Incorrect rate of tax results in short payment of Rs 6.34 crore

SHILLONG, Apr 23: Short payment of tax due to application of incorrect rate of tax has resulted in the Taxation Department losing out on revenue.

As per the report of the Comptroller and Auditior General (CAG) of India, for the year ended March 2017, a dealer paid tax on sale of automobiles at 5 percent instead of 13.5 percent, resulting in short payment of tax of Rs 6.34 crore.

According to the CAG report, a dealer submitted tax returns for the period from April 2013 to March 2015 wherein he disclosed total sale turnover of Rs 119.71 crore.

Out of this he declared sale of goods amounting to Rs 74.59 crore taxable at 5 percent.

The Superintendent of Taxex (ST) completed the scrutiny of returns (July 2015) upto September 2014 and accepted the returns as correct.

Examination of the case records of the dealer revealed that the dealer dealt in automobiles and accessories only, which are taxable at 13.5 percent.

“The dealer, thus, paid tax at incorrect rate on sale of goods worth Rs 74.59 crore resulting in short payment of tax amounting to Rs 6.34 crore (differential rate of 8.5 percent on Rs 74.59 crore is Rs 6.34 crore).

Additionally, penalty no exceeding Rs 12.68 crore and interest of Rs 4.26 crore were also leviable,” the CAG report stated.

The Superintendent of Taxes failed to check the application of incorrect rate of tax by the dealer at the time of scrutiny resulting in short payment of tax to that extent.

The case was reported to the Taxation Department, in April 2017 and reminded in August 2017 and January 2018.

The Assistant Commissioner of Taxes stated in February 2018, that the dealer also dealt in tractors, tillere amongst other things, which are taxable at 5 percent and there was no application of incorrect rate of taxation.

Audit noted that the dealer was an authorised seller of vehicles manufactured by M/s Tata Motors, which did not manufacture tractors or tillers.

Also, the dealer did not disclose any local purchases taxable at 5 percent in his tax returns.

Further, the Assistant Commissioner of Taxes had not furnish any evidence of purchase and sale of these items as mentioned.

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