INCOME TAX MATTERS ( A monthly journal on - Income tax and wealth tax- since 1999) - ( subscription for the year 2008 (TWO VOLUMES) is only Rs. 1100/-) - For subcription and to Know more click here

 

 

Views relating to VAT (Value Added Tax)

 

>> Locking of Tax Identification Number (TIN) – under Rule 51 A of Punjab Value Added Tax Act, 2005 – Against law and  business – By P. C. Garg (Advocate) and Ritesh Garg (Chartered Accountant) - See below

 

>> Lumpsum VAT on brick kilns - See below

 

>> Even God cannot comply with such law - See below

 

Locking of Tax Identification Number (TIN) – under Rule 51 A of Punjab Value Added Tax Act, 2005 – Against law and  business – By P. C. Garg (Advocate) and Ritesh Garg (Chartered Accountant)

Punjab government recently introduced rule 51 A for Locking of Tax Identification Number (TIN). In this article, I have not only explained these provisions but also critically commented upon them.
   
Meaning of locking of TIN

“Locking of Tax Identification Number(TIN)” means temporary stoppage of inter-state movement of goods of the concerned person for the purpose of verification or further legal action.”.

Locking TIN means virtually stopping the business as that person can neither bring goods from out of Punjab nor can send goods out of Punjab. Even the goods which are stopped at the barrier cannot move till the lock of TIN is opened.

When TIN can be locked

If any person fails to pay any tax, penalty or interest payable under the Act or fails to furnish a return or returns or annual statement by the prescribed date or has filed incomplete or incorrect return or has conducted huge transactions as per Information Collection Centre data available in the computer system but has not filed corresponding returns or no business at the declared place is being conducted or has failed to comply with the requirements of any notice issued by a designated officer

This is a very harsh punishment to the businessmen. There is no provision to the effect that if the commissioner or the designated officer locks the TIN wrongly, he shall be liable for the loss caused to the dealer. Already department is locking the TINs without any rules since 2005. Thousands of TINs are locked without any fault of the dealers. Who is responsible for the loss of business and harassment in such circumstances.

Giving power to lock TIN without prior notice is against the principles of natural justice as well as create unnecessary work for the department as well as for the businessmen.

To give power to lock TIN in so many circumstances is not required at all. In following circumstances, there is no need to lock the TIN:-
If any person has filed incomplete or incorrect return or has conducted huge transactions as per Information Collection Centre data available in the computer system but has not filed corresponding returns or
 no business at the declared place is being conducted or has failed to comply with the requirements of any notice issued by a designated officer

In such circumstances tax, interest or penalty should be imposed and if either he fails to pay or file appeal, then his TIN should be locked after giving him an opportunity.

 

Who can lock the TIN

The Commissioner or the designated officer may lock his Tax Identification Number, without prejudice to other actions which may be taken against him under the Act or the Rules

Notice after locking TIN

A notice in Form VAT-58 shall be issued immediately after locking of the Tax Identification Number by the designated officer to the person, informing him about the action taken, alongwith the reasons thereof.

Giving power to lock TIN without prior notice is against the principles of natural justice as well as create unnecessary work for the department as well as for the businessmen

Reopening of TIN

The locked Tax Identification Number shall be reopened immediately after the compliance by the concerned person by furnishing evidence of the payment of the tax, interest and penalty or furnishing of overdue return or returns or annual statement, as the case may be.

How the department can compel me to pay the tax, interest and penalty immediately when Act and Rules give me 30 days time to pay these demands.

Information of TIN locking and opening

In all cases where the Tax Identification Number is locked or reopened the designated officer shall display the fact in the office notice board and also inform the Commissioner within twenty four hours.

No such information is displayed on the office notice board uptil now although rule 51A has become effective w.e.f. 15-9-08.

 

Lumpsum VAT on brick kilns

 

1. Applicable from 1st July, 2008

 

2. If you deposit form in July, 2008, then start paying lumpsum from July, 2008.

 

3. Lumpsum VAT is payable on 20th or 30th of every month.

 

4. In VAT return only lumpsum amount paid should be shown anywhere where it is visible on the face of the return.

 

 

Even God cannot comply with such law

 

Notifications under VAT are effective from the date on which these are printed in official gazzette of Punjab govt. But the official gazzette of Punjab govt. is available to the public much later than the date on which notification is published in the gazzette. Then how any one can comply such law.

 

I had written a letter to the Honourable Punjab and Haryana High court about this situation. The Honourable Punjab and Haryana High court treated this letter of mine as Public Interest Litigation gave its Judgment which is reported as P. C. Garg Advocate Vs. State of Punjab [(2005) 8 STM193(P&H)]

 

In this petition, the the Punjab Government has asserted in its reply before the High Court that notifications are despatched on every monday and the work of despatch of notifications will never suffer in future for want of funds.

 

But the position has not changed and people are suffering.

 

I request everyone to ask this question to Financial Commissioner Taxation Punjab so that some formula is evolved that businessmen become able to comply with law.

If my help is needed, I am ready to help you. Give your comments on "contact Us" at this site.

 

P. C. Garg (Advocate)