Confusion about February Return

Frequent changes in the rules can cause sheer confusion amongst the dealers who have to pay hefty penalty for the same. A classic example is amendments in rule 17. A notification was issued on 18th March, 2006 by which the last dates prescribed for filing the returns for the month of January was 21st February, for the month of February was 31st March and for all the other months was 21st of the subsequent month. The dealers noted accordingly that 21st of the next month is generally the last date for filing returns for all months except month of February where special concession was granted and 31st March would be the due date.

Rule 17(4) was revamped in 8-9-2006 and last date for filing monthly returns were changed to 21st of the next month for all the months including February. Thus, there was no change for all other months except February. However, dealers had already noted 31st March as the due date for February. The Trade Circular No. 30T of 2006 dt. 10-10-2006 on amendments to rules ought to have made special mention of this change. The result of such non-communication is that most of the dealers remained under a mis-conception that last date for February is 31st March and have filed the returns late. It is clear that there was absolutely no intention to file the return late. In spite of that, such dealers have now invited the penalty u/s. 29(8) interest u/s. 30(2). The matter needs to be looked into seriously and administrative relief in interest and penalty ought to be granted to the dealers. It is interesting to note that Government itself sensed the confusion and advertised about the last date for filing February 2007 return as 21st March 2007 in the newspapers as early as on 24th March, 2007; i.e., after the due date was already passed. This conduct of the Government supports the requisition of the dealers that waiver in interest and penalty ought to be granted.

C.S.T. Amendments – A few issues

The Central Sales Tax Act, 1956 has undergone certain changes vide Taxation Laws (Amendment) Act, 2007 in view of the Central Government’s resolution to gradually phase out C.S.T. Act. The readers are well aware of the implications of the amendments and hence, not repeated here. However, the Trade Circular No. 28T of 2007 dt. 30-3-2007 has created some confusion instead of clarifying the amendments. The Commissioner of Sales Tax has explained the net effect of the said amendment in para 2 of the Circular, Clause (b) of the said para states that "the rate of CST on inter-State sale other than sale to registered dealers shall be the rate of VAT applicable in the State of the selling dealer."

There can be an eventuality where a registered dealer is unable to issue a ‘C’ form or is not willing to issue the same. A declaration in Form ‘C’ has certain recitals such as use of purchased goods for the purpose of resale, manufacturing, mining etc. which may not get fulfilled by the purchasing dealer. In that case he is unable to issue the ‘C’ form. In still other cases, the purchasing dealer does not issue ‘C’ form in spite of repeated reminders for whatever reasons. The aforesaid Trade Circular does not explain the incidence of tax in such cases since it restricts to the cases where the purchasing dealer is not a registered dealer. There has been a confusion on this issue amongst the dealers and it needs to be clarified. In any case, one has to look to the provisions of amended section 8(2) which does not classify the dealers in the manner described in the Trade Circular; i.e., registered dealers and other than registered dealer. The Commissioner of Sales Tax should clarify this aspect at the earliest.