VAT crime - circulars and instructions

 These are the horrible circulars and instructions related to the VAT crime in Telangana

GOVERNMENT OF ANDHRA PRADESH

COMMERCIAL TAXES DEPARTMENT

                                                                   Office of the

Commissioner of Commercial Taxes

Andhra Pradesh :: Hyderabad.

CC No.19

 

CCT’s Ref. No. BV(3) /37 /2010.                                     Dated :27-08-2012                    

CIRCULAR

Sri Suresh Chanda, I.A.S., Commissioner of Commercial Taxes

***

             Sub: APVAT Act,2005- Audit and Assessments –Certain instructions  

                      issued-Reg.

      Ref: 1. CCT’s Ref. No. B II (2)/ 122/ 2006, dt. 29.5.2006

                      2. CCT’s Ref. No. B II (2)/ 122/ 2006, dt. 19.6.2006

3. CCT’s Ref. No. B II (2)/ 122/ 2006, dt. 8.9.2006

4. CCT’s Ref. No. B II (2)/ 122/ 2006, dt. 16.9.2006

5. CCT’s Ref. No. B II (2)/ 122/ 2006-1, dt. 4.10.2006

6. CCT’s Ref. No. BV I (3)/ 120/ 2007, dt. 31.5.2007

7. CCT’s Ref. No. BV I (3)/ 120/ 2007, dt. 13.6.2007

8. CCT’s Ref. No. BV I (3)/ 120/ 2007, dt. 22.9.2007

9. CCT’s Ref. No. BV I (3)/ 120/ 2007, dt. 5.10.2007

10. CCT’s Ref. No. BV I (3)/ 120/ 2007, dt. 25.10.2007

11. CCT’s Ref. No. BV I (3)/ 120/ 2008, dt. 16.4.2008

12. CCT’s Ref. No. BV I (3)/ 120/ 2007, dt. 30.10.2008

13. CCT’s Ref. No. BV (3)/ 60/ 2009, dt. 11.5.2009    

14. CCT’s Ref. No. BV (3)/ 37/ 2010, dt. 29.3.2010.

15. CCT’s Ref. No. BV (3)/ 37/ 2010, dt. 5.9.2011.

16. CCT’s Ref. No. BV (3)/ 37/ 2010, dt. 21.5.2012.

17.CCT’s Ref.No.AII(1)/267/2012, dt.20.7.2012.

             

***

    The attention of all the Deputy Commissioners(CT) and Enforcement Wing is invited to the ref.2nd cited, wherein, it was already instructed to issue authorization of Audit in Form ADM 1B and Notification of Advisory/Audit visit to VAT dealers in Form VAT 304 through VATIS only. But, it is noticed that in some cases these guidelines are not followed strictly and  audit is being authorized outside VATIS without generating ADM 1B and Form VAT 304 through the software. Therefore, the following instructions are issued:-

Effective from 1.9.2012, all the Deputy Commissioners concerned and Additional Commissioner/Joint Commissioner, Enforcement shall issue “Audit  authorizations” in Form ADM-1B  with Unique No. through VATIS only. Any authorization (ADM 1B) issued outside VATIS or without unique No. shall not be a valid authorization for audit/assessment. Any officer conducting audit/assessment without valid authorization shall be liable for disciplinary action.

Jumbling system shall be used to allot dealers to audit officers for audit/assessment.

Guidelines issued from time to time for selection of dealers and allocation to Audit officers for audit/assessment shall be followed.

Audit visit notice to dealers in Form VAT 304 shall also be generated through VATIS only.

As per High Court Judgment, initially ‘Authorization for Audit’ (Inspection)  shall alone be issued. After receipt and verification of audit report, and if required, authorization for assessment (ADM 1B) should be issued separately, whether to the same Audit officer or to different audit officer.

The audit officer on authorization from the competent authority, shall issue “Notice of assessment” inviting objections, and thereafter after considering reply from dealer if any, “Assessment Order” shall be issued.

 Penalty proceedings if any shall be issued separately after issue of Assessment order.

The result of the Audit/Assessment finalized shall be entered in VATIS.

The details of Penalty, if any, shall also be entered in VATIS.

 Performance of Audit/Assessment shall be reviewed through VATIS Reports.

 Step by step help is available on VATIS Home Page for the guidance of field staff.

 The above procedure shall be followed even in the case of audits/assesment  authorized by the officers of Enforcement Wing, O/o Commissioner of Commercial Taxes. 

The above instructions shall be followed w.e.f. 1.9.2012 without fail. 

                            Sd/- Suresh Chanda

                        Commissioner of Commercial Taxes

To

All the Deputy Commissioners (CT) in the State

GOVERNMENT OF ANDHRA PRADESH

COMMERCIAL TAXES DEPARTMENT

                                                                   Office of the

Commissioner of Commercial Taxes

Andhra Pradesh :: Hyderabad.

CC No. 21     

 

CCT’s Ref. No. BV(3) /37 /2010.                                     Dated :30-08-2012                    

CIRCULAR

Sri Suresh Chanda, I.A.S., Commissioner of Commercial Taxes

***

             Sub: APVAT Act,2005- Audit and Assessments – Issuing notices calling for  

                     books of accounts by the CTOs- Certain instructions issued-Reg.

      Ref: 1. CCT’s Ref. No. B II (2)/ 122/ 2006, dt. 29.5.2006

                      2. CCT’s Ref. No. B II (2)/ 122/ 2006, dt. 19.6.2006

3. CCT’s Ref. No. B II (2)/ 122/ 2006, dt. 8.9.2006

4. CCT’s Ref. No. B II (2)/ 122/ 2006, dt. 16.9.2006

5. CCT’s Ref. No. B II (2)/ 122/ 2006-1, dt. 4.10.2006

6. CCT’s Ref. No. BV I (3)/ 120/ 2007, dt. 31.5.2007

7. CCT’s Ref. No. BV I (3)/ 120/ 2007, dt. 13.6.2007

8. CCT’s Ref. No. BV I (3)/ 120/ 2007, dt. 22.9.2007

9. CCT’s Ref. No. BV I (3)/ 120/ 2007, dt. 5.10.2007

10. CCT’s Ref. No. BV I (3)/ 120/ 2007, dt. 25.10.2007

11. CCT’s Ref. No. BV I (3)/ 120/ 2008, dt. 16.4.2008

12. CCT’s Ref. No. BV I (3)/ 120/ 2007, dt. 30.10.2008

13. CCT’s Ref. No. BV (3)/ 60/ 2009, dt. 11.5.2009    

14. CCT’s Ref. No. BV (3)/ 37/ 2010, dt. 29.3.2010.

15. CCT’s Ref. No. BV (3)/ 37/ 2010, dt. 5.9.2011.

16. CCT’s Ref. No. BV (3)/ 37/ 2010, dt. 21.5.2012.

17.CCT’s Ref.No.AII(1)/267/2012, dt.20.7.2012.

18.CCT’s Ref.No.BV(3)/37/2010, dt.27.8.20012.     

19.E-Mail dt.27.8.2012 from  CTO-II, Anantapur Circle.

***

    It is brought to the notice of the Commissioner (CT) that Circle CTOs are issuing  notices to the dealers under section 21(4) of the AP VAT Act calling for books of Accounts. For example:- 

1.      V&E cases.

2.      AG paras and internal Audit paras.

3.      For the purpose of cross verification reports received from other circles.

4.      In cases where the returns are not filed continuously and also when taxes are not paid continuously.

5.      To disallow ineligible input tax credit under Rule 20.

6.      For extracts received from the check posts and other investigating agencies.

7.      To verify whether the checked waybills received from DC’s are accounted for in the books of accounts of the dealers.

8.      Input tax verification in case of Iron ore dealers particularly in light of CBI investigation on Iron ore dealers.

9.      In case of big manufacturing units, to call for the IT Returns if not submitted to the CT dept and to make cross verification of the same with our returns.

10.  In cases where output tax/input tax ratio is very small or negligible.

11.  In cases where there is continuous input tax credt for 3-4 years.

12.  Refund claims.

13.  When a firm is closed, in order to verify whether VAT is paid on the closing stock and to prevent leakage of Govt Revenue.

14.   And any other case forwarded by the DC to take further action.  

 

All the Assistant Commissioners(CT) and  Commercial Tax Officers are informed that such calling  for the  records of the dealers and doing assessment after scrutiny of such records of dealers willl amount to inspection/audit without authorization which is not in the spirit of VAT Act and rules and goes against the provisions of Rule 59 of APVAT Rules, 2005.

 

    Therefore, all the Commercial Tax Officers of the Circles and Assistant Commissioners(CT)(LTU) are directed to confine themselves to scrutiny of returns with any information already available with them (obtained/ received from any source) and then take necessary action to take up Audit/Assessment if required, by seeking authorization from the Deputy Commissioner for Audit/Assessment. If any of the  officers act in contravention of the above instructions it will be viewed seriously besides  taking disciplinary action for violation of instructions.

                        Sd/- Suresh Chanda

                        Commissioner of Commercial Taxes

To

All the Commercial Tax Officers(CT)/ Assistant Commissioners(CT)(LTU) in           

                                                           the State.

All the Deputy Commissioners (CT) in the State.

Copy to the Addl.Commissioner (CT)/ Joint Commissioners(CT), 

                                                             O/o Enforcement  Wing, Hyderabad.

Copy to the  Federation of Andhra Pradesh Chambers of Commerce & 

                                               Industry, Federation House, FAPCCI Marg,

                                               Red Hills, Hyderabad – 500004.

Copy  to Portal. 

                

                //t.c.f.b.o//

                        Addl.Commissioner(CT)(G)(FAC)            

    

GOVERNMENT OF ANDHRA PRADESH

COMMERCIAL TAXES DEPARTMENT

 

                                                Office of the 

Commissioner of Commercial Taxes

                                                Andhra Pradesh, Hyderabad.

C.C.No.27

 

CCT’s Ref. No. B-V (3)/ 37/2010 .       dated: 10.10.2012 

 

CIRCULAR

 

Sri Suresh Chanda, IAS, Commissioner of Commercial Taxes

 

***

Sub: APVAT Act, 2005 – Audits (including refund audits) and Assessments – Transparency and fairness in Audit process - Certain instructions issued – Regarding.

            

Ref:  1. CCT’s Ref. No. B II (2)/ 122/ 2006, dt. 29.5.2006

                 2. CCT’s Ref. No. B II (2)/ 122/ 2006, dt. 19.6.2006

        3. CCT’s Ref. No. B II (2)/ 122/ 2006, dt. 8.9.2006

        4. CCT’s Ref. No. B II (2)/ 122/ 2006, dt. 16.9.2006

                 5. CCT’s Ref. No. B II (2)/ 122/ 2006-1, dt. 4.10.2006

6. CCT’s Ref.No.VAT Refund(1)/2006-1, dt     2/2007 

                 7. CCT’s Ref. No. BV I (3)/ 120/ 2007, dt. 31.5.2007

                 8. CCT’s Ref. No. BV I (3)/ 120/ 2007, dt. 13.6.2007

                 9. CCT’s Ref. No. BV I (3)/ 120/ 2007, dt. 22.9.2007

               10. CCT’s Ref. No. BV I (3)/ 120/ 2007, dt. 5.10.2007

               11. CCT’s Ref. No. BV I (3)/ 120/ 2007, dt. 25.10.2007

               12. CCT’s Ref. No. BV I (3)/ 120/ 2008, dt. 16.4.2008

               13. CCT’s Ref. No. BV I (3)/ 120/ 2007, dt. 30.10.2008

               14. CCT’s Ref. No. BV  (3)/ 60/ 2009, dt. 11.5.2009

               15. CCT’s Ref.No.BVI(1)/76/2006, dt.8.6.2009

               16. CCT’s Ref. No. BV  (3)/ 37/ 2010, dt. 29.3.2010

               17. CCT’s Ref. No. BV  (3)/ 37/ 2010, dt. 30.8.2012

               18. e-mail from DC(CT), Nellore Division on 24.9.2012

               19. Audit Manual 2012

***

 

The attention of all the Deputy Commissioners (CT) in the State is invited to the references cited, wherein certain instructions were issued from time to time on conducting ‘Audits’ and subsequent  finalization of ‘assessments by obtaining prior authorization from the Deputy Commissioner (CT) concerned. Based on the review of ‘Audits (including Refund audits)’  on 5.10.2012 and 6.10.2012,  and in partial modification of earlier instructions ( wherever  they are in conflict with these present instructions) the following further instructions are issued, which shall be followed with immediate effect:-

 

All the registered VAT dealers shall be selected for Audit through ‘VATIS’ by choosing any of parameters enumerated there in. A dealer may appear under more than one category, but when any dealer is selected under one category, the same/TIN of same dealer will not again appear in another category / parameter for selection.  The Deputy Commissioner (CT)  while choosing the dealers for ‘Audit’ under any of the parameters, must choose the  top dealers as per list on priority basis, and if they choose next level dealers leaving the earlier TOP dealers, justifiable reasons for doing so shall be recorded in the file(s).

 

After choosing the dealers for ‘audits’ the said dealers can be selected for authorization of Audits to any of the officer (other than same circle officers in whose territorial jurisdiction dealer is registered) by following jumbling method only except for LTU dealers. For LTU dealers guidelines are given under next point. Any deviation in this regard will be reviewed as flouting the instructions and necessary action will be taken for deviations.

As per existing Rule position, for the dealers in LTU, audits can be authorized to AC(LTU), AC (Audit), CTO (Int), CTO (Audit) or Circle CTO;  but for ‘assessment’, either AC(LTU) or AC (Audit)/VMU only can be authorized. CTO (Audit), CTO (Int.) or circle CTO cannot be given authorization for assessment of LTU dealers.

After completion of ‘Audit’, the authorized officer who conducted audit shall submit an ‘Audit Report’ to the Deputy Commissioner (CT), incorporating the observations on audit, what are the omissions/ commissions/ deviations by the dealer, what is the additional tax that can be assessed as per provisions of law/ instructions issued in connection with any of the issue noticed in audit.

After receipt of ‘audit reports’ by DC and on examination of such audit reports; wherever the Dy. Commissioner is satisfied that assessment is needed, authorization for assessment shall be separately issued. Assessment authorization can be issued to same officer who conducted audit or to another officer by following jumbling guidelines for Circles and guidelines for LTU dealers as indicated above. If DC is not satisfied with the Audit Report, he can return the same with his observations, if any, for fresh examination by audit officer and resubmission.

The officer authorized for assessment, shall be guided by the observations in the ‘Audit Report’. If the additional tax levied on final assessment is in deviation of the additional tax proposed in the show cause notice issued as per audit report by more than 25% (Finally tax assessed is less than 75% of tax proposed in SCN), then a copy of the final assessment order along with a copy of audit report and a copy of show cause notice shall be submitted to the DC for perusal within 7 days of passing of final order, and where the DC is of the opinion that the said assessment is prejudicial to the interest of revenue, he shall take revision in such cases on priority basis.

 When any dealer is selected   for ‘general audit’, and if circumstances so warrant, the same dealer may be selected for special/ specific audit again during the same financial year after recording reasons in the file; but when any dealer is selected for ‘special / specific audit’ first, then the same dealer cannot be selected for ‘general audit’ within the same financial year.

When once ‘Audit’ is authorized under any category, the Audit officer has to verify/ audit the dealer’s  accounts, from the last audit period (Keeping in view limitation period on conduct of audit), on all issues instead of confining to piece-meal audit like – APVAT/CST /other purposes.

Even the ‘Refund Audits’ shall be authorized to officers by following jumbling method in case of Circles and LTU guidelines for LTU dealers, in partial modification of instructions issued in reference 15th cited.

In the ‘assessment order’ (especially those flowing out of audit) the assessing authority has to discuss on every aspect, as per check-lists (enclosed in VAT Audit manual 2012) wherever applicable. A ‘model assessment order’ as communicated in CCT’s Ref. No. B-V (3)/ 37/2010  dt. 5.9.2011  shall be followed to the extent feasible. Inordinate delay in finalizing the assessments shall be avoided.

All the Deputy Commissioners (CT) in the State are also hereby informed that the Hon’ble  High Court of A.P. in the case of M/s.Sri Balaji Flour Mills Vs CTO-II, Chittoor  and others in W.P.No.855/2008, dated:30.12.2010 {40 VST 150 (AP)} held that ”assessments without authorization of the higher official as specified in Rule-59(1) (4) (ii) (b) and (d) would be certainly without authority or jurisdiction and would contravene  not only Section- 21(4) but also Rule-59(1)”.-----Therefore even in cases where assessment is needed, other than the assessment resulting out of ‘Audit’ of dealer’s accounts, authorization is required, separately, through VATIS on the grounds listed in reference 17th cited. Thus in brief in all cases Authorization for assessment is a must.

In respect of unregistered dealers, authorization for audit/assessment, for the time being, can be issued manually out side VATIS.

For audit of TOT dealers, selection of dealers may be made through ‘specific/ special audit’   route in VATIS.

In case of authorization of surprise Audits, the notice in VAT Form 304 may be got printed under Deputy Commissioner (CT) login to maintain secrecy.

 Henceforth performance under ‘general audits’ and ‘special/specific audits’ will be made separately, and as per data available in ‘VATIS’ only, but not based on statistics received from the Deputy Commissioners.  Therefore, the Deputy Commissioner (CT)s are instructed to ensure that all data, including report on completion of assessments, penalties (wherever applicable) are properly and promptly entered in VATIS.

A new ‘VAT Audit Manual 2012’ is released for guidance / internal circulation among officers, which shall be followed henceforth subject to amendment/modification from time to time.

Similar process shall be followed by Joint Commissioner/Addl Commissioner Enforcement in the o/o Commissioner, CT Hyderabad.

In case of General Audit (Other than surprise audit), VATIS system is being modified to send email to dealer email id registered with CTD as soon as audit visit notice is issued to dealer through VATIS system 

 

    The above instructions shall be brought to the notice of all Assessing / Audit Authorities for strict compliance. 

 

    

                                Sd/-Suresh Chanda

Commissioner of Commercial Taxes

  

To

All the Deputy Commissioners (CT) in the State.

Copy to the Addl.Commissioner (CT)/ Joint Commissioners(CT), 

O/o Enforcement  Wing, Hyderabad.

Copy to the  Federation of Andhra Pradesh Chambers of Commerce &  Industry, Federation House, FAPCCI Marg, Red Hills, Hyderabad.

Copy  to Portal. 

 

GOVERNMENT OF ANDHRA PRADESH

COMMERCIAL TAXES DEPARTMENT

 

                                                Office of the 

        Commissioner of Commercial Taxes

                                                Andhra Pr