9
GOVERNMENT OF ANDHRA PRADESH
COMMERCIAL TAXES DEPARTMENT
Office of the
Commissioner of Commercial Taxes,
Andhra Pradesh, Edupugallu, Vijayawada
CIRCULAR-1 on Invoice mismatch reports
CCT’s Ref No. CCW/CS(1)/129/2016 Dated: 04.10.2016
Sub:- C.T. Department - Uploading of Sale/Purchase invoices – Certain Mis-matches found in the invoices uploaded and the ITC claimed etc. – Show Cause Notices to be issued to dealers – Certain Instructions issued – Reg.
-oOo-
All the Deputy Commissioners of C.T. Divisions are aware that with effect from the tax period of June 2015, all the dealers have been uploading every month the Sale and purchase invoices effected to/from VAT registered dealers in Andhra Pradesh along with the monthly returns. The invoices uploaded by the sellers are matched with the relevant invoices uploaded by the buyers for the tax period upto March 2016 and wherever mismatches are noticed, reports are generated and placed in the VATIS Reports.
The Invoice mis-match reports are analysed casewise viz excess claim of ITC, Suppression of Sales, Suppression of Purchases, Input Tax Credit claimed against invoices issued by the dealers who have cancelled their registrations, sellers who have not filed returns, not paid tax, short paid tax, etc. However mismatch reports are not generated in the initial phase, for certain category of dealers viz works contractors, Lease transactions and Hotels& restaurants, as data is not captured in VAT200A s. The Help document is enclosed for the convenience of the assessing authorities. It is also available online.
Based on the analysis, Show Cause Notices could be generated disallowing ITC claims, proposing tax on suppressed sales, proposing tax on the deemed sale on suppressed purchases etc. However, where the audits were already taken up by the department officials, there is no point in generating notices and hence advisory reports will be sent for detailed verification. Further, where there are SAS general list reports, in such cases also, no notices will be generated. These general reports will be available in DC(CT)’s logins for allocation of audits. Initially Show Cause Notices are generated for the dealers whose probable tax payable is more than Rs.1 Crore and due to the above irregularities.
The following are the steps to generate and issue Show Cause Notices:
1. The Show Cause Notices are available in the Logins of AC (LTU)/ CTO concerned with Menu options for necessary action. The concerned DC(CT)s can also see these notices in their respective logins.
2. AC(LTU)/CTO has to View these Show Cause Notices and also the details of invoice mismatches in VATIS Reports-Reports-invoice mismatch reports. Only after preliminary examination and satisfying himself he may generate the notices .
3. The Signed copy of the SCN shall be served on the dealer and simultaneously a copy it to be sent to the registered mail id of the dealer.
4. The Assessing authority shall confirm service online and send email to the dealer in the VATIS login.
5. The dealer shall file his reply to the Show Cause Notice in online reply template which will be made available. No physical reply shall be accepted.
All the Assessing Authorities are requested to follow the above instructions scrupulously. The Deputy Commissioner(CT)s of the divisions are requested to monitor the progress of work and submit compliance reports.
Sd/ J.Syamala Rao
COMMISSIONER OF COMMERCIAL TAXES,
ANDHRA PRADESH.
To
All the Deputy Commissioners in the State.
All the Assistant Commissioner(CT) (LTU)s in the state
Al the Commercial Tax Officers in the state.
The Joint Commissioner(CT) Enforcement
Copy to all the Senior Officers O/o Commissioner(CT)
Copy to the P.S. to Commissioner(CT) ,AP.
Help Document on Invoice Mismatch Reports:
The VAT dealers have been filing returns online and also uploading the invoices of purchases made from VAT dealers and sales made to VAT dealers related to goods taxable at 1%, 5% and 14.50%. The intention of the system is to match the purchase and sale invoices online without manual intervention and to allow input tax credit to the dealers without delay. At the same time, tax, penalty etc has to be realized where there are irregular and illegal claims of ITC, and suppressed sale turnovers. Further, if selling VAT dealers fail to upload the sale invoices, it results in the purchasers not getting ITC for which they are eligible. Hence penalties may have to be levied, if sale invoices to VAT dealers (tax rates 1%, 5%, 14.50%) are not uploaded by the sellers.
It is system based and dynamic mismatched report, giving alerts to the dealers regarding the discrepancies in the ITC claimed by them and enables them to claim the correct amount of ITC by rectifying the mistakes before an assessment is initiated.
A. General Principles:
1. The Mismatch reports will be displayed to the individual dealers and department officers in their respective logins.
2. The mismatches will not be made on invoice to invoice basis but on account to account basis, tax rate wise. This means invoice number mismatch is not taken into consideration.
3. For the purpose of comparing ITC claimed by the dealer in the return and VAT in the purchase invoices uploaded by him, the total ITC claimed in VAT200 is compared with the total VAT in the invoices, rate of tax wise.
4. For the purpose of comparing the invoices of the seller and the purchaser the entire amount in the account of the purchaser for a rate of tax in a tax period is compared with the entire amount in the account of the corresponding seller for that rate of tax in that tax period.
5. Similarly for the purpose of identifying suppression of sales, the entire amount in the account of the seller for a rate of tax in a tax period is compared with the entire amount in the account of all the corresponding purchasers for that rate of tax in that tax period.
B. Mismatch of purchase invoices and corresponding sellers invoices with VAT 200:
This report is called Purchaser’s Mismatch Report and is compiled as follows.
· Column 2 is the tax period in which ITC is claimed.
· Column 3 is the total VAT available in the invoices uploaded.
· Column 4 pertains to the difference of ITC proposed to be disallowed when the ITC claimed in the VAT 200 return is more than the total VAT in the purchase invoice uploaded.
· Column 5 pertains to the ITC proposed to be disallowed for three reasons viz., nonpayment of tax by the seller, delayed claim of ITC by the purchaser by more than 3 months, more ITC invoices uploaded by the purchaser than his sellers.
· Column 6 is the total of Column 4 and Column 5.
· Column 7 is ITC proposed to be allowed.
1. Mismatch between the ITC claimed by the dealer in the return and VAT in the purchase invoices uploaded by him.
· The mismatch between the ITC claimed by the dealer in the return and VAT in the purchase invoices uploaded by him is displayed in the ITC account of the dealer.
· Only when the amount of ITC claimed in VAT200 is greater than the amount in the invoices uploaded, this mismatch is displayed. This is treated as “case 6” in the list of the mismatches
· Example: The dealer has claimed Rs 1,00,000/- as ITC in 5% creditable purchases column, however the VAT in all purchase invoices pertaining to 5% goods is only 90,000/-. Therefore Rs. 10,000/- is treated as excess claim of ITC.
· The details of the ITC proposed to be disallowed on this ground can be seen in the Drilldown report as follows:
o Column 7 is the difference between the purchase turnover declared in the return and the purchase turnover as per the invoices uploaded, when such difference is greater than zero, Rate of tax wise. This is the difference between Column 3 and column 5.
o Column 8 is the difference between the ITC claimed in the return and the VAT in invoices uploaded, when such difference is greater than zero, Rate of tax wise. This is the difference between Column 4 and column 6.
2. Mismatch between the Invoices uploaded by the purchaser and the invoices uploaded by his sellers in order to identify excess claim of ITC.
The mismatch between the VAT in the invoices uploaded by the purchaser in the return and VAT in the invoices uploaded by the corresponding selling dealer is displayed in the drilldown report.
The data in the above drilldown report is compiled as follows:
o Column 3 is the Tax period during which the seller has raised the invoices on the purchaser for a rate of tax.
o Column 5 indicates whether the seller has paid tax for the tax period in which he has raised invoices on the purchaser for a rate of tax.
o Column A is the total tax in the invoices in column 3.
o The columns displaying months, show the amount of VAT reported as ITC from out of the total amount of VAT in the invoices raised by the selling dealer for a tax rate in the month indicated in column 3 by the purchasing dealer in each month preceding the current return month (These columns are not numbered as they are dynamic and keep changing every month).
o The column B displays the total ITC reported up to the previous return month.
o Column (A-B) displays the probable maximum balance which can be reported in the current month as ITC. This balance is not arrived after applying the prorate prescribed in the rule 20 (4) to rule 20(12) of the AP VAT rules-2005. This balance is arrived from the invoices uploaded by the seller and purchaser. Therefore this is only a provisional amount and the upper limit beyond which even provisional ITC cannot be given.
o Column C is the ITC claimed in the current month from out of the balance in the column (A-B).
o Column D is the ITC allowed in the current month with respect to the invoices pertaining to the return month during which the seller has raised the invoice on the purchaser, for a tax rate.
o Column E is the ITC disallowed in the current month with respect to the invoices pertaining to the return month during which the seller has raised the invoice on the purchaser, for a tax rate.
o Column F refers to the reasons due to which the ITC claim of the purchaser was rejected / accepted. These reasons are termed as cases; these cases are explained as follows.
a. Case 1.a (Seller not Filed Return) ITC is disallowed for the purchases made by the seller who has not filed the return for the invoice period.
This shall be treated as “case 1.a” of the ITC disallowed/allowed categories.
b. Case 1.b (Seller Not Paid Tax ) ITC is disallowed on such invoices uploaded by the purchaser ,where the seller has NOT paid the declared TAX for the Tax period in which he has issued the tax invoice to the purchaser
This shall be treated as “case 1.b” of the ITC disallowed/allowed categories.
c. Case 1.c (Short Paid) ITC is allowed on such invoices uploaded by the purchaser to the extent, the seller has paid the TAX, and ITC disallowed to the extent the seller has not paid TAX (Short Paid) for the Tax period in which he has issued the tax invoice to the purchaser
This shall be treated as “case 1.c” of the ITC disallowed/allowed categories.
Example: Seller has declared net tax payable as Rs/- xxx but not paid the tax in full, then ITC of the purchaser will be proposed to be disallowed to the extent the seller has Short Paid Tax.
d. Case 1.d (ITC Claimed on NILL Return) ITC is disallowed on such invoices uploaded by the purchaser, when the seller has filed NIL Returns for the Tax period in which he has issued the tax invoice to the purchaser.
This shall be treated as “case 1.d” of the ITC disallowed/allowed categories.
e. Case 2 (Belated Claim).
ITC is allowed on such invoices uploaded by the purchaser, when the purchaser claims ITC within three months from the tax period in which the seller has uploaded invoices.
If the purchaser has uploaded the tax invoice after 3 months from the tax period in which the seller has uploaded invoices, the purchaser will not be eligible to claim ITC against such invoices. This shall be treated as “case 2” of the ITC disallowed/allowed categories.
Example: Seller has uploaded the invoice in the month of August,2016, the purchaser can claim ITC on such invoice for the month of either August, or September or October but not beyond October, 2016
f. Case 3 (VAT is equal in both sale invoices and purchase invoices uploaded).
When sum total of the VAT in all the invoices uploaded by a seller in respect of a purchaser are equal to the sum total of the VAT in all the invoices uploaded by such purchaser, the ITC shall be allowed on the VAT in such invoices uploaded by the purchaser. This shall be treated as “case 3” of the ITC allowed/disallowed categories
g. Case 4 (VAT claimed is Less in purchase invoices compared to the invoices uploaded by the seller).
When sum total of the VAT in all the invoices uploaded by a seller in respect of a purchaser are more than the sum total of the VAT in all the invoices uploaded by such purchaser, the ITC shall be allowed on the VAT in such invoices uploaded by the purchaser only. This shall be treated as “case 4” of the ITC allowed/disallowed categories.