1. The Return forms under MVAT have been amended TWICE in a
short period of 3½ years. (The fundamental accounting presumption of
consistency does not apply to so-called user-friendly tax administration)
2. Even the Vat Audit Report (Form 704) has been amended.
The Amendment comes in the midst of financial year, which results into several
hardhips on the Dealer as the information asked in the Audit Form 704 was not
required to be provided in return forms. The dealer has to recompile the
information at the time of preparing Audit Report in Form 704.
3. There were several extensions to the filing of Vat Audit
report for the financial year 2005-2006 and 2006-2007. (The repeated extension
of due date of audit must be unique to the Indian Tax System.)
4. Certain information viz. cash purchases, cash
sales, Maharashtra sales, oms sales, etc. and asking the reason for change
with reference to the previous year seems irrelevant. What purpose is going to
be served by having such information, is beyond comprehension.
5. Refund : Since MVAT is a multi-stage system of
taxation; it gives rise to refunds in many situations, such as exporters,
resellers, etc. The MVAT Act does not allow carry forward of such refunds to
the subsequent financial year. However, till financial year 2006-07, such
carry forward was allowed under administrative Circular issued by the Sales
Tax Department. But this practice has been discontinued from Financial Year
2007-08 and a dealer has to compulsorily claim refund of excess set-off by
making an application in Form No. 501. Some of the difficulties and hardships
suffered by the dealers in such procedure are as below :
(a) The dealer has to pay the tax liability arising in
subsequent period from his own pocket, even though excess tax paid by him in
the earlier period is lying with Government in the form of this refund claim.
(b) There is no monetary compensation to the dealer in the
form of interest.
(c) The dealer has to furnish bank guarantee to obtain
refund. (optional)
(d) The dealer is required to furnish copies of challans
and returns even when the data is already available, since the returns are
already filed online.
(e) Details of purchases for the relevant period are to be
submitted in a specified format as well as on a CD. Compilation of data in the
specified format itself is a cumbersome task, as the software used by the
dealer might not be able to generate the data of purchases in the specified
format. This information is to be given in respect of all the purchases during
a given period, irrespective of the amount of refund. This sometimes becomes a
very difficult exercise for a dealer. e.g., if there is a refund claim
of Rs.10000 only, but the turnover of purchases is Rs.5 crores, the details of
all purchases have to be submitted, which is a time-consuming exercise.
(f) Recent Trade Circular No. 35T of 2008, dated 10th
October 2008 has devised a new scheme known as Voluntary Refund Scheme. Under
this scheme, refund claim will be restricted to those purchases whose
suppliers’ return filing is confirmed.
(g) It also specifies that the dealer may voluntarily
furnish the proof of filing return by suppliers.
(h) For the balance refund arising due to subsequent
confirmation of filing of return by the suppliers, the dealer has to make
another application. Thus for the default committed by the suppliers, the
dealer may be penalised in the form of late refund or even no refund.
(i) The newly registered Large Taxpayer Units are to be
processed on priority basis. Where does the small dealer go who has been
paying taxes ?
