Returns – Ever changing phenomenon

Under B.S.T. Act, rule 22 dealing with filing of returns used to undergo frequent changes making it difficult to comprehend and comply with them. The same old trait is being followed even under VAT regime and rule 17 of MVAT, Rules, 2005 has been amended twice within one year on 4th March, 2006, 18th March, 2006 and 3rd April, 2006. The Government has felt the need to amend the rules relating to returns thrice within a span of hardly one year which clearly shows that rules are framed without visualising the need, utility and convenience of both Government and dealers.

The said amendments are made taking shelter under proviso to section 83(4); i.e., dispensing away with the requirement of previous publication. This power has to be utilized in exceptional cases where such circumstances exist so as to warrant immediate action. As far as the above amendments are concerned, it is not known what was the tearing hurry to amend the rule in the month of March alone. The basic purpose behind amendment dated 4th March, 2006 is obviously granting maximum refunds before 31st March, 2006 so as to claim maximum compensation from the Centre. As per this amendment, the dealers required to file six monthly returns (having tax liability below Rs.12,000/- in previous year) are directed to file quarterly returns for the two quarters; viz., October to December 2005 and from January to March, 2006 on or before 13th March, 2006 and 21st April, 2006. if his first six monthly return (April to September, 2006) showed a refund. By the time the amendment was made known to the dealers, the deadline of 13th March was already crossed. The rule uses the expression ‘shall’ which makes it obligatory for such dealers to file such returns and claim the refund. What are the consequences of failure to file such returns? Will the dealers be deprived of the refunds due to them? The answer is clearly ‘no’ in view of the provisions of the Act and the broad policy of our welfare oriented Government. However, it must be clarified accordingly.

Same is the case of PSI units who are now required to file monthly returns for January to March, 2006 in Form 209 under newly inserted rule 17(5)(b) and claim refund by filling up Form No. 501. The deadlines are 13th March, 20th March, and 21st April respectively. The Government expects the dealers to abide by law with such a short notice. Such dealers may not have systems to provide monthly details readily since they were so far required to file quarterly returns.

The condition of filing application in Form No. 501 could prove to be a hitch in the process since the annexure appended to the said Form No. 50l requires all the details regarding purchases from registered dealers. For most of the eligible dealers, this is a difficult task. On the top of it, the said application in Form No. 501 needs to be filed on the same date when return is filed and a hard copy as well as soft copy of the Statement have to be submitted along with it. These are cumbersome conditions and should not have been imposed at the last moment. A well thought over policy in advance would have been more effective.

The line of thinking is somewhat clear from the trade circular No. 8T of 2006 dated 28-2-2006 which can be described as a cart before the horse. The amended rules were published on 4th March whereas trade circular in pursuance of the rules was issued earlier; i.e., on 28-2-2006 in anticipation of the rules. The intention of granting refunds before 31-3-2006 is clear from the entire endeavour. However, there are number of dealers who were not aware of the last minute changes and were unable to comply with the directives. What treatment will be given to the refund claims of such dealers?

The amendment dated 18-3-2006 has sought to revise the due dates for filing returns preponing them to 21st of subsequent month instead of 25th except January and February. The due dates are 21st February and 31st March respectively. This revision also shows the lack of vision and thoughtfulness in framing the rules. Frequent changes in due dates for filing returns creates unnecessary confusion leading to unintentional non-compliance.

Submission of ‘C’ forms

The amendment which caused maximum upheaval and anxiety is C.S.T. (R & T) Rules; viz., in rules 12(1) and 12(7) with effect from 1-10-2005. A single declaration in Form ‘C’ can cover the transactions of sale only in a quarter. Amended rule 12(7) also provides that the declarations in Forms C/F/E-I/E-II shall be furnished to the prescribed authority within three months after the end of the period to which such declaration relates.

The Commissioner of Sales Tax accordingly issued trade circular No. 28T of 2005 dated 24-10-2005 explaining the provisions and granted administrative concession allowing the dealers to submit only the list of pending declarations in a given format within the prescribed period of three months. He dispensed away with the condition of submitting the forms physically considering the limitations of the department in preserving them. The first such quarter was October to December 2005 and dealers were required to submit the list of pending forms on or before 31st March, 2006. As per the above circular, the prescribed authority is assessing officer. It is a common experience of the dealers desiring to comply with the said requirement that none of the officers were inclined to accept such list. They were in fact not aware of any such amendment. If the authorities themselves are not well informed, the dealers cannot be later on blamed for non-compliance.

It is not yet known what are the consequences of non-compliance of this requirement. It needs a clarification from the head of the department.

There is another common problem of immediate concern in this regard. The seller makes a sale in a particular quarter whereas the purchaser receives the goods in the next quarter. The process of booking the purchase is also many a times very long and may take even one or two months. The seller claims the ‘C’ form for earlier quarter whereas the buyer dismisses the claim by saying that he has booked the purchase in the next quarter. As a result, the seller is unable to receive the form within the three months period. The sales tax authorities should clarify the procedure of compliance in such eventualities.

Exemption on fuel – Government resolution