PPBM WRITES TO ETC on `Description of Goods in VAT 15’

Ludhiana/Amritsar, February 16, 2013: Punjab Pradesh Beopar Mandal (PPBM) president Amrit Lal Jain has sent a representation to the Punjab’s Excise and Taxation Commissioner (ETC) Anurag Verma, in connection with `Description of Goods in VAT 15’.

The representation – a copy of which is in possession of City Air News reads: “Selection of appropriate commodity out of description of 1,700 items has posed a serious legal problem before the dealers. A large number of disputes are lying in our courts which relate to the issue as to under which commodity description does an item lies. Even so many times, the queries are asked from ETC u/s 85 to determine the nature of commodity for tax rate purposes.

The only language an ordinary dealer understands is as  to how

a commodity is normally known in trade parlance. Asking a dealer to define a commodity in a name different from its billing name tantamount to first befooling him and then parting with his money. The issues which sometimes fails the best of legal brains has been left to be decided by uneducated, semi educated dealers.

On this issue, the Vat practitioners have also left the dealers to their fate and they have asked the dealers to determine themselves the commodity name or description of item. Thus it will become a big source of black mailing the dealers. They shall be put to unnecessary harassment through legal as well as illegal means.

Further, when a dealer goes to department for registration and provides the list of items, the department itself is not able to identify the items required to be registered with the commodity names provided in software and they are not described in the Registration Certificate on the simple pretext of non availability of matching name in the software.  At present the commodities proposed to be dealt by have not been entered in the systems of the department.  Further all the items which are entered in the system are not appearing in the registration certificates. This is an all glaring truth and can easily be verified from the records of the department. As a result the dealer is in complete darkness at present as to what items are covered by his registration certificate. Still the department wishes the dealer to come out with specific description of item by guess or gosh.

Further how the excise and taxation department has confined the world of millions of commodities into 1,700 or so items. Whether the names suggested by the department are based on some scientific adoption of names like harmonized system of nomenclature or central excise tariff which are often used to define the commodities. The department is trying to find objective answers of subjective questions.

Further, dealer who mentions 15 to 20 items in his bill shall have to copy and paste all the items in the return. To put it succinctly, Vat return form shall become verbatim copy of bill and dealer’s most of time shall go in preparing his Vat return. Inducing such complications shall not only lead to a situation where new dealers shall refrain from entering into Vat stream but also lead to massive non compliance by otherwise compliant dealers because the cost of compliance is going to be sky rocketed. As a result the revenue of the department shall dip down.”

At the end, Jain has sought to immediately abolish the requirement of describing commodity in VAT Forms and restore the old position of requiring the trade name only. He has also thanked ETC for his reply received on February 14 regarding their representation dated February 2 this year. He hoped that the difficulties of the traders would be redressed soon.

Earlier, the AETC Baldeep Kaur on behalf ETC, Punjab has sent the comments to Jain’s observations against each point. In view of the larger interest of traders’ community, City Air News is, hereby, publish them as it;  

“1. Description of Goods as per bill has been made mandatory in Vat 18 & Vat 19, while actual description in bill may often vary from description given under pop up and a lot of time and energy will go in finding suitable item out of 1700 items in the list and many a times there shall be a chance of selecting wrong item for which again dealer shall be made a scape goat.

REPLY: To facilitate the selection / entering of commodity a separate trade wise list of all the commodities has been provided on the portal. Moreover, once entered it may be copy / pasted also. However search facility is also being provided in the form.

2. Similarly Commodity name which was earlier an optional field has been mandated. Earlier only trade name was mandatory. This will put the dealers to a lot of hardship against which the dealers had raised their voice after which this field was made optional.

REPLY: This has been kept mandatory to reduce the mismatches. As from now onwards mismatches will be taken out on the basis of Commodity as well as value of Goods. As mentioned in point 1 above, the list provided on portal may come handy in this case too.

3. Vat 19 asks information of purchase whether it is against C form or without C form. Dealers have entered their data in softwares without making this bifurcation because no ITC is available against interstate purchase. Hence whether the purchase is @ 2% or some other rate they are all clubbed in one head

 Although this requirement has been incorporated in the form to facilitate issue of C forms electronically but it will result in lot of hardship for quarter ending 31-12-2012. Further one month of next quarter has also passed. So it should be suspended till new accounting year i.e. 01-04-2013

REPLY: The field for “Nature of Transaction” has been added to facilitate the categorization of transaction based on which form will get the figures auto filled. This particularly in VAT 19 facilitates the issuance of Online Statutory Forms. Hence it is for the convenience of Dealers only.

4. In Miscellaneous Information: Information regarding payment to

contractors and tax deducted in being called for while at the same time separate return Vat 27 is required to be filled in thus information is being repetitively called for without scrapping Vat-27. This point was raised in our earlier representations and discussions also and was agreed to be settled but it still remains unresolved.

REPLY: The fields related to TDS are not mandatory. Dealer may give information in whichever quarter it is applicable. Also, the return for VAT 27 is not yet being taken online.

5. Vat 15 Point 2(o) under Purchase detail required deduction of labor paid on job Work which by no stretch of imagination can be part of purchase and such like items only add to confusion and not clarification or simplification. This point was raised in our earlier representations and discussions also and an assurance was given that suitable clarification shall be brought in this regard which is still awaited.

REPLY: Clarification provided in instruction sheet. This is as follows for reference: 

“In case of repair and job work done / got done within state, where VAT is charged on such sale to / purchase from taxable person then transaction of material part has to be entered in VAT 23 / 24 and labour part to be given in Work Sheet 3A (in case of sale) / Work Sheet 5A (in case of purchase)”

6. Under Sales Detail in Vat 15, no provision made for other deductions. This point was raised in our discussions with your good self also and was agreed to be settled but it still remains unresolved.

REPLY: Any such “others” information (if comes across) may be added in remarks column. If required, such field may be added from next quarter onwards.

7. Column for 3rd month payment should also be inserted. Other wise the form shows the amount paid for 3^rd Quarter as the amount payable in spite of entering the payment for 3rd month in the return. This anomaly prevailed in earlier return format also has been inherited from the same.

REPLY: Before the filling of quarterly returns, monthly return in VAT 16 (along with tax deposit) is being filled only for first two months. Tax Payable after deducting first two months is calculated. Payments made after that may be added in payment details section.

8. In Vat forms, tax is calculated by system. Hence there is no scope for providing actual tax charged in bills. Column of rounding off is also not amenable to changes. It has been provided in Worksheet-6 only. Hence in Vat forms 23, 24 tax is not reconcilable with books due to disabling of rounding off. In CST-1 also tax is calculated by system itself and even there is no column for rounding off also. This rounding issue can be nightmare for dealers unless it is resolved or simplified.

REPLY: Rounding Off difference getting calculated in VAT 23 / 24 is to take into account the difference due to Invoice wise / customer wise details. However, for any other difference arising out of rounding off issues a field has been kept in WS-6, specifically for this purpose only.

9. TIN field although does not permit lesser than 11 digits but it permits more than 11 digits. Checks should be applied on this point

REPLY: It is only allowing to type, however, any invalid TIN will not be allowed at time of “Validating” the form. Hence TIN more than 11 digits are not allowed.

10. The form takes more than reasonable time while exiting and it is not convenient to work upon it in network system.

REPLY: Please specify clearly the point where form is taking longer time to respond.