax credit

a)the sales should be taxable sales.

b)If exempted under VAT, no input tax credit for raw materials.

c)No in put tax credit in full for consignment sales or branch transfer

to other states

8) Input tax credit for c above.sec19(4)

9) Input tax credit eligible, over and above 2%(w.e.f.1.6.08) i.e. if 12.5% paid on purchases

Input tax credit will be 10.5%

10) In put tax credit eligible for zero rated goods as below as per sec 18

a)Direct export and for export as CST Sec 5(1)(3)

b)sales to dealers in special economic zone in the state by the Central

Government.

c)Sales to International Organizations listed out in the Vth schedule.

11) For Lease Sec4(2)

12) For works contract sec 5(2)eligible for ITC

13) For Star hotels, recognized by the State Government and Central Government, the rate of tax is 12.5%, and they are eligible to avail input tax credit. Sec 7(1)(a) and 7(2)

14)For other hotels, the rate of tax is 4% as per entry 51 of Part B, reduced to 2% by notification, and not eligible to avail input tax credit.

15)Gold Silver Bars, Jewellery Platinum Jewellery and precious stones liable to tax at 1% as per sec 9(1) no threshold limit and eligible to avail input tax credit. as per sec 9(2)

16)What are all capital goods, defined in sec 2(11),eligible to avail input tax credit.sec19(3),No input tax credit for capital goods stock as on 31.12.2006

17)Capital goods(manufacturing taxable goods) purchased after 1.1.2007 are eligible for input tax credit, that to w.e.f from the date of commencement of its commercial production , and input tax credit can be availed within 3 years from the date of its commencement of commercial production, if any unavailed input tax credit, lapsed to government sec 19)3)(b) rule 10(4),the date of commencement of commercial production should be reported to A.O. within 30 days, of commencement of production, and can avail upto 50% in the year of commencement of commercial production and the remaining in the next two financial years, further excess after three years will lapse to Government.

18)Purchase tax paid by self, is also eligible for input tax credit as per sec 12.,but the sale under VAT should be taxable.

If business as a whole including entire stock of goods and capital goods transferred to another dealer, the input tax credit will be also transferred. Sec19(14)

ITC for RST GOODS

Input tax credit in respect of tax paid under RST. The input tax credit to be taken at 85% of the tax element viz 10(3)(b)

Total sales turnover X rate of tax inc SC

Tax element = --------------------------------------------

Rate of tax inc SC + 100

Input tax credit eligible for goods manufactured and kept as stock as on 31.12.2006,from out of raw materials purchased within a year. This also includes for purchases as per erstwhile sec 7A. Also eligible for labels, packing materials, used for stock of finished goods as on 31.12.2006,

And also for stock of labels and packing materials as on 31.12.2006.

Last date for passing order on ITC on closing stock as on 31.12.2006 has been extended upto 31.7.2007

To avail input tax credit, in the purchase and sale invoices, the rate of tax and amount of tax collected should be separately noted, if noted as including tax, no input tax can be availed, and the entire turnover including tax will be treated as taxable turnover Sec 19(10)(a)

If purchase bill lost, copy of bill should be produced before the A.O.within 30 days, and get orders from the A.O. regarding quantum of input tax credit as per rule 10(5)

Ineligible for input tax credit sec 19(5)

a)Sales of exempted goods as per sec 15

b)Tax paid on inter-state purchases sec19(5)(b)

c)Inter-state sales not covered by C forms19(5)(c)

d)Purchase of goods manufactured from out of total exempted goods.

19(6)

e)goods taken for personal use of employer or employee19(7)(a)

f)all vehicles including parts and spares, except dealers in vehicles

19(7)(b)

g)Air conditioner( except dealers in Air conditioner sec 19(7)(c)

h) taken for personal use and given as gift or at free of cost. sec 19(8)

I) goods destroyed by natural calamities, by fire or theft sec19(9)

j) goods purchased for manufacture, destroyed by fire before manufacture, lost while in transit, destroyed while in stock or destroyed at the semi finished stage. Sec 19((9)

K) A dealer effects zero rated sale, no ITC for stock as on 1.1.2007Rule10(3)(b)(vii)

l) taxable under TNGST but exempted under VAT, no ITC,Rule10(3)(b)(iii)

m) Consignment sales/Branch transfer not covered by form F

n) No ITC for dealers who are paying tax at compounded rates u/s3(4),

u/s 6,u/s 8

o) NO ITC for sugar manufacturer on tax paid on the last PTO of sugarcane

p) NO ITC for second schedule goods.

q) purchases covered by bogus bills.

the above items not eligible for input tax credit, if availed already, the same may be reversed.

Rule 6(9) dealer to maintain IT adjustment a/c in the format prescribed.

Rule 6(10) -do- for capital goods. ( rules 10(1)&10(2),10(4)& 10(7) 10(9)(b)10(4)(d),10(5),10(8),10(10)

Sec 20 Assessment of tax.- rule 8

To be excluded from total turnover: Rule 8

a) Discounts shown in sale patti

b) purchase return

c) sales return

d) Interest received on balances and instalments.

To arrive taxable turnover, the following are to be excluded.Rule 8(2)

a)Post sale expenses.

b)sales turnover of commodities found in IV th schedule.

c)sales turnover of exempted goods as per sec 30

notification.

Sec 21. Filing of returns. Rule 7

Every month 20th or 12th I, J, K, L, price variation amount paid/

received in form N within 30 days from the end of the year. M return as per rule 7(4) return to file in time, along with tax due rule 23

for tax dues per return no notice of demand.

Payment of taxes due Rule 23

SBI, Treasury/Cheque, DD, Cheque bounced more than one occasion , no cheque payment admissible.

Sec 22.Proccedure to be followed by AA.(rule10(11),rule8(6) form O,P. (1) Asst on the basis of return

(2)SA returns and proof of payment of taxes due along with

documents prescribed.

(3)not exceeding 20% random selection by CCT.

(4)No return- BJ procedure.

(5)Penalty same order or separate order 150%for wilfulness

No penalty after a period of 5 years from the date of order. (6)(a) Asst u/s 22(4)-re-asst within 30 days of service apply AA

with correct return for reassessment only if failure to file

return is beyond the control of the dealer cancel the asst

and make fresh asst provided returns with proof of

payment of taxes due.

(b) on re-asst if excess refund without interest.

If due to be collected.

Random selection not above 20% of assessments by the CCT as per sec

22(3) and as per rule 10(11), not by computer without any norms, but now with reference to exorbitant input credit claim, new capital goods on which input tax credit claimed, Direct exporters and sales to exporters.

Rule 8(6)

Sec.23.Proceedure when assessee claims identical question of law

is pending before HC/SC for an asst. year to file declaration

on asst of the turnover or for imposition of any penalty.

(5)Admission or rejection of declaration u/s 23(2) final and against which no appeal or no revision, or no reference. Rule 8(7) if admitted the A.O. to pass order leaving this turnover on receipt of HC/SC orders the A.O. shall amend the order accordingly. Rule 8(7) form QSec.24.Asst of sales shown in accounts at low prices. Rule 8(3)(d)

Purchase or sales abnormally low - within 5 years

From the date of order.

The provision of section 27(3) to (8) apply to asst or reasst.

If purchase price and sales price exceeds 15% above, detailed

enquiry has to be made and revision to be made on best of judgement -sec 27(1)For willfulness penalty u/s27(3)attracts.

Sec.25.Proceedure to be followed in asst in certain cases.

(1) No return or filing in correct and incomplete return

BJ- reasonable opportunity

(2)asst made on low Turnover/Low Rate of tax,

Higher turnover/ High rate of tax reverse

If enhancement of tax reasonable opportunity.

As per sec 25, if the returns filed by the dealer are incorrect and incomplete, the A.O. can resort to Best of Judgement assessment, but no penalty has to be levied. Rule 5(4)(b),16(6) &16(7) form ESec.26.Asst of legal representatives.

Dealer dies, his executor, administrator or other legal

Representative shall be the dealer- arrears of the dealer

Died to the extent of asst of the deceased.

Sec.27.Asst of escaped turnover and wrong availment of ITC

(1)(a)whole or any part of the turnover escaped,

5 years from the date of order by BJ, Reasonable opportunity.

(b)whole or any part of the turnover if assd on low

rate of tax.

5 years from the date of order by BJ, Reasonable opportunity.

(2)reversal of ITC, false bills, vouchers, declarations or any other

documents.

5 years from the date of order by BJ, Reasonable opportunity.

(3)asst u/s 27(1)(a)

due to willful nondisclosure

difference the tax due on such turnover and tax paid as per

return.

50% not more than 10%

100% more than 10% and not more than 50%

150% more than 50% and above.

(4)-asst u/s 27(2)

first detection 50% Penalty

Second and subsequent -100% penalty

Reasonable opportunity.

(5)Revision u/s 27(1)(2),even though original asst is on appeal

or revision. (6)Period of limitation - -stay by civil court or other competent

authority to be excluded.

(7)any appeal pending before HC/SC involving question of law

to be excluded.

(8)Appeal any appellate, revisional authority or HC or SC

to be excluded.

Sec 28. Asst of turnover not disclosed under compounding provisions

Any part of the turnover escaped, dealers u/s 3(4),6,8

Within a period of 5 years from the date of order penalty as per27(3) to(8)-RO

Sec 29. .Asst in cases of price variation

a)previous year/amount received this year,within 30 days from

the end of the year submit a return

b)Amount excluded, within 30 days from

the end of the year submit a return

c)(a) (b) AA assess or reassess

d) if incorrect and incomplete 2(a)-BJ,RO

e)29(a) within 5 years, RO

f) if penalty at the rate as per sec 22(5)

g)29(d) levy penalty as per sec 27(3) if there is willfulness

Rule7(6) if receives or returns in any year any amount due to

Price variation within 30 days from the end of the year submit

Return in form N. Rule8(6)Sec.30.Powers of Govt to notify exemption or reduction of tax

Section 30 of TN VAT Act,2006, empowers the Government to issue notification on exemption or reduction of tax whether prospectively or retrospectively.

Sec.31.Powers of Govt to notify remission,tax,pty,int, etc.(Rule 16(4)Sec.32.Powers of Govt to deferred payment of tax of the industrial

Unit in the pipe line. 2)Territorial Deputy Commissioner has powers u/s 32(1)

3)No interest as per u/s 32(1) if deferred conditions

are satisfied.

Sec.33. Remission of tax deemed to be deferred payment of tax

(2)deferred payment of tax no int u/s 42(3)

if conditions are satisfied.

Sec.34.Liability of persons not observing restrictions and conditions

Notified u/s 30,31.

if any restrictions or conditions notified violated, to levy tax.

Sec.35.Liability of firms

1) all partiies jointly orseverally

2)if reties, due till retirement to pay. rule 4 forms B & C.Sec.36.Liability of tax of partitioned Hindu family, disolved firms etc.

a)upto that period ofpartition.

b) joint and severally rule 4(10),rule 29 form CSec.37.Liablity to tax private company on winding up

every director responsible for arrears if not proved that non

payment of tax, due togross neglect, misfeasance or breach of

Duty

Sec.38.Registration of dealers. 39.Procedure for registration.

Sec 38 and 39,rule 4, 4(9)5(1)(a) form D form A Rule 5(6),5(6)(d) from F & G,form F

Rule 5(6)(a)(d)

Application Form A

Threshold Limit:

Rs.10 lakhs for local purchase and local sales.sec 3(1)(b)

All others Rs.5 lakhs. Sec3(1)(a)

Below threshold limit any willing dealer may register.

Casual dealer- rule 4(4) within 24 hours, agent of a non-resident dealer, dealers in bullion, gold, silver and platinum jewellery, Dealers regd. under CST ACT, Dealers with no fixed place in Tamilnadu4(5) within 24 hours to CCT, No turnover limit

Sufficiently stamped self addressed envelope.

Two passport size photos.

Rs.500/-and Rs.50/- for branches

TIN- to all existing dealers, w.e.f. 1.1.2007, but in force from the date noted in the erstwhile form D1 certificate. to file A return before 15.1.2007- no witnesses sign two pass port size photos -no fee- to issue TIN and certificate of Registration in form D before 30 days-rule5(1)-

-otherwise deemed to be registered - no renewal

No security deposit even though pointed out in section. sec 39(4)

No salesman permit, but with Xerox copy of TIN certificate and authorization letter.

Rule4(2)intending to commence business can register

If T.O. exceeds threshold limit within 30 days to register.

Rule 4(6) if minor inherits an existing business or succeeds a dealer

Within 30 days fresh registration.

Rule 4(7)successor to whole or part of business unless he holds

Regn.,he should file fresh RC.within 30 days.

Rule5(3)Change in constitution- report within 30 days,RC to amend.

Rule5(4)If regd dealer dies,his executor,administrator,or other

Legal rep within 30 days to furnish form E to the RA.

Rule 5(7) Name board, first in Tamil , second in any other language, with suffix that regd under VAT Act. And also noting TIN.

Sec.40.Collection of tax.

1.Unregd dealer should not collect tax

regd dealer should collect as per the provisions of the ACT.

2.excess collection 100% if bonofide belief.

wilful and knowlingly 150%,

within a period of 5 years.

no prosecution u/s 71(2) if penalty levied.

Sec.41.Forfeiture of tax collected.

below taxable minimum if collect tax, should remit to Govt.

There is no provision in the ACT, to levy and collect tax on the turnover below the taxable minimum

Sec.42.Payment of recovery of tax, pty,etc(rule16(5),19 &23 form RR) rule 11 form P

FA demand within 30 days

1) tax,pty,int due under r.r.act.

2) claim against the property.

a) as land revenue or

b) application to magistrate.

no recovery if appeal or revision u/s 51,52,54,57,58,59,60pending

3) unpaid on due date, int 1 %p.m.Form RR

no int, for less than Rs.100/- and period of default not morethan

one month. For belated payment of tax, as per sec 42 and sec 21,the penalty at 1.25% per month for delay has to be levied as penalty as per sec 41(3)

42(4) Belated submission of returns tax +1 % int. p.m.

42(5) excess to refund within 90 days

Appeal/Revision/Review orders to give effect to within

90 days from the date of order, after 90 days if not less than Rs.100/- % interest,p.m. remanded no time limit

Sec.43.Transfers to defraud revenue void. Sale, mortgage, gift, Exchange or another other mode of

Transfer shall not be void if permitted by the AA,

If no notice is pending

Sec.44. Recovery of penalty or interest.

Shall be deemed to be tax

Sec.45 .Further mode of recovery- B6 rule 21

rule 9(4),16(2) form U and form QQSec.46. Recovery of tax where business of a dealer is transferred.

Transferer to pay

Transferee- liability limited to the value of asset. Obtained by

Transferer.

Sec. 47: Rounding off Turnover,tax etc.

Nearest rupee

Sec. 48: Appointment of CCT, upto CTOs

Sec .49: Special powers of AC under R.R.Act.

AC has powers of Collector under R.R.Act.under the control of

DC and CCT.

AC may delegate the powers to ACTO and above.

Sec. 50: Constitution of Appellate Tribunal.rule 13,13(2).(1) 1 + 2 Dt Judge,IInd member, and JC

(2) Addl.Bench: Subjudge and DC. 1 + 1

3 Members Bench, 2 members bench

1 member Bench,disputed turnover does not exceed 1 lakh

may be chairman or other members.

(3) single member question of law(Not chairman) refer to 2

members or 3 members bench.

3 members differs in any point only majority opinion

2 members bench if differs in any point(not chairman)

refer to 3 members bench.

Sec. 51.Appeal to AAC.rule 14(1) 14(15) form X,G & HH orders passed u/s 22,24,26,27(1to4),28,29,34,40(2) other than

AC(Asst)

proviso1/ 30+30 days sufficient cause for not presenting the Ap.

Proviso 2/ 22,24,26,27(1to4),28,29 proof of payment of

admitted tax and 25% of the tax due rule 14(10)

(4)stay by AAC with sufficient security

proviso valid for 180 days from the date of order. This is not applicable to the tribunal stay.

AAC appeal fess Rs.100/-rule14(2)

Sec.52. Appeal to ADC rule 14(1) form X,rule 14(15) form G & HH orders passed u/s 22,24,26,27(1to4),28,29,34,40(2)

proviso1/ 30+30 days sufficient cause for not presenting the Ap.proviso 2/ 22,24,26,27(1to4),28,29 proof of payment of

admitted tax and 25% of the tax due

(4)stay by ADC with sufficient security

proviso valid for 180 days from the date of order.

Sec. 53. Special powers of DC (SMR) rule 14(19) on own motion call for and examine orders passed u/s

22,24,26,27(1 to4),28,29,if prejudicial to the interest of revenue

revise,modify,setaside the asst.

provided DC shall not initate progs

if time for appeal not expired,appeal to AAC.ADC or App.Tribunal

or revision in the HC

more than 5 years expired from the date of order.

Progs of the DC stayed by civil court, or any other competent

Authority.

Pending with HC/SC time to be excluded for time limit.-RO

Sec.54.Powers of Revision of DC rule 14,14(7),14(15) formY,G & HHAny non appealable order passed or progs recorded within 30 days of Receipt revision to DC( 30 days + 30 days)

If any tax,fee or other amount due DC may give direction to pay

Before disposal but with security.-RO

If adversely affects a person, that person has had a reasonable

Opportunity of being heard.

Sec.55.Special powers of JC rule 14(19) JC of his own motion call for any order u/s 22,24,26,27(1to4),28,29,

Or orders passed by DC 53,54(3)

If prejudicial to revenue, reverse, modify/setaside

Provided the JC shall not initiate progs

Appeal time not expired.

Or appeal pending before App.Tribunal or revision in HC

Or more than 5 years expired from the date of order

Or order of AA/DC pending with HC/SC

If progs of JC stayed by civil court or other competent authority-RO

Sec.56.Power to transfer appeals. Rule 14(6) By Chairman,ADC to ADC

AAC to AAC

Chairman may direct stay of further progs pending before

AAC/ADC-RO

Sec.57. Powers of revision by JC rule 14(7) form Y,rule 14(17),14(18).

against DC order u/s 54(1)

30 days of receipt + 30 days

tax,fee or other amount shall be paid against the revision

appn. Filed. RO

Sec.58. Appeal to the Appellate Tribunal.rule 14(10) FORM Z & AA RULE 14(12)FROM CC,14(11) formBB,14(18)&14(22)& 19

Against AAC order 51(3)

Against ADC order 52(3)

Against DC order 53(1)

120 days for Govt + 120 days for sufficient cause.

60 days for others + 60 days

with proof of payment of tax, ordered by AAC/ADC u/s 51(3),52(3)

Payment of admitted tax 53(1)

DC u/s 53- 25% of difference of tax and Admitted tax paid.

Sec 51,52- ADC/AAC setting aside the asst for fresh asst-no appeal.

(2) on receipt of notice from Tribunal, within 60 days + 30 days

to file cross objections.

Appeal and cross objections with fee, for Govt no fee.

Question of law orders of the App.Tribunal in other case, against

Which adverse decision by HC/ and if appeal to SC against the

HC order pending, Appellate Tribunal defer hearing till decision

Received from HC/SC

Within 60 days of receipt of notice - appeal to App.Tribunal

Against AAC order 51(3),ADC order 52(3)/DC order 53(1),ASR/SR

To file enhancement petition/restoration of asst-also App.Tribunal

May admit an E.P. or petition for restoration of asst,after the

Expiry of the said period if sufficient cause

For appeal tax should be paid

For DC order 53(1) App.Tribunal may give direction to pay tax

Before disposal if security filed.

7(a) dealer/dept may file review of any order passed by the App.

Tribunal discovery of new and important facts

But not more than once

Tribunal institution fess 2% of disputed tax and penalty,minimumRs.500/- max Rs.2000/-

Confirmed Tax by AAC should be paid sec 58(1)

Revision within one year of service/dealers with fee,Govt no fee.

Sec.59.Appeal to High Court.rule 14(13) form DD,rule 14(15),14(16) formG & HH,14(14)(a)form FF

Against the orders of JC u/s 55 appeal within 90 days from service.

Orders passed is final.

If any taxes due the HC may at its own discretion to pay tax before

Disposal

Dealer/Dept may file review petition with proof of payment in time.

Sec.60.Revision by HC. Rule 14(13) form EE,14(14)form GG Revision against orders passed u/s 58(4)(5)(7)

Within 90 days of service, any person/DC as AT decided

Erroneously or failed to decide question of law.

90+ 90 with sufficient cause.

Dealer fee/Govt No fee

May dismiss subject to RO.

Reverse/amend/affirm the orders of the App.Tribunal

Or remit with such order on question of law.

Before HC may remit the petition to App.Tribunal and may obtain

Findings from Appellate Tribunal.

Dealer tax should be paid

Dealer/Dept may file review petition of orders passed by HC.,

With fee from the dealer discovery of new points and important

Facts.

Sec.61.Petitions and appeals to HC to be heard by Bench of not less than

2 judges.

Every appeal u/s 59,every revision u/s 60

Sec. 62.Amendment of order of asst.etc form G & HH 1) appeal, revision/review to give effect to - if excess to be refunded/

if any taxes due to be collected.

2) if excess stay if further appeal/revision/review On application by

AA, by appellate authority, revising/ reviewing authority

3) reviewing authority may stay further amount due till disposal

if sufficient security filed. (From G & HH)Rule 5(6)(d) 14(15) & 14(16)

Sec 63 Production of accounts.

(1) Every dealer liable to pay tax to produce accounts (2) AAC/ADC should not first time receive evidences as in (1) if received, should recorded that reasons for non production before A.O. beyond the control of the dealers.

(3) Appellate authority/reviewing/revising authority first time should not see any accounts/ Registers, Record/documents

(Nothing in this section shall apply to accounts which are built up from the initial accounts).

SEC 64: Maintenance of uptodate, true and correct accounts and records

by dealers. Rule 6(1)

Rule 6(2)(b) purchase account details

(c) sales/stock transfer account details

if assessee u/s 3(4) and 8,to maintain description,

invoice No.value of goods.

Rule 6(3)(b)manufacturer for purchase of industrial inputs should

Give certificate for mfe. of taxable goods.

Rule 6(6)(a) accounts to maintain by commission agents.

(2)(a)Current accounts in the place of business

(b)Should keep five years accounts, in the place notified to the AA.

Rule 6(11)

(3)Move the goods with bill of sale or Delivery Note.

(4)Audit by CCT, now below ACTO

who not filed returns

claimed exorbitant refund

incorrect returns filed, incorrect claim if any made, in correct

deduction claimed, incorrect turnover disclosed in return

or on the basis of any other criteria, random selection.

In the opinion of CCT detailed scrutiny needed.

5(a) dealer to provide account books etc

to check and verify the stocks

to furnish any other information required,

(b) should not recover accounts or stocks.

Sec.65.Powers to order production of accounts and powers of entry, inspection etc.rule 20

1.Summoning of accounts-mode of service - rule 19

2. Inspection

house search warrant issued by a Magistrate.

3.D7 permitted.rule 20

Govt to prescribe difference class of officers for1,2,3.

Sec.66. Powers to inspect goods delivered to a carrier or a bailee.

Lorry check and Checkposts.Rule15

Records to carry

a)sales bill or delivery note in form JJ, along with trip sheet

b)VAO certificate for agricultural products except sugarcane

c)for own sugar cane, sugarcane inspector certificate.

For import or export records to carry sec 15(14)

a) Trip Sheet

b) sale bill or delivery note in form JJ

c) if locally manufactured goods exported

i) sale bill

ii) port from where exported

iii) Ship name

iv) ship arrival and departure time noted letter

d) if manufactured outside the state

i) Purchase bill

ii) letter from clearing and forwarding agent about the details of to be exported items, quantity, value, buyer name

if imported items

i) foreign sale bill copy

ii) letter of clearing and forwarding agents, about the importer name, imported goods details ,quantity, value

Forms II, JJ, KK, LL, MM & NN

Sec.67.Estt of check post or barrier and inspection of goods while in transit. Rule 15, form JJ Government by notification

Sec.68.Possession and submission of certain records by owners, etc.

of boats. Rule 15, forms JJ,MM, NN

Sec.69.Possession and submission of certain records by owners of goods vehicle. Rule 15

Sec.70.Issue of transit pass. Rule 15(17) form LL1) From one state to another, through Tamil Nadu

2) From this state to other state on consignment basis or by branch transfer.

For sl.No.1, the transit pass should be obtained from the first checkpost

For sl.No 2,the transit pass should be obtained from the A.O

Sec.71.Offences and penalties.

Regd under VAT ACT, paying tax, but not filed returns,

Dealer who has to register under VAT ACT failed to register.

fine by Magistrate upto Rs.500/-

Illegal collection of tax as per sec 40(1)

fine by Magistrate upto Rs.1000/-

Willfully submit untrue return

Not an assessee fails to submit a return

evasion of tax

dishonestly object to a notice u/s 27(1)

fails to keep true and correct accounts as per sec 64(1)

keeps accounts in other than the authorized place as per sec 64(2)

moves the goods in contravention of sec 64(3) without bill of sale or delivery note

willfully acts in contravention of the provisions of the Act.

Fails to make use of the goods for the declared purpose

False statement or declaration filed in the RC application

Wilfully acts against the undertaking given u/s67(9)

fine by Magistrate upto Rs.2000/-

Second and subsequent fine of Rs.2000/- or extend to six months simple imprisonment or both

Prevention or obstruction as per sec 65or 66 fine of Rs.2000/- or extend to six months simple imprisonment or both

Fails to carry transport documents, as per sec 69 fine of Rs.2000/- or extend to six months simple imprisonment or both

Driver fails to give name and address of the owner, or if given false name and address as per sec 67(2)

Failed to produce driver licence fine of Rs.2000/- or extend to six months simple imprisonment or both

False statement or declaration given as per sec 68 or 69 fine of Rs.2000/- or extend to six months simple imprisonment or both

Evasion of tax, fine of Rs.2000/- or extend to six months simple imprisonment or both

Bill trader, simple imprisonment extend to three months, and second and subsequent times, conviction to rigorous imprisonment for six months.

Composition of offences. sec 72

Failure to pay, attempt for evasion Rupees two thousand or double the amount of tax payable which ever is greater.

For others a. sum rupees not exceeding Rs.2000/-

Sec.73.Cognizance of offences.No prosecution for obstructions except with written permission of DC.

Sec.74.Asst,etc, not to be questioned in prosecution.

Sec.75.Bar on certain progs.

Sec.76.Limitation for certain suits and prosecutions.

Sec.77.Bat of suits and progs to setaside or modify assts or from recovery of any tax or penalty made under this ACT except as provided in this ACT.

Sec.78.Appearnace before any authority in progs.rule 17(1)formSS Relative, full time employee duly authorized.

Legal practitioner

Acct or VAT practitioner duly authorised.

Sec.79.Publication of information in respect of the assesses

regarding suppression and tax arrears. Rule 22

Sec.80.Power to make rules.

Sec.81.Power to summon witnesses and production of documents

As per sec 81(1) for non appearance for summons issued or non production of records as called for in the summons, then as per sec 81(2)

Penalty of Rs.500/- has to be levied. Rule 16( form PP)Sec.82.Power to get information

Sec.83.Power to remove difficulties

Sec.84.Power to rectify any error apparent on the face of the record.

within five years from the date of order by A.O. and AAC. If any enhancement of tax or penalty, notice to give and then pass orders.

Sec.85.Prohibition of disclosure of particulars produced before tax authorities.- to legally due to other departments, central or state

or courts,etc.

DC permission upto CTO

CCT above AC.

Sec.86Power to amend schedules.

Sec.87.Construction of reference to TNGST ACTSec.88.Repeal (Cancellation) and saving.rule 26,rule 10(3) form VTNGST ACT & TNAST ACT REPEALED.

Right , privilege, obligation, liability, appointment, notification, notice or order issued rule, regulations, forms certificate license or permit are valid.88(2) regd dealer continue to be registered dealer- had this act not come into force till fresh certificate given.

88(3)(a)

all previous actions, or proceedings validity be continued.

(b)liable to pay tax, fee ,penalty, interest or other amount for any period before VAT Act, shall be levied and collected under the provisions of the Act as if this act were in force during the said period.

(c) registration, renewal, deemed to have been paid for registration under the said act.

(d)CCT, JC, DC, AC, CTO,ACTO continued as above under section 28

(e) Chairman and members continued u/s 30

(f) officers of the enforcement wing continued.

(g) Amount, accounts, register, documents retained under the said act continues.

(h) goods detained continues.

(i) rules, regulations, notifications, clarifications or orders continues.

88(4)

tax, interest, penalty, fee due previously levied subsequent to VAT levied all methods of recovery continues.

(5) appeal, revision continues.

(6)(a)ITC can be claimed by registered dealers on stock held excluding capital goods on the date of commencement of VAT Act (within one year).

(b) stock inventory as above to be furnished before the AA within 59 days from the date of commencement of the Act.

Vvvvvvvv SCRUTINY OF RETURNS. Form IAnnexure I, Tin NO., total ITC taken over is correct or not?

Annexure II

Sales details

Annexure III

Details regarding reversal.

Annexure-IV

Zero rated sales/export

Rate of tax

Calculation

Whether actually sold exempted goods.

Interstate purchases not eligible for ITC

Interstate sales not covered by C forms full reversal

Consignment sales/ Branch Transfer not covered by F form full reversal.

Goods for personal use.-NO ITCGiven as gift No ITCDestroyed by natural calamities, theft No ITCCorrect adjustment of entry tax paid.

Purchased used for the manufacture of exempted goods.NO ITCImports no ITC

Difference between return and books of accounts.

Tax not paid by the seller but claimed ITC

ITC availed for free gift-reversalITC availed for exempted goods. reversalITC availed for goods taken for own use - reversalTax paid u/s 12

Tax not paid u/s 10

ITC availed for the bullion purchased locally but sent for job work to other states for manufacture of jewels or articles .- reversalITC availed for the bullion purchased under gold loan scheme- reversalInterstate sales not covered by form C- NO ITCITC not reversed for stock transfer/branch transfer , consignment sales to other states with or without F forms.(with 2% from 1.6.08 without full reversal)TDS not deducted u/s 13

ITC availed for the purchases made from RC cancelled/ compounding dealers -reversalSales of assets

Difference in rate of tax.

Excess collection of tax

Wrong availment of refund falling u/s 18(2)

Disallowance of sales return

ITC not reversed for purchase return

Freight/pre-sale charges not included in the sales turnover

Compounding dealer u/s 6 made inter-state /import purchases.

Suppression of purchases

Suppression of sales

Excess carry forward

Out put tax reduced due to Discount /incentive received not acceptable rule 10(6)(b) (ii) (C)VAT not shown in the invoice separately but deducted from the sale value.

To be reversed

19(16) Pregenerated notice Defects.

Seller Tin No invalid

Unregd dealers purchases

Non assessees

RC cancelled

Transaction unmatched

Purchases from Compounding dealers

Cross check references

Value addition

Discount

Carry forward entry

Purchases from compounding dealer

Incorrect claim- between as per return Vs annexure.

Capital goods.

Upto 50% this financial year, after commencementRemaining in the next two financial years.

Not vatable goods IInd schedule goods, no ITC

Capital goods ITC whether exceeded three financial years to verify

If so, reversal, to be realized.

From the date of commencement of commercial production.

No ITC on capital goods for manufacture of exempted goods.

Original tax invoice to be filed to claim ITC

ITC allowable before 90 days from the date of purchase or before the end of financial year.

ITC by 100% EOU not eligible

Revised return not admissible

Annual return in from I-1by non assessee before 20th May rule 7

(sub rule 6)

Section 18(2)

Refund admissible on purchase of goods which are exported as such or

consumed or used in the manufacture of other goods and exported.

Section 18(3) claim within 180 days from the purchase.

Cross verification of purchase and sales

All the available information from Computer Management Information System should be utilized before taking up a case for audit to identify the potential defects.

Form W refund Section 18(3)from the date of accrual of such ITC, to be changed as from the date of zero rate sales - Honble CT Minister 8.7.09 budget speech. No amendment till date.(10.10.2009)Purchase returns within 6 months

Sales returns within 6 months

Unfructified sales. Within 30 days.

Exempted goods reversal formula

Sales turnover of exempted goods X ITC

Total sales turnover.

Compounding dealers hotels sweet stalls section 8(5)

Works contractors compounded rates paying tax 6(5)

Form K return 3(4)0.5%

Certain defects noticed reversal made.

use of furnace Oil for exempted goods.

Sales to 100% EOU

Interstate sales without C form

Wrong claim of ITC from unregd dealers purchases.

By cross check, buyer at other end claimed ITC, but here no such payment- ITC collected.

Purchase tax under section 12 not paid

To claim ITC

Both purchaser and seller must be regd dealers

Bill should show the tax portion separately.

The goods purchased must be for

a) for re sale

b) use in manufacture of other goods in the state.

c) use as containers, labels, packing materials

d) use as capital goods for the manufacture of taxable goods.

e) for interstate sales covered by C forms

f) Agency transactions by the principal within the state.

g) stock transfer/depot transfer or consignment sales outside the state against F forms.

Different kinds of Claim:

Wrong claim -before commencement of commercial production.

False claim-unregd dealers purchases & VAT applied cases.

Irregular claim- capital goods after three years.

Incorrect claim- rate of tax

Inadmissible claim as per return as per annexure

Export of towels, whether ITC on cotton yarn to be refunded - yesEnforcement proposal

Whether equal addition to be made - yesSelf assessment

Deemed assessment.1.4.06 to 31.12.2006

See Territorial wing package(Territorial Domain)

Exceeding Rs.50 lakhs

ITC claimed and zero out put

Input Vs out put

ITC adjustment details

Tax Paid details

Issue cross check inter and intra division for turnover over 1 lakhs,

Also verify the purchases, that some dealers might have issued bills for below 1 lakh viz., Rs.90,000/- such cases also to be cross verified.

C form to file within 3 months from the end of the quarter to which they relates w.e.f. 1.10.2005 till 2007-2008 order to pass. Collect C forms and verify in the TINXSYS for their genuineness .

Used capital goods for manufacture of taxable and exempted goods, reversal formula rule 10 sub rule (4)(e)

Checkpost bills not accounted for and extracts not accounted for dont allow the dealers to set off from ITC on hand. This is a suppression collect tax and also penalty.

Evaluation study team observations regarding implementation of Vat.

The proportion of assessee to total dealers increased from 31% under TNGST to 36% under VAT.

More than two third of the registered dealers were non assessees.

The gift/discount amount have been deducted from the sale price before arriving the amount of tax.

Considerable delay in passing assessment order

Traders explore more innovative ways to claim ITC

ITC claim increased by 15% during 2008-2009 as against 2007-2008

4% tax 45%increased claim ,12.5%tax rate 41%, 1 % tax rate 13%

The reasons for higher ITC than tax actually paid:

Turnover suppressed

Higher ITC claim for spares and accessories.

No mechanism to verify ITC for the purchase of capital goods.

No provision in the annexure showing separately for capital goods.

Refund of ITC to export commodities.

Lack of proper verification to curtail understating sales.

The number of mismatch cases during cross verification almost doubled between these two years, 2007-2008 and 2008-2009 55% from intra division cross verification and the rest from inter-division cross verification.

Reversal increased by four fold in between these two years.

Viz:

Interstate sales without C forms

Inputs destroyed

Purchase from unregd dealers.

Purchases from other state

ITC claim without bills.

Defects in field audit

Prior intimation of VAT audit to the VAT assesses and the mutually convenient date for making vat audit are the main weakness of the Field Auditing system.

Most of the dealers selected for VAT audit manipulates /adjust accounts and stocks after getting VAT notices.

Some dealers are filing revised returns to the assessing officer concerned and disclosing the suppressed turnovers.

Scrutiny of returns:

In some monthly returns, the code of the commodities have been wrongly entered, which have not been verified and corrected by the officials of the CT department.

In some cases, the purchasers TIN and sellers TIN have been omitted.

Similarly in some instances, those TIN numbers has not been mentioned.

Arithmetical error also existed.

Consolidation of invoices relating to purchases and sales are given in the Annexure I and II consequently one to one verification could not be possible.

The correctness of the tax due to be paid have not been verified by officials.

The officials simply collected the returns from the assesses and bundled it. Even the entry of the monthly returns in the register for the year 2008-2009 is yet to be taken up.

Evasion Prone commodities

Furniture

Iron and steel

Auto parts

Granites

Timber

Computers

Medicines

And jewellery

Common defects:

Incorrect exemption of commodity

Incorrect rate of tax

Invalid declaration forms

Inappropriate concessional rate of tax

Material suppression based on purchases to sales ratio

Wrong exemption based on tax sufferance

Arithmetical inaccuracy

Incorrect set off of entry tax

Inappropriate concession for deferral/waiver

Not raising an invoice for sales.

Non payment of taxes due before 12th or 20th

Non payment of purchase tax on purchases from unregd dealers

Exemptions claimed through items not specifically covered.

Exemption claimed through the conditions are not fulfilled

stock transfer of goods without payment of CST where the buyer is known

inputs credits not proportionately reduced for return of inputs.

Credits availed for inputs used to manufacture exempted goods.

Input credit availed on photo copy of tax invoice.

Availing the credit on defect input documents such as TIN NO., Vat not clearly indicated, no consecutive serial number etc.

Error in classifying goods as inputs instead of capital goods & vice versa.

Non reversal of proportionate ITC when inputs are used in manufacture of both taxable and exempt goods and no separate accounts are maintained to distinguish usage.

Removal of goods without a tax invoice without discharging the tax.

Non debiting tax when the materials on which credits are availed are removed for service.

Goods being classified wrongly.

Whether the dealer has registered himself under the VAT and whether all the places of business are noted in the registration Certificate.

Whether the books required to be kept under the provisions of the act and rules are maintained , whether they are available at the place of business and whether they are uptodate.

Whether the stock found during the audit have been accounted for in the books and whether the latest bills for purchases available have been recorded in the books.

Whether purchases and sales are supported by vouchers and whether bills of sale are issued systematically.

Whether separate books are kept for credit sales or sales of goods issued on approval basis and whether such sales are properly brought to account.

Whether the goods are stocked only at the places mentioned in the registration certificate.

Whether the goods different from those recorded in the books are exposed for sale.

Details of stocks of important commodities handled should be taken to see whether a true account has been kept.

No document to prove the movement of goods.

Excess collection of tax than prescribed rates of tax.

Stock transfer to other state agents/branches with F form without proportionate reversal of ITC.

Proportionate ITC not reversed for inputs used in labour work.

Proportionate ITC not reversed for exemption claimed on sales made to Notified units/organizations.

Proportionate ITC not reversed for works contractors paying tax under compounding options.

Failure to deduct tax at source in works contract as required u/s 13 of the TNVAT act.

In correct claiming ITC on personal use AC and vehicles

Incorrect claim of ITC on goods which are purchased for office/maintenance purpose, furniture, stationary etc.,

Non assessee to file annual return inform I-1 before 20.5. for the year 2007-2008 before 31.12.2008 rule 7 sub rule(7)

1.4.06 to 31.12.2006 deemed assessment.

AG defects:

1)ITC amount claimed in the return is in excess of VAT paid amount shown in annexure -341.27 crores inadmissible claim in 160071 cases.

Vat paid is incorrect with reference to rate of tax.

Excess carryforward -960.48 crores in 128147 cases.

Excess claim than paid

Section 12 omission

Over 10 lakhs turn over not filed returns.

3(4) 50 lakhs and above paying 0.5.%

Non levy of interest for belated payment of tax as per section 42(4) 1.25%

Monthly return not filed

Discrepancy found in the tax paid against collections.

Incorrect ITC claimed from RC cancelled dealers.

ITC on capital goods.

Incorrect claim of ITC on purchase of exempted goods

Incorrect reversal of ITC by dealers.

Excess collection of tax

Excess of 1%,4% and 12.5%,360 cases,151570 cases and 5598 cases.

Excess claim of ITC on closing stock

Dealers regd under TNGST Act, not regd under VAT Act.

VAT AUDIT & INSPECTION FORMS.

VA -1 notice for VAT audit visit.

VA-2 Vat audit report

VA-3 VAT audit notes.

VA-4 The register of VAT audit

VA-5 Authorization of VAT audit

VSI-1 Surprise inspection report

VSI-2 The Register of surprise inspection.

VSI-3 Register of cases detected.

VSI-4 Master Register of dealers

VSI-5 inventory of records etc, recovered.

VSI-6, Authorisation for surprise inspection.

vvvvvvvvvvv

Cash discount or other discount allowed. However, where credit notes are issued for discount, then the selling dealer shall not disturb the tax component on the price in the original tax invoice and the purchasing dealer shall be entitled to claim Input Tax Credit on the tax paid as per original price in the original Tax Invoice. Rule 10(6)(b)(ii)(C)CCTs Circular Dated 7.8.09

Many dealers effected purchases by using TNGST Number.

Some sales were effected to the TIN applied dealers.

Most of the TIN mentioned were wrong and invalid.

Some top assesses have effected purchases at 4% against 12.5.% but using CST Number.

Some of the dealers who seem to be big contractors have purchased paints at 2% from the inter-state by using CST Number, but it is not known whether they were used in works contract in Tamilnadu.

Unless these dealers transactions are verified, the state may loose sizeable revenue.

CCT circular dated 18.6.09

C form is required to be filed within 3 months from the end of the quarter to which they relates with effect from 1.10.2005 vide notification No.GSR.588(E) dated 16.9.05 issued by the Government of India.

The Government of India has withdrawn the form D declaration w.e.f. 1.4.07 vide Notification No.1/2007-CST-F.No.34/135/2005 issued by the Government of India.

C forms usage details as per rule 10(5-A)(i) of the CST (TN)Rules 1957, that every regd dealer shall submit an extract of the form 8 register relating to inter-state purchases against form C declarations including issuance of form C on or before 25 th of April of each year showing the particulars of purchases made during the preceding financial year.

As per rule 10(5-A)(ii) every regd dealer who discontinues his business shall file the extract of form-8 register within 30 days from the date of closure of business.

The A.Os are also instructed to watch whether those dealers who are obtaining C forms are filing monthly returns regularly and paying tax appropriately.

F form a single declaration for one calendar month. Rule12(5)

CCT letter dated 26.8.09While viewing the return data received for the year 2008-2009, 206444 returns have shown NIL tax paid , viz 12 months Nil 36644 cases., 20600, 14764, 13091, 12165, 11718, 12001, 12343, 12966, 14066,

16716, 29030.

Take appropriate action.

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e.filing:

www.tnvat.gov.intype user name and pass word, submit

change your pass word and relogin again

contact person details and type of return details

submit

returns

form I

Tin No, year, month and circle name- submit

Fill the returns

Payment details

Cash/ cheque

Bank name

Place

Cheque number/DD No.

Date

Amount

Save

Confirm

Return

Upload form I annexures in excel format

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e.payment

e.payment

CCT progs dated 8.9.09

As per rule 7(1)(b) proviso

Every dealer whose taxable turnover exceeds Rs.200 crores shall file returns or or before 12th of the succeeding month, either form J (2nd schedule goods) or form I are hereby directed to make electronic payment of tax through the website www.tnvat.gov.in. They shall start paying tax electronically from the month of September,2009(August 2009 returns) They shall submit the e.receipt and challan generated from the respective bank website as proof of payment of tax along with the monthly returns.

12th return to file on 14 th, others on 22nd through website of C.T.Department Previous year taxable turnover exceeds Rs.200 crores, rule 7 sub rule 7(8)

Rule 23(dd)

The e.payment facility used the modern techniques of computerization to transfer the monthly tax amount due, directly from the Account of the dealer or dealer authorized account to the Government Account.

directed to make electronic payment of tax through the website www.tnvat.gov.inIn order to facilitate e.payment the Commercial Taxes Department, Tamil Nadu has made a tie with SBI, ICICI, IOB and Bank of Baroda. This facility is achieved through the integration of websites of the Commercial Taxes Department and the respective banks.

For availing the facility of e.payment, internet banking account is

mandatory for TIN regd dealers. The required used Id and pass word would be issued by the bank, to those dealer who possess internet banking account.

The Regd TIN dealers can login to the website of the Department using the used Id and password obtained from the Department of commercial taxes, and file their e.return .

e.payment- selection click Chennai and other division dealers

e.payment login to TNVAT website

username (Tin No)

pass word(first time TIN No.)

submit

second time self generated pass word

e.payment and payment verification

select bank

SBI/ICICI/IOB/Bank of Baroda

User Authentication

Re enter pass word

Submit

Payment entry(TIN No, year, month(Submit),name of the dealer, circle name Whether form I,J,K,L, form 1 CST)

Tax due/interest/ tax payable

Online payment click

E payment details/confirmation of payment entry

Tin No, dealer name return month, return year, form I, J, K, L and form 1 CST(Taxes due), interest, total amount - submit

Maker login to bank site

SBI

Username and pass word/log in

Selection of account

Savings or current

Maker verification of transactions details (Accountant)

Maker entry status(Accountant/may be MD)

e.pay order

back to TNVAT site

Transaction is in pending state.

Authorizer, Authorizer connecting to bank site, (MD who signs cheque)

Authorizer login to bank site

Selection of manage transactions

Check inbox for pending authorization

Payment authorization

Pay order authorization

Authentication of payment authorization

Pay order

Confirm

Confirmation status of payment authorization

View of e. challan by authorizer

Maker verification of transactions

Maker login to TNVAT site,

Selection of e-payment verification

Verification of pending authorization

Status of authorized payment(your transaction is completed successfully)

Click here for acknowledgement

On acknowledgement from TNVAT site for payment.

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Field to concentrate for Desk audit or Vat audit or Field audit.

Export dealers

Top 6000 dealers,

Commodities

Iron and Steel

Electrical goods

Timber

Sago

Rubber

Plastics

Jewellers

Hoteliers

Works contractors

Dealers having ITC morethan 10 lakhs on closing stock as on 31.12.2006

Dealers having ITC claim of more than 10 lakhs during the period from 1.1.07 to 31.3.07

Dealers having unavailed input credit of Rs.15 lakhs or more at the end of the financial year.

Compounding dealers

Dealers has a bad return filing record

The dealer has stopped filing returns

Scrutiny of returns reveals a number of errors

Dealer has a bad payment record

Newly registered tax payer

Tax payer has not been audited in the last 3 years.

Previous audit identified material discrepancies

Claims exorbitant refund

Claim of huge exemption

Claim of huge ITC

Dealers reporting fall in revenue/turnover

Importing dealer

Revenue:

2005-2006 Rs. 16615.00 crores.

2006-2007 Rs. 19217.00 crores.

2007-2008 Rs. 19952.00 crores.

2008-2009 Rs. 22570.00 crores. 13% G.R.

ACTS IN FORCE

1)TNGST Act 1959

2)TNAST Act 1970

3)CST Act 1956

4)TNET Act 1939

5)TN Advt Act 1983

6)TN betting tax act 1935

7)TN tax on Luxuries act 1981

8)TN tax on entry of Motor Vehicles into Local areas Act 1990

9)TN tax on entry of goods into Local areas act 2001

10)VAT 2006

STATE Revenue 2008-2009

CT Department Rs.22570 crores 63%

STATE Excise Rs.5709 crores

Stamps and Regn Rs.4430 crores

Vehicles tax Rs.1726 crores

Others Rs. 1514 Crores. 35949 crores.

TNET w.e.f. 4.10.2004

1)Municipal Corporations,Municipalities

Spl.grade theatres,permanent and 15% on the gross payment for

Semi permanent within 5 kms from admission for a new film

The outer peripherals limits of these (other than Tamil Film)

Areas

2) Municipal Corporations,Municipalities

Spl.grade theatres,permanent and 10% on the gross payment for

Semi permanent within 5 kms from admission for an old film

The outer peripherals limits of these (other than Tamil Film)

Areas

3) Other areas(other than item 1 above) 10% on the gross payment

for admission for old or new

film.(other than Tamil film)

4) all areas 15% on the gross payment of

admission for dubbed film

5) all areas No E.T. is payable on the

old /New film.if the film is

named in Tamil (w.e.f. 22.7.06)

TAX on cable TV,exempt w.e.f. 1.4.08

TAX on amusement w.e.f. 30.12.2002 10%

Amusement park, arcade, theme park or the like

TAX on recreation parlours 20% w.e.f. 1.11.2001

4G of TNET act. Bowling, billiards, snooker or the like

LH

Rate of charges per day per room

Rs.200 to 499 5%

Rs.500 to 999 10%

1000 & above 12.5%

excluding Foods, drink and telephone calls.

CCT circular dated 3.10.2007

The High Court of Madras setaside the levy of tax on entry of goods and quashed the demand notice, 7 VST 367.Judgement of High Court of Mad in WA.1320,1321/06 and WP 12553/02 filed by ITC limited dated 22.3.2007

The above decision was not accepted by the Government and special leave petition has been filed in the Supreme court on 5.9.07, which is pending. Now levy stand still.

SCHEDULES.

Ist Schedule

(A)1%

(B)4%

(C)12.5%

all the above three eligible for input tax credit.

IInd schedule Outside Vat. To collect tax at the rate and at the point only, no input tax credit. Sec 3(5)

IIIrd schedule sec 8

Hotels, Sweet Stalls, bakeries on option compounding tax.

IVth schedule sec 15

All exempted goods, no input tax credit.

Vth schedule- sales and export to International organizations, zero rate, but eligible for input tax credit.

VI schedule

Transit pass goods

VII scheduleCompounded rate for Brick KilnsRETURNS

Every dealer has to file return every month in form I, noting the tax to be paid, tax deducted by way of input tax credit, and the tax to be paid should be paid along with the return before 20th of next month along with purchase and sales details.Rule 7(1). If there is excess of input tax credit over and above the tax to be paid, then the same will be carry forward to next month, if input tax credit is in excess during that financial year that may be carry forward to next year or the excess may be refunded.rule 7(1)(a),7(2) and 7(3)

If any omission in claiming input tax credit, the same may be claimed within 90 days or before the end of that financial year which ever is later.sec 19(11)

Dealers dealing in second schedule goods should file return in form,J

before 20th of next month along with proof of payment of tax and also with purchase details.Rule 7(1)(b)

Dealers dealing both in first and second schedule goods, should file returns in form I and J before 20th of next month along with proof of payment of taxes, with purchase and sales details.Rule 7(10(c)

Top dealers with turnover Rs.200 crores and above in the previous financial year should file return before 12th of next month,with proof of payment of tax also with purchase and sales details.

Resale dealers paying 0.5% under sec 3(4)hasto file monthly in form K before next month 20th along with proof of payment of tax.Rule 7(1)(d)

Compounding tax by works contractors and hotels as per sec 6 and 8 to file monthly return in form L before 20th of next month along with proof of payment of tax, option before 31.1.2007 Rule 7(1)(e)

Governmnet Departments to file quarterly returns in form M before 20th of next month along with proof of payment of tax. The A.O has to verify the rate of tax noted in the return and set right the defect if any then and there. Rule7(4)

As per rule 7,those dealers directed by the CCT to file return on E.mail in duplicate in Intelligence character Recognition form, Rule 7(5)may file return on E.mail.

Charging sections

1) Sec 3(1)First schedule 1% 4% and 12.5%

2) pay tax 0.5%on the turnover relating to taxable goods, on option but no input tax credit. Sec 3(4) ,tax should not be collected.

3) Sec 3(5) goods outside VAT - Second Schedule. rate of tax as per schedule at noted point of levy , no input tax credit.

4) Tax on lease

5) Tax on works contract.

6) Tax on Hotels and sweet stalls.

Star Hotels. 12.5% sec 7(1)(a),7(2),input tax credit eligible

Others 2 % above Rs 10 lakhs sec7(1)b) no input tax credit

if below Rs. 50 lakhs, on option can pay compounded tax as per Third Schedule ,to file option before 30.4. or within 30 days from the date of commencement of business, The dealers should not collect tax and also not eligible to avail input tax credit. Sec 8

7) Bullion and jewellery sec 9

Gold and silver Bars, jewellery, platinum jewellery and precious stones

1%, eligible for input tax credit,First Scheduile.part A.

8) sec 10. goods purchased against C forms and sold as such shall pay

tax on sales as such

9) Sec 11. Tax on sugarcane, as per second schedule. No input tax credit

for sugar manufacturers.

10) Purchase Tax sec 12.

Assessment Procedures

Self assessment as per sec 22(1)(2),provided returns and tax paid in time as per rules.

Random selection not above 20% of assessments by the CCT as per sec

22(3) and as per rule 10(11),not by computer without any norms, but now with reference to exorbitant input credit claim, new capital goods on which input tax credit claimed, Direct exporters and sales to exporters.

To be excluded from total turnover:Sec8

a)Discounts shown in sale patti

b)purchase return

c)sales return

d)Interest received on balances and instalments.

To arrive taxable turnover, the following are to be excluded.sec 8(2)

a)Post sale expenses.

b)sales turnover of commodities found in IV th schedule.

c)sales turnover of exempted goods as per sec 31.

Rate differenceSec24.rule8(2)(d)

If purchase price and sales price exceeds 15% above, detailed

enquiry has to be made and revision to be made on best of judgement

sec 27(1)

Forms

Form A rule 4(9)

Application form for registration.

Two pass port size photos from Prop,Mg Partner,Mg Director.etc

Who authenticates the application form.

With self addressed stamped cover

Security Deposit in same form as in TNGST ACT

Ration card Xerox

Rental agreement

Form I rule7)(1)(a),7(2) and 7(3)

Monthly return u/s 3(1)

Annexure I Purchase details

Annexure II Sales details

Annexure III Details regarding reversal of input tax credit

Annexure IV Zero rated sales details, and input tax credits details

Form K rule 7(1)(d)

Return to be submitted by the second sales dealers below Rs.50 Lakh,

As per sec 3(4) paying 0.5% tax, where no input tax credits and no exemption claim.

Form L rule 7(1)(e)

Monthly returns to be filed by compounding tax paying hotels

Sweet stalls,Bakeries on option, unregd foods stuffs, and soft drinks dealers, works contractors,where in no input tax credit and no exemption turnover.

Form J rule 7(1)(b)Monthly returns to be filed by Second Schedule dealers.

Form W sec 18,rule 11(2)

Application form to get refund of input tax credit from zero rated sales dealers. The above input tax credit should be adjusted within 180 days or before the end of the financial year, or if no claim application has been filed, the input tax credit lapsed to Government. If no adjustment is possible, the input tax credit on hand should be refunded by an order by the A.O.within 90 days of receipt of D-1 application, further delay the amunt should be refunded with interest as per Act.

Penalty

As per sec 27(1)(a), if suppression noticed then the assessment has to be revised by giving notice to the dealers, within five years from the date of order of the assessment

For willful suppression, the penalty has to be levied as per sec 27(3)

If suppressed tax due is below 10% of tax due as per returns, 50%penalty on the tax due of suppressed turnover.

If above 10% and below 50%, then 100% penalty

If 50% above, then penalty at 150%

If orders passed on self assessment u/s 22(1) then for willful suppression 150% penalty has to be levied.

As per sec 24(1)if a dealer willfully suppresses the purchase or sales price with an intention to evade tax, then assessment has to be revised on best of judgement within five years after giving notice from the date of order of assessment. As this revision covers sec 24(2) and 27(3) to (8),the penalty as per sec 27(3) has to be levied.

As per sec 27(2), revision has to be made for wrong availment of input tax credit, by bogus bills, vouchers, declaration certificate or any other documents, within 5 years from the date of assessment order by giving notice.

As per sec 27(4) penalty for first time 50% of the tax due and second and subsequent times, 100% penalty has to be levied.

As per sec 40(1) unregd dealer should not collect tax, or equal to tax,

And regd dealer should not collect excess tax as per the provisions ACT,

If so the assessment has to be revised within five years from the date of order of assessment, by giving notice. and penalty at 100% if there is no willfulness and if willfulness then 150% as penalty, as per sec 40(2)

For belated payment of tax, as per sec 42 and sec 21,the penalty at 1.25% per month for delay has to be levied as penalty as per sec 41(3)

Form RR.

As per sec 81(1) for non appearance for summons issued or non production of records as called for in the summons, then as per sec 81(2)

Penalty of Rs.500/- has to be levied.

Shop Inspection.Sec 65

65(1)to produce accounts before the an officer not below the rank of ACTO

Inspection powers to officer not below than the rank of an ACTO, as per sec 65(2)

Suspected accounts may be recovered on issue of receipt as per sec 65(3)

To inspect the place, authorized as per sec 65(4)but not residence without a warrant issued by a Magistrate.

Accounts Audit as per the directions of the CCT as per sec 64(4),by not below the rank of ACTO, for the reasons

a) undue delay in filing returns.

b) Exorbitant input tax credit and exorbitant refund claimed cases.

c) Suspected returns

d) Deep scrutiny of accounts

e) Any other criteria and on random selection

Also provides for stock verification64(5)

As per 64(5)(a)the auditing officer should not recover accounts, connected records and also confiscate the physical stocks.

Lorry check and Checkposts.Rule15(3)

Records to carry

a) sales bill or delivery note in form JJ,along with trip sheet

b) VAO certificate for agricultural products except sugarcane

c) for own sugar cane, sugarcane inspector certificate.

For import or export records to carry sec 15(14)

a) Trip Sheet

b) sale bill or delivery note in form JJ

c) if locally manufactured goods exported

i) sale bill

ii) port from where exported

iii) Ship name

iv) ship arrival and departure time noted letter

d) if manufactured outside the state

i) Purchase bill

ii) letter from clearing and forwarding agent about the details of to be exported items, quantity, value, buyer name

if