Circular No :
Date :
Subject :
Ref:
AI(3)/94/95
05/07/1995
Levy of tax on VAT basis - Information regarding stock inventories to be
obtained from the dealers - Certain instructions issued - Further
instructions
1) CCT`s Ref. AI(3)/94/95, dt.4.4.95 (Clarification on new provisions).
2) CCT`s Ref. AI(3)/94/95, dt.4.4.95 (Collection of information on stock
inventories)
3) CCT`s Ref. AI(3)/94/95, dt.15.5.95 (Further instructions on collection of
stock inventories etc).
4) G.O.Ms.No.244, Rev (CT-II) Dept., dt.17.5.95 (APGST Rules)
In the references cited above, instructions were issued regarding the procedure to be followed for
calculation of tax on VAT basis, obtaining of information regarding stock inventories etc.
Vide G.O. 4th cited, the Government have issued amended APGST Rules to the relevant provisions
of Act No.22 of 1995. Pursuant to these Rules, the following instructions are issued regarding
collection of tax from the dealers dealing in VAT commodities.
A2 Returns
Procedure for calculation of VAT has been simplified. There is no need to verify the value addition
invoice wise for every transaction. It appears some officers have issued notices to the dealers
requiring them to furnish invoice wise correlation of a particular commodity and its sales and the
value addition thereon. This is not required.
In the A2 Returns filed by every dealer, the sales turnovers are reported by them under different
commodities sold by them. The dealer furnishes the details of purchases effected by him under
different categories of commodities. In case of commodities which are liable to tax under VAT the
dealer is required to deduct the tax due on the value of the purchases from tax due on the sale value
of the same commodity during that month and pay only the balance amount towards tax due on
value addition during that month. In case the tax due on purchase value is more than tax due on the
sale value, the tax due on sales value shall be deducted from the tax due on purchase value and the
balance amount shall be carried forward to the next month as a tax credit in the account of the
dealer. This amount can be set off against the tax due to be paid by the same dealer on the sales
turnover for the subsequent months.
It seems some officers issued notices requiring the dealers to mention in A2 returns transaction wise
details of sale value and tax collected thereon separately. This is not required. It is sufficient if the
dealer indicates the value of purchases and sales for that month in that commodity. If in A2 return
tax levied on purchase is not shown separately the amount of tax levied on such purchases shall be
arrived at by applying the formula given in proviso to Sixth Schedule.
The proforma of A2 return is amended and in the `Statement of Commodity wise tax and turnover
details` the following 4 columns have been added.
Turnover of purchases during the
month.
Tax levied at the preceding point of saleTax due Tax paid
Therefore the assessing authorities are hereby instructed not to insist upon invoice-to-invoice
verification of value addition on the sales transactions. It is sufficient if the dealers furnish the
difference between tax due on sales value and tax due on purchases value and pay the differential
tax. The above instructions shall be followed scrupulously and no scope shall be given for any
complaints from the dealers. The receipt of the above instructions shall be acknowledged
immediately to the next higher authority.
References:
1. THE CENTRAL SALES TAX ACT, 1956 Section 3
2. THE CENTRAL SALES TAX ACT, 1956 Section 5