Mail News Service
Imphal, July 21: The Central Sales Tax Act, 1956 (CST Act) and the Rules provide for concessional rate of tax in respect of Inter State sales and branch transfers. These concessions/exemptions are subject to furnishing of declarations in the prescribed forms viz. ‘C’, ‘F etc. Failure to furnish the declarations or submission of fake, misuse or invalid declaration forms etc. will make the transactions liable to tax as applicable to sales in the appropriate State.
Cross verification of declaration forms used in Inter-State trade was conducted across the States and Union Territories to check the genuineness of these declaration forms wherein all the information collected was cross checked with the Commercial/Sales Tax Departments of other States and Union Territories.
The Department had no mechanism in place for periodic review of the stock of forms held by it so as to ensure that old, obsolete, defective of unused forms were either destroyed after obtaining the approval of the competent authority or otherwise secured so as to obviate the possibility of their misuse. No physical verification of statutory forms held by the Commissionerate was done during the period covered by audit except once on 23 September 2009 in respect of Form ‘F’.
The Department did not adopt enforcement measures like blacklisting the dealers who had been found utilising invalid/fake Declaration forms in the past and circulation of the names of such dealers among various units and States to establish the authenticity of Declaration forms.
The information regarding dealers and Declaration forms issued to the dealers were not uploaded on the TINXSYS website promptly.
Department had not installed any system of either verification of each and every Declaration form submitted by the dealers with the data available in the TINXSYS website before allowing exemption/concession of tax or cross verification of the purchase values shown in the utilisation statement/counterfoil of utilised ‘C’ forms issued to dealers with those in database in the TINXSYS website while settling/finalising the tax returns.
Out of 16 modules developed by the Department, only one module was functional online. The TINXSYS website remained nonfunctional and inaccessible and statutory forms were not issued online.
Our cross verification of ‘C’ Declaration Forms revealed that one form was fake as it was not issued by the Department, six forms projected as issued by the Department were incorrect and twenty forms were issued by the Department to eleven dealers other than the corresponding purchasing dealers.
While finalising the assessments, the assessing authorities allowed concessional rates on these 27 forms without checking these irregularities.
The tax effect involved was Rs 8.81 lakh. Besides, penalty of Rs 17.61 lakh was also leviable.
While finalising the assessments of seven dealers, the assessing authorities allowed concessional rate of tax by accepting Declarations which were either not supported by ‘C’ forms or were supported by ‘C’ forms which were filed beyond the stipulated time. Such irregular assessments involved short levy of tax of Rs 30.98 lakh.
Scrutiny of ‘C’ Declaration forms/utilisation statements revealed that the assessing authorities, while finalizing the assessments, accepted purchase turnover of Rs 10.99 crore as against actual purchase turnover of Rs 23.09 crore. Suppression of these Inter-State purchases and consequent sales turnover involved tax and penalty of Rs 2.65 crore.
While finalising the assessments, the assessing authority allowed exemption of tax on stock transfer of Rs 30.92 lakh made by a dealer, which was not supported by form ‘F’ Declaration. The tax effect involved was Rs 3.87 lakh.
Read more / Original news source: http://manipur-mail.com/state-taxation-department-not-acting-against-defaulters-cag/
