The VAT Return Branch has vigorously started a drive to recover interest u/s. 30(2) on late payment of tax along with Returns. Although legality of the said action cannot be questioned, the practical aspects relating to correct levy of interest are being overlooked leading to multiplicity of proceedings and unnecessary correspondence with the Returns Branch.

To quote an example, we have come across orders levying interest on so called delayed payments considering the date of realization of the cheque as the date of payment. It is being consistently held by the dept. that date of tender of cheque into the bank should be construed as date of payment since banks especially the Reserve Bank of India, take a very long time for clearance of cheques. The dealers cannot be penalized for the delay on the part of the banks. However, dealers come to know about such levy of interest only upon receipt of the order. Then the process of rectification begins by pointing out the difference between date of tender and date of clearance.

Although strictly speaking, the Sales Tax authorities may not be required to hear the dealer before levy of interest since it is mandatory, they should, in all fairness call upon the dealer to verify the correctness of interest before levying it unilaterally.

Another classic example is wrong mention of period on the return. To give an illustration, returns filed for the months of October, 2005 and November, 2005 may mention the period as October 2005 on both the returns leading to an inference that October 2005 return is filed late. The dealer has to take the corrective action by showing both the returns and filing rectification application. The Sales Tax authorities are sometimes reluctant to pass rectification orders which compels the dealers to prefer an appeal against the interest order. These are merely illustrative errors. There could be many more instan-ces of patent errors in levy of interest which definitely calls for proper hearing of the dealers before levy of interest.

In nutshell, the interest arising out of defaults on the part of the assessees has become the main source of revenue for the Government. There seems to be a tearing hurry to recover the interest although policy regarding VAT assessments is not made clear as yet. Is the action of levy of interest u/s. 30(2) an indication that returns are accepted on self-assessment and there will not be any scrutiny of returns ? If it is so, dealers will be happier to pay the interest immediately.

Allotment of VAT officers:

It is more than one and a half years ever since VAT has been introduced. But as on the date, the dealers do not know who is their VAT officer. For certain compliances under MVAT Act, 2002 as well as C.S.T. Act, 1956, the dealer have to approach his VAT officer in charge of his case. For example, a dealer is required to file a list of pending C/F/H forms before his Sales Tax authority within 3 months from the end of the quarter to which such forms relate as per amended rule 12(7) of the C.S.T. (R & T) Rules, 1956.

Secondly, a dealer is required to amend his C.S.T. Registration Certificate for inclusion of goods as per section 8(3)(b) of the CST Act, 1956 in order to issue C/D Forms against inter-State purchases.

A dealer is also required to inform his Sale Tax authority about the changes or developments in his business, such as transfer/disposal of the business, merger/demerger or amalgamation, change in the name of the business etc. as per section 18 of the MVAT Act. At present, the dealers do not know where and whom to approach for such compliances which are likely to be treated as his lapses in future. Therefore, Commissioner of Sales Tax has to inform the traders about administrative set-up at the earliest.

Patent discrimination:

Rule 79 of MVAT Rule, 2005 has been amended w.e.f. 8-9-2006 and an eligible unit enjoying exemption under the 1979, 1983, 1988 or 1993 schemes can now claim full refund on purchases of fuel and other raw materials without reduction on account of branch transfers, manufactures of Tax Free goods etc. It is not known why the said concession is not extended to eligible units enjoying deferment benefits. There does not exist any logical reasoning behind discriminating between two types of eligible units when basic intention in awarding these incentives, whether by way of exemption or deferment, is the same; i.e., development of industrially backward area. Both types of eligible units need to be treated at par for the purposes of MVAT Act and the above disparity is quite glaring. The Government should reconsider its decision if it is taken deliberately for any reason whatsoever.

Refund applications: