VAT crime in Telangana

VAT నేరం గురించి!

జరిగిన నేరం ఏంటంటే VAT Act 2005 లోని Sections 21,43,63లను రద్దు చేస్తూ 2006 లో అప్పటి DCలు, JCలు, COMMISSIONER లు 2 రోజులు మీటింగ్ పెట్టే నిర్ణయం తీసుకున్నారు.

2017 జనవరి లో నేను తెలంగాణ ప్రభుత్వానికి ఈ నేరం గురించి Complaint చేస్తాను.

సెక్షన్ 21 ప్రకారం చేయాల్సిన అసెస్మెంట్ లు సరిగా చేయక లక్షా 50 వేల అసెస్మెంట్ లు చేయలేదని ఫలితంగా కనీసం ₹30 వేల కోట్ల నష్టం వచ్చిందని తెలిపాను.

దీనికి ప్రతిగా 2017 జూన్ లో ప్రభుత్వం వారు అసెస్మెంట్ కాలం పరిమితిని 4 ఏళ్ళనుండి 6 ఏళ్ళకు పెంచుతూ ఆర్డినెన్సు జారీ చేసారు. ఈ మేరకు 2017 నవంబర్ లో అసెంబ్లీ లో చట్ట సవరణ కూడా చేసారు.

కానీ తప్పు చేసిన అధికారులపై ఎలాంటి చర్యలు తీసుకోలేదు.

అంటే CM కేసిఆర్ తో పాటు వారి మంత్రులందరూ రాజ్యంగం ప్రాకారం, చట్టం ప్రకారం నేరం చేసారు.

అంతేకాకుండా VAT Act 2005 లో చట్ట విరుద్ధంగా రద్దు చేసిన సెక్షన్లను పునరుద్ధరించలేదు.

ఈ విధంగా చేయడం చాలా పెద్ద నేరం.

VAT నేరం ఈ కింద పేర్కొన్న చట్టాల్లోని సెక్షన్ల ప్రకారం నేరం మరియు శిక్షార్హం:

The Unlawful Activites (Prevention) Act 1967

లోని

Sec.15&16, జీవితఖైదు,

Indian Penal Code 1860 లోని

Sec.121-జీవిత ఖైదు

Sec.124a - జీవితఖైదు

Sec.166 - ఒక సంవత్సరం ఖైదు

Sec.167 - 3 సంవత్సరాల ఖైదు

Sec.217 - 2 సంవత్సరాల ఖైదు

Sec.218 - 3 సంవత్సరాల ఖైదు

Sec.409 - జీవిత ఖైదు/10 years

Sec.420 - 7 సంవత్సరాల ఖైదు

Sec.468 - 7 సంవత్సరాల ఖైదు

Sec.471 - 2 సంవత్సరాల ఖైదు

read with 34 & 120B

Prevention of Corruption Act 1988 లోని

Sec.12 - 7 సంవత్సరాల ఖైదు,

Sec.13 - 7 సంవత్సరాల ఖైదు.

COMPLAINT TO CBI - TELANGANA VAT CRIME

Below is the text of my complaint to the CBI

From: Raghupathi Mote <raghupathimote@gmail.com>

Date: Fri, Feb 2, 2018, 6:14 PM

Subject: Sub: Action sought on the Hon'ble CM and Hon'ble Ministers of Telangana Government as they failed to take action against and allowing the higher authorities of Commercial Taxes Department as by disobeying law causing thousands of crores of rupees loss to the Government , VAT Act and VAT rules-Requesting -Regarding.

To: <hozhyd@cbi.gov.in>

Honorable Sir,

I, Raghupathi Mote, convenor of MOSDEM, Movement for Stronger Democracy, R/O 11-9-75/1/102, Road No. 2, Laxminagar Colony, Kothapet, Saroor nagar, Hyderabad, submit the following for your kind perusal and action.

I have made representation to the Principal Secretary (excise and Commercial taxes) in January 2017, Hon'ble Chief Minister in April, 2017, Directore General of vigilance&Enforcement in June 2017 and Vigilance Commissioner in June 2017, bringing about the disobedience of the law , Telangana VAT Act 2005 and Telangana VAT rules 2005, and causing loss to the Government thousands of crores rupees by the Higher Authorities, including the Commissioner, of the Department of Commercial Taxes, Telangana.

It was submitted and relevant proofs ere provided regarding the violation of Sub Sections 2&24 of Section 2, Section 17, section 20 section 21, Section 43 and 77 of the Telangana VAT Act 2005.

It was also submitted and relevant proofs ere provided regarding the violation of Rule 25 and certain sub rules of Rule 59 of Telangana VAT Rules 2005.

In spite of my representation the violations of the Act and Rules are going on even tody. No action has been initiated against any Officer for their disobedience of the Law and causing thousands of crores of rupees to the Government.

As I submitted around 80 % of the Assesments have been not completed and due to this thousands of crores of rupees loss occured to the Government a bill was introduced by the Government in the August house of Assembly amending the ACT extending the period of Cpmpletion of Assessments from 4 years to 6 years.

The Government have not explained the reasons for the amendment to the Hon'ble Memebers of the August House. It was also not informed about the disobdience of the Higher Authorities and their causing of thousands of crores of rupees loss to the Government.

It is clear from the act of introducing the bill in the assembly amending the ACT extending the period of Cpmpletion of Assessments from 4 years to 6 years the the Honorable coucil of Ministers under the leadership of Honorable Chief Minister sir have taken cognizance of the offence committed by the higher authorities of the Commercial Taxes Department. .

By not taking any action against the erred higher authorities and allowing the violation to be continued the Honorable coucil of Ministers under the leadership of Honorable Chief Minister sir have been supporting the officials in their acts.

It is submitted that the Honorable council of Ministers under the leadership of Honorable Chief Minister sir have been working against the interest of the State Government and the people of Telangana who have elected them. Thus they have violated following from the oath they have taken :

“allegiance to the Constitution of India as by law established,

that I will faithfully and conscientiously discharge my duties as a Minister for the State and

that I will do right to all manner of people

in accordance with the Constitution and the law without fear or favour, affection or ill-will.”

Hence it is rquested that an appropriate action may be initiated against the Honorable coucil of Ministers under the leadership of Honorable Chief Minister sir.

Thanking you sir,

Yours Obedient Citizen & VAT payer,

Mote Raghupathi.

R/O 11-9-75/1/102,

Road No. 2, Laxminagar Colony,

Kothapet, Saroor nagar,

Hyderabad-500035.

Mobile: 8099057731, 9030057731

All the copies of my represtations which include all proofs are forwarded herewith as Attachments

Letter to Principal Secretary Revenue about VAT crime in Telangana

Hyderabad,

03-01-2017.

To The Principal Secretary (Revenue),

The Government of Telangana State,

Hyderabad.

Respectable Sir,

Sub: Application requesting to Abolish the VATIS system including Form ADM-1B

and Form VAT 304 so that the Telangana State can get some thousands of

crores of rupees of VAT tax in this crucial time-Requesting-Regarding.

Ref: 1) 2 (4), 2 (24), 20 (1), 20 (3-a,b),21 (3), 21(4), 21 (5), 43 (1), 43 (1-a), 43 (1-b),

43(1-c), 43 (1-d), 43(1-e), and section 70 (1), 70 (2) of the Telangana VAT

Act 2005.

2) Rules 3(a), 25(5), 25(6), 59(1-3), 59(1-4ii),59(1-5), 59(1-7),59(1-14) of The

Telangana VAT Rules 2005.

3) CCT‘s Ref. No. BV(3)/ 37/2010, dated 27-08-2012.

4) CCT‘s Ref. No. BV(3)/ 37/2010, dated 30-08-2012.

5) CCT‘s Ref. No. B-V(3)/ 37/2010, dated 10.10.2012.

6) CCT‘s Ref. No. B-V(3)/ 37/2010, dated 10.10.2012.

7) CCT‘s Ref. No. BV(3)/ 37/2010, dated 05.11.2012.

8) CCT‘s Ref. No. Enft/B3/75/2016, dated 10-06-2016.

I, Mote Raghupathi, Advocate, Convener, MOSDEM (Movement for Stronger Democracy),R/o H.No. 11-9-75/1/102, Laxminagar Colony, Kothapet, Saroor Nagar, Ranga Reddy District, Telangana, submit that,

The section no. 77 of The Telangana VAT Act 2005 provides that “The Commissioner may, from time to time, issue such orders, instructions and directions not inconsistent with the provisions of the Act or the rules made thereunder to his subordinate officers as he may deem fit, for the proper administration of the Act and such officers and all other persons employed in the enforcement of the Act, shall comply with such orders, instructions and directions”.

But in the references cited from 3 to 8 the Commissioners in different times have issued instructions to the subordinate officers which are inconsistent with the VAT Act 2005 and the VAT Rules 2005 vide references cite 1 and 2 which resulted in thousands of crores of rupees loss to the Government.

Violations in Assessments:

The sub-section 4 of Section 2 of The Telangana VAT Act 2005 states as following:

2(4) ‘Assessing authority’ means any officer of the Commercial Taxes Department authorized by the Commissioner or as may be prescribed to make any assessment in such area or areas or the whole of the State of Andhra Pradesh;

The sub-section 24 of Section 2 provides as following:

2 (24) ‘Prescribed’ means prescribed by the Rules made under the Act;

Thus there are two types of Assessing Authorities as per the Act:

Assessing Authority only Prescribed by the Rules but no authorization is needed and

Assessing Authority to be Authorized by the Commissioner(DCs, JC/Addl.Comissioner)

As per sub-rule 1 (4-i) of Rule 59 of Telangana VAT Rules 2005 the authorities prescribed for Unilateral Assessments under Rule 25(1) are:

i) Assistant Commissioner of the division concerned in case of Large Taxpayer Unit concerned

and

ii) Commercial Tax Officer in the case of Circle concerned.

As per sub-rule 1 (4-ii) of Rule 59 of Telangana VAT Rules 2005 the authorities prescribed for Assessments of VAT dealers under Rule 25(5) are:

i) Assistant Commissioner of the division concerned in case of Large Taxpayer Unit concerned or

ii) Commercial Tax Officer in the case of Circle concerned. (These authorities don’t need any authorization from any authority to make assessments) Or

iii) Any officer not below the rank of Deputy Commercial Tax Officer in the Division concerned as authorized by the Deputy Commissioner, concerned in the case of the dealers in the territorial jurisdiction of the Division concerned,

iv) Any officer not below the rank of Deputy Commercial Tax Officer in the State as authorized by the Joint Commissioner or Additional Commissioner, empowered for this purpose by the Commissioner.

For TOT dealers:

iv) TOT – Unilateral assessment / Best judgement assessment Deputy Commercial Tax Officer of the circle concerned as authorized by the Commercial Tax Officer of the circle concerned the dealers in the circle concerned under Sec.20(3) (a) &(b), 21(1), 21(3) (4) & (5)

Thus,

In case of Large Taxpayer Unit of the division the Assistant Commissioner of the division concerned is the Assessing Authority for LTU VAT dealers.

Again in the case of Circle the Commercial Tax Officer of Circle concerned is the Assessing Authority for VAT dealers. And

Deputy Commercial Tax Officer of the circle concerned as authorized by the Commercial Tax is the Assessing Authority for Assessing the TOT dealers.

I further submit that,

Sub- section 1 of Section 20 The Telangana VAT Act 2005 is as follows:

20. (1) Every dealer registered under Section 17 of the Act, shall submit such return or returns, [the Annexures as may be prescribed]along with proof of payment of tax in such manner, within such time, and to such authority as may be prescribed.

As per sub-rule (3) (i&ii) Rule 59 of Telangana VAT Rules 2005:

In case of Large Taxpayer Unit of the division the Assistant Commissioner of the division concerned is the prescribed Authority to receive returns for LTU VAT dealers.

Again in the case of Circle the Commercial Tax Officer of Circle concerned is the prescribed Authority to receive returns for VAT dealers.

Similarly Deputy Commercial Tax Officer authorized of Circle concerned is the prescribed Authority for the purpose of Receipt of TOT returns

Thus As per sub-rule 1 (4-ii) Rule 59 and as per sub-rule (3) (i&ii) Rule 59 (4-i) of the Telangnana VAT Rules 2005:

In case of Large Taxpayer Unit of the division the Assistant Commissioner of the division concerned is the prescribed Authority to receive returns and also the Assessing Authority for LTU VAT dealers.

In the case of Circle the Commercial Tax Officer of Circle concerned is the prescribed Authority to receive returns and also the Assessing Authority for VAT dealers.

In the case of Circle the Deputy Commercial Tax Officer of Circle concerned is the prescribed Authority to receive TOT returns and also the Assessing Authority for TOT dealers.

Sub section 3-a&b of Section 20 of the Telangana VAT ACT 2005 are as follows:

(3) (a) Without prejudice to the powers of the authority prescribed under sub-section (3) of Section 21, every return shall be subject to scrutiny to verify the correctness of calculation, application of correct rate of tax and input tax credit claimed therein and full payment of tax payable for such tax period.

(b) If any mistake is detected as a result of such scrutiny made as specified in clause (a), the authority prescribed shall issue a notice of demand in the prescribed form for any short payment of tax or for recovery of any excess input tax credit claimed.

The prescribed Authority may issue a notice of demand in Form VAT 213 as provided in the above mentioned sub section (b).

Sub-section 3 of Section 21 the Telanganana VAT ACT 2005 provides as follows:

(3) Where the authority prescribed is not satisfied with a return filed by the VAT dealer or TOT dealer or the return appears to be incorrect or incomplete, he shall assess to the best of his judgment within four years of due date of the return or within four years of the date of filing of the return whichever is later.

Sub section 3-a of Section 20 of the Telanganana VAT ACT 2005 mandates the Authority prescribed to receive the return that every return shall be subject to scrutiny and Sub-section 3 of Section 21 the Telanganana VAT ACT 2005 mandates the Assessing Authority that he shall assess to the best of his judgment within four years of due date of the return or within four years of the date of filing of the return whichever is later if the authority prescribed is not satisfied with a return filed by the VAT dealer or TOT dealer or the return appears to be incorrect or incomplete!

As I submitted above,

As per sub-rule (3) (i&ii) Rule 59 and as per sub-rule (4-i) Rule 59 of the Telangnana VAT Rules 2005:

In the case of Circle the Commercial Tax Officer of Circle concerned is the prescribed Authority to receive returns and also the Assessing Authority for VAT dealers.

In the case of Circle the Deputy Commercial Tax Officer of Circle concerned is the prescribed Authority to receive TOT returns and also the Assessing Authority for TOT dealers.

As per The sub-section 4 of Section 2 of The Telangana VAT Act 2005:

Thus it is clear that for the VAT dealers the Assistant Commissioner (LTU) and the Commercial Tax Officer of Circle concerned are the PRESCRIBED Authorities to make assessment in the circle concerned without any authorization from any higher authority and Deputy Commercial Tax Officer is the authority to make assessments with the authorization of the CTO of the circle concerned for the TOT dealers of the circles concerned.

Also any officer not below the rank of DCTO of any other circle may make assessments in the Division as Authorised by the Deputy Commissioner of the Division concerned.

And also any officer not below the rank of DCTO of any other circle in the state may make assessments in any circle as authorized by the Joint/Additional Commissioner Empowered for this purpose by the Commissioner.

From the above mentioned Sections of the Act and Rules it is clear that no authorization is needed from any higher authority to make Assessments of VAT dealers by the CTO in his circle concerned. Similarly the DCTOs needed only the authorization of the CTO to conduct assessments of the TOT dealers of their circle and no other authorization is needed from any higher Authorities except the CTO of his circle .

But the higher officers like Deputy Commissioners of the Divisions and the Commissioners have been precluding the Prescribed Authorities, that is, the Commercial Tax Officers and Deputy Commercial Tax Officers to make assessments of the dealers of their circle concerned and insisting that only the authorized authorities have to make assesments.

I submit that kindly the contents of the relevant Circular may be perused which is pasted in this application after Violations in Inspection (Audit).

Violations in Inspection (Audit):

Though there is no word such as Audit in the Telangana VAT Act 2005 the Department using the word to denote ‘inspection and or detailed scrutiny of the books of accounts of the dealers’.

After Assessment the audit (‘inspection and or detailed scrutiny of the books of accounts of the dealers) is another important pillar of Tax Collection.

As per sub-sections 1 and 1-a of the Section 43 of Telangana VAT Act 2005:

43. (1) For the purpose of enforcing compliance of the provisions of the Act, any officer not below the rank of Deputy Commercial Tax Officer shall have the power of entry, inspection, search and seizure and confiscation and he:-

(a) shall have, full and free access to any premises, place, goods, books, record, computer or any electronically stored data at any time during business hours prescribed under the relevant law for the time being in force and where no such hours are prescribed at all reasonable times without any prior notice to any dealer;

This Section 43 of Telangana VAT Act 2005 provides that for CTOs and DCTOs no authorization is needed to enforce powers under this section.

Also the CTOs and the DCTOs need not issue any prior notice to any dealer and seek their permission to conduct Audit (‘inspection and or detailed scrutiny of the books of accounts of the dealers).

Sub-section4 of Section 21 states as follows:

21. (4) The authority prescribed may, based on any information available or on any other basis, conduct a detailed scrutiny of the accounts of any VAT dealer or TOT dealer and where any assessment as a result of such scrutiny becomes necessary, such assessment shall be made within a period of four years from the end of the period for which the assessment is to be made!!

Sub-rule 1-5 of Rule 59 Telangana VAT Rules 2005 provides as follows:

Inspection and or detailed scrutiny of accounts and consequential assessment, resulting therefrom, if any the Authority prescribed-

Assistant Commissioner (CT) Large Tax Payer Unit in case of the dealers of LTU concerned or

Commercial Tax Officer in case of dealers in the Circle concerned

Any officer not below the rank of Deputy Commercial Tax Officer in the Division concerned as authorized by the Deputy Commissioner, concerned in the case of the dealers in the territorial jurisdiction of the Division concerned,

Any officer not below the rank of Deputy Commercial Tax Officer in the State as authorized by the Joint Commissioner or Additional Commissioner, empowered for this purpose by the Commissioner.

Again sub-rule 1-14 of Rule 59 Telangana VAT Rules 2005 provides as follows:

Entry, inspection, Search, Seizure, Confiscation-

Assistant Commissioner (CT) Large Tax Payer Unit in case of the dealers of LTU concerned or

Commercial Tax Officer in case of dealers in the Circle concerned

Any officer not below the rank of Deputy Commercial Tax Officer working in general Administration (Vigilance and Enforcement) department, or as authorized by any officer, empowered for this purpose by the Head of the General Administration (Vigilance and Enforcement) Department.

Any officer not below the rank of Deputy Commercial Tax Officer in the State as authorized by the Joint Commissioner or Additional Commissioner, empowered for this purpose by the Commissioner.

Thus it is clear that the Assistant Commissioner (LTU) is the PRESCRIBED Authority to conduct Audit (Inspection etc.,) for VAT dealers of of LTU and the Commercial Tax Officer of Circle concerned is the PRESCRIBED Authority to conduct Audit (Inspection etc.,) for VAT dealers of the circle concerned:

without any authorization from any higher authority and

without any prior intimation to the dealers.

But in violation of the above sections of Telangna VAT Act 2005 and Rules of Telangna VAT Rules 2005 the Commissioners of Commercial Taxes and other higher authorities are precluding the CTOs and DCTOs of the circle conduct Entry, inspection, Search, Seizure, Confiscation and detailed scrutiny of accounts and consequential assessment, resulting therefrom, if any, without the authorization of the higher authorities, that is, the DCs, and without the prior intimation to the dealers.

To enforce this a system called VATIS has been introduced. As per this VATIS authorization for inspection, audit and/or assessment authorization in Form ADM-1B has to be generated and Form VAT 304 for intimation to dealers also has to be generated and issued to the authority to conduct inspection, audit or assessment.

All the dealers are informed that no officer of the department can come to their business premises for inspection or assessments without showing to them both the Form ADM -1B and Form VAT 304.

This act of the higher authorities is in violation of the Act and Rules.

The most serious violation:

This is the most serious violation of the ACT. Within a circle the CTO or DCTO don’t need any authorization to conduct Entry, inspection, Search, Seizure, Confiscation and detailed scrutiny of accounts and consequential assessment, resulting therefrom, if any, as per Sections 43 (1), 43 (1-a), 43 (1-b), 43 (1-c), 43 (1-d), 43(1-e), of the Telangana VAT Act 2005 and Rules 59(1-5) and 59(1-14) of The Telangana VAT Rules 2005.

But as per the circular vide CCT’s Ref. No. BV(3) /37 /2010 has mandated that Jumbling system shall be used to allot dealers to audit officers for audit/assessment. And it is also mandated that 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.

The above mentioned instructions are clearly in violation of Sections 43 (1), 43 (1-a), 43 (1-b), 43 (1-c), 43 (1-d), 43(1-e), of the Telangana VAT Act 2005 and Rules 59(1-5) and 59(1-14) of The Telangana VAT Rules 2005.

Due to these instructions of the CCT the entire Intelligence system at circle level has become defunct. The tax evading dealers have been created a safe passage and this resulted in a huge tax evasion to the tune of thousands of crores of rupees. A strong confidence has been infused into the minds of the dealers that they are free from any kind of inspection and assessments without their prior knowledge. This resulted in rampant sales without sale invoices and many other business malpractices.

Many dealers use the WAY BILLS 4 to 5 times, some times even more. Hence it is not possible to ascertain the TAX liability of the dealer just by scrutinizing the Returns and WAY BILLS

The Form VAT 304 gives an intimation before minimum one week time to dealers so that they can set everything right before the audit/assessment takes place.

The Form VAT 304 is not prescribed either by the The Telangana VAT Act 2005 or The Telangana VAT Rules 2005. It is introduced by the Department to help the dealers to set right their tax evasion transactions before the Officers of the Department undertake Audit/Assessment.

This act of the higher authorities is quite anti to the very basic spirit of The Telangana VAT Act 2005 and The Telangana VAT Rules 2005. As the Act and the Rules are intended for VAT Tax Collection without any kind of evasion. But the act of introduction of Form VAT 304 is to protect the dealers who indulge in Tax evasion.

The revenue loss due to violations in Audit (inspectionetc.,) is many times of the loss due violations in Assessments

In violation of the section no. 77 of The Telangana VAT Act 2005 following circular (whixh is pasted as under) has been issued on 27-08-2012 vide CCT’s Ref. No. BV(3) /37 /2010.

This circular has violated the Sections 2 (4), 2 (24), 20 (1), 20 (3-a,b),21 (3), 21(4), 21 (5), 43 (1), 43 (1-a), 43 (1-b), 43 (1-c), 43 (1-d), 43(1-e), and section 70 (1), 70 (2) of the Telangana VAT Act 2005.

This circular has also violated the Rules 3(a), 25(5), 25(6), 59(1-3), 59(1-4ii),59(1-5), 59(1-7),59(1-14) of The Telangana VAT Rules 2005.

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.

This Circular along with many other circulars have been issued superseding the Telangna VAT Act 2005 and Telangnana VAT Rules 2005. In the above circular it is clearly mentioned that “Any officer conducting audit/assessment without valid authorization shall be liable for disciplinary action”.

It may be kindly perused that the CTOs/DCTOs of the circle concerned are not excluded from this condition.

It is also mentioned that Jumbling system shall be used to allot dealers to audit officers for audit/assessment.

This provision made compulsory that no CTO or DCTO can make assessment in his circle and that they have to audit/assess the dealers of other circles of the Division as CTOs/DCTOs of the circle concerned are not exempted from this condition.

It is clearly insisting that only the officers authorized can only conduct audit/assessment and no other officer shall conduct any audit/assessment and if they do so they shall be liable for disciplinary action.

Thus only around 10 percent of the total dealers are being assessed every year incurring a heavy loss of thousands of crores of rupees revenue loss to the Government.

I request your kindness to peruse the following circular on next page which reveals that still the practice has been going on:

The Circular is on the next page…………

It is requested that the Government may kindly:

Abolish the VATIS system including Form ADM-1B and Form VAT 304 so that the state can get some thousands of rupees of VAT tax in this crucial time,

Initiate disciplinary action against all those higher authorities, working as well as retired, who are responsible for this violation of the Act and Rules and thus causing heavy revenue loss to the Government,

Recover the amount of tax loss to the government from the responsible officers those who are working as well as retired.

I submit that by initiating the above requested actions and any other deemed to be fit for improving the VAT tax collection there by helping the Hon’ble Government to effectively implement the developmental and welfare measures which have been initiated.

Thanking you sir,

Yours Sincerely

Mote Raghupathi,

Advocate,

, Convener, MOSDEM (Movement for Stronger Democracy),

H.No. 11-9-75/1/102, Rd. No 2

Laxminagar Colony,

Kothapet, Saroornagar Mandal,

Rangareddy District, Hyderabad.

Mobile No. 8099057731

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.

***

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

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

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

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 Pradesh

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