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VAT Articles

RATTAN ADVOCATES | > VAT Articles

Rectification of Mistakes under Punjab VAT Act, 2005

   Dr.Naveen Rattan,   LL.M.(Gold Medalist), Ph.D. +91-9417311987 Amritsar, Punjab         Under Section 66 of the Punjab VAT Act, 2005 the Designated Officer or Commissioner or any such authority under such conditions as may be prescribed, may rectify any mistake which is apparent from the record, within the period of three years from the date of the order which is to be rectified by the Designated Officer or Commissioner. It may be noted that only those mistakes can be rectified which are apparent on the face of the record- Mistakes contemplated by these provisions are not those which are to be discovered as a result of an argument. In a manner, no error could be said to be apparent on the face of the record if it was not self-evident and if it required an examination or argument to establish it. This test might afford a satisfactory basis for decision in majority of cases. But there might be cases in which even this test might break down, because judicial opinions also differ. What is an error apparent on the face of the record cannot be defined precisely or exhaustively, there being an element of indefiniteness inherent in its very nature and it must...

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Judicial Process For Appeal And Revision

When an assessee is aggrieved by an order of  sales tax authorities, he is entitled to seek a remedy in the form of appeal or revision. The Sales Tax Act lays down the scheme of appeal and revision etc., at various levels. The Principals governing such appeals and their scope and nature are discussed along with suggestions. The provision for appeal is a necessary. It is human experience that unbridled power runs the risk of being abused and as such the need for provision of appeal and revision arises. Moreover, the aggrieved person must have at least one opportunity of contesting on merits the order of assessment to the extent he is aggrieved before the appellate forum. When  the dealer is not satisfied with the order passed by the Assessing Authority under  Punjab and Central Sales Tax Acts, than he can file an appeal against such order before the competent authority under section 20 of the Punjab General Sales Tax Act, 1948  and under section 9(2) of Central Sales Tax Act 1956. The word dealer in section 20 is not only restricted to dealer, but includes every dealer from whom the tax interest and penalty is recoverable which also includes surety1.The...

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Time Limit For Filing an Appeal

Under the provision of sub-clause 4 of section 62 of Punjab VAT Act, 2005 an appeal is to be filed within the period of thirty days from the date of the communication of the order appealed against.. The period of limitation of thirty days starts from the date of communication of the order. However, If the copy of the order is not supplied to the dealer free of cost the period of limitation is available to the taxable person till the copy of the order is supplied, to the Taxable person free of cost. The onus is lies on the Designated officer to supply the copy of order as soon as available to the Taxable person through various modes of services prescribed. Reliance is placed upon Punjab Engineering Cutting Tools Ltd. v. The State of Punjab (1996) 8 PHT 220 STT Pb.  If the dealer is required to get the certified copy of order for filing of an appeal, then the time requisite for obtaining copy of order are excluded from the period of limitation. The word ‘Requisite’ is significant and means some thing more than word requisite. No period can be recorded as requisite which need not have been...

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An Article on Transfer of Right to Use Goods

Dr.Naveen Rattan, LL.M. (Gold Medalist), Ph.D. +91-9417311987   Amritsar,         The careful study of section 2 z(f) of the Punjab VAT Act, 2005  manifests that sale is any transfer of property in goods for cash deferred payment or any valuable consideration. It further reveals that definition of sale also includes by virtue of sub-clause 4 of the Punjab VAT Act, 2005. The transfer of right to use any good for any purpose (whether or not for specific period) for cash, deferred payment for other valuable consideration.  In other words, sale includes the transfer of right to use any good for any purpose if cash, deferred payment or any other valuable consideration is passed by the transferee to transferor. For example, if any person has a taxi and he transfer his right to use taxi being a good to some other person for any purpose for any specific period then the consideration received by the transferor from the transferee shall be treated as sale and the person who has transferred the good is liable to pay VAT on the amount received by way of cash or deferred payment or on any valuable consideration.                                   The point that is to be noted at this stage that...

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Grant of waiver of Pre-deposit under section 62(5) PVAT Act – An Analysis

Mandatory pre-deposit at the time of filing appeal: Sub clause 5 of Section 62 of Punjab VAT Act,2005 enunciates that no appeal shall be entertained unless such appeal is accompanied by satisfactory proof of the prior minimum payment of twenty five percent of the total amount of additional demand, penalty and interest, if any.  This provision was mandatory and every appellate authority under Punjab VAT Act, 2005. was reluctant to hear the appeal unless 25% of the total amount of additional demand, penalty and interest if any stands deposited. Majority of the appeals were dismissed on the ground of non-deposit of 25% without considering the merits of the case. It is a different matter that in case where the additional demand was time-barred or where the order of subordinate authority was void-ab-nitio, the appellate authority including High Court have entertained certain appeals without prior deposit of additional demand including penalty and interest. In some other cases where the appellant was entitled to the excess ITC, which was available for adjustment against the deposit of 25%, the appellate authority was also liberal to grant set off of excess ITC against the prior deposit of 25%.  More or less every appellate authority followed...

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Mechanical Rejection of ITC under Punjab VAT Act

Under Section 13 of the Punjab VAT Act, 2005 the taxable person is allowed the credit of input tax against the output tax liability   as a matter of right. Very recently major problem has cropped up that designated officers under the Act, do not allow the credit of tax paid on the purchases by the taxable person in spite of the fact that he satisfies all the requirements of law. The claim of input tax credit is rejected mainly on the ground that selling dealer has not deposited the tax and sometimes certain sales are not reflected in his return or returns as the case may be, which he is expected to file in the normal course of business with the department. Technically it is called miss-matching of sale and purchase from the seller and purchaser. The return and record filed by such persons and enquiry made thereafter by the department, is also kept secret and on these bases the legitimate claim of input tax of the purchasing dealer is rejected in a mechanical manner without complying the principals of the natural justice. This further result into uncalled litigation in the court which consumes not only long span of time...

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Article on Cancellation of Registration under VAT Act, 2005

CANCELLATION OF REGISTRATION CERTIFICATE             Under section 21 of the Value Added Tax no person other than the casual dealer, who is liable under the value added tax shall carry on the business unless he is registered under the Act. It means that business can be carried out only if the dealer possesses the registration certificate. It has been observed recently that the large number of registration certificates of the various such dealers was cancelled automatically by the department for the reason that the various such dealers have not filed the returns under VAT. And the same has been done without going into the merits of the each case. One should not forget that the cancellation of registration is the severest penalty that should be imposed only in extra ordinary cases. Cancellation of registration certificate for penalty offences is not justified. Hon’ble Punjab Tribunal has held that cancellation of registration certificate is the heaviest penalty which can be inflicted upon the dealer which results in the forcing him to close down his business. Such extreme action should not be resorted to frequently on flimsy grounds and for petty offences. This is required to be used with utmost care keeping in view...

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Article On Transfer of right to use goods

An Article on  Transfer of  Right to Use Goods The careful study of section 2 z(f) of the Punjab VAT Act, 2005  manifests that sale is any transfer of property in goods for cash deferred payment or any valuable consideration. It further reveals that definition of sale also includes by virtue of sub-clause 4 of the Punjab VAT Act, 2005. The transfer of right to use any good for any purpose (whether or not for specific period) for cash, deferred payment for other valuable consideration.  In other words, sale includes the transfer of right to use any good for any purpose if cash, deferred payment or any other valuable consideration is passed by the transferee to transferor. For example, if any person has a taxi and he transfer his right to use taxi being a good to some other person for any purpose for any specific period then the consideration received by the transferor from the transferee shall be treated as sale and the person who has transferred the good is liable to pay VAT on the amount received by way of cash or deferred payment or on any valuable consideration.                                   The point that is to be noted at this stage...

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