Sub: Treatment of claims of Input Tax Credit (ITC) in respect of brought forward stock by the dealers under the Assam Value Added Tax Act, 2003.

As per section 108 of the Assam Value Added Tax Act, 2003, input tax credit is allowed to a registered dealer in respect of the tax paid under the Assam General Sales Tax Act, 1993 on goods purchased by him during the period from 01.05.2004 to 30.04.2005 and held as opening stock on 01.05.2005 and sold as taxable goods in the State against Output tax payable by him. Rule 58 of the Assam Value Added Tax Rules, 2005 lays Down the procedure requiring the filing of a statement in Form-77 to the Jurisdiction Prescribed Authority within 30 days of the appointed day, i.e. 01.05.2005 (further extended upto 31st July, 2005).

The VAT dealers in the meantime have submitted the aforesaid Form-77 claiming adjustment of the outstanding credit brought forward for being availed in respect of the stock brought forward in 6 (six) equal installments commencing after 3 (three) months from the appointed day.

It is, therefore, imperative that the Prescribed Authorities scrutinize the claims of ITC in respect of such brought forward stock for ensuing the current adjustment of such ITC in the 6 (six) equal installments. If any Prescribed Authority has not verified the claim under in Form-77, he has to immediately complete the task and to record a finding in the case record of the dealer. The following points should be noted by all Prescribed Authorities:-

(a) Where a dealer claiming ITC has not submitted any details required by Rule 58 and Form-77, such dealer shall not be permitted to claim any ITC under section 108. If a dealer claims ITC in the Tax Return, which is unsubstantiated, notice shall be issued to the dealer for rejection of the Return.

(b) Where on the basis of such notice, the dealer submits details or cures any defect pointed out, the case should be proceeded with as envisaged by section 108.

(c) The closing stock value under each head (goods purchased inter-State and those purchased from registered dealers within the State) as on 30.04.2005 should be compared with the figures for 30.04.2004 and 30.04.2003 [For simplicity, such figures on 31.03.2005, 31.03.2004 and 31.03.2003 may be considered first and the additional month of April may be added to arrive at the desired date]. If any glaring difference is noted, such case should be noted separately, noting the defect. Such cases may be further certified with reference to the bank records to see whether the dealer had any history of showing accumulation of stock. If so, that should also be noted specifically.

(d) The statement of purchase bills will be cross-verified with reference to the stock inventory to see whether the value shown is only for the quantity held in stock. If any excess claim is found, such cases should be listed noting the defect.

(e) In the case of the list of purchase of goods taxable at the point of first sale and purchased from the first seller, the correctness of the rate of tax applicable to the goods should be verified with reference to the tax shown in the statement as paid. Cases where irregularities are noticed should be listed.

(f) In case of the purchases from second or subsequent seller, after verifying the correctness of the rate of tax, the correctness of the calculation of the tax component may be verified. Cases where irregularities are noticed should be listed. It may be noted that the benefit of input tax credit in respect of purchase from a second/subsequent seller is not available if such seller was not registered under the repealed Assam General Sales Tax Act, 1993.

(g) Goods included in the stock inventory may be verified to see whether the items included in the list are taxable under the Vat Act, Discrepancies, if any, found should be adequately dealt with.

(h) Cases which require further verification of amount or stock shall be communicated to the Joint Commissioner of Taxes, in-charge of Central Audit Team under VAT with a copy to the Deputy Commissioner of Taxes of the concerned Zone.

(i) Where on the preliminary scrutiny, no irregularity is noticed after applying the above parameters, the claim of the dealer shall be provisionally accepted and the dealer may be informed accordingly. Where on preliminary scrutiny, it is found that a particular case record is required to be referred to the Joint Commissioner of Taxes, in-charge of Central Audit Team under VAT, the dealer may be informed that the claim of the ITC under rule 58 will be subject to further verification and admission of the claim.

(j) The scrutiny of the claim will be completed on a time-bound basis. A minimum of 15 (fifteen) cases shall be scrutinized by each Superintendents of Taxes/ Assistant Commissioners of Taxes daily. They will endorse such completion daily in a register to be maintained for the purpose in the Unit along with their dated signatures recording completion of the scrutiny at their level. List of cases in which anomaly is noted should be transmitted to the Joint Commissioner of Taxes, in-charge of Central Audit Team under VAT or to the Officer nominated by him within 3 (three) days of the completion of the aforesaid scrutiny. Any statement in Form-77 furnished by a dealer should not be rejected on the ground that details of goods taxable at the last point under the Assam General Sales Tax Act, 1993 or the goods exempted in Schedule-I of the Assam General Sales Tax Act, 1993, which were held in stock on 30-04-2005 have not been furnished.

(k) The Joint Commissioner of Taxes, in-charge of Central Audit Team under VAT will take immediate action to get the verification completed within one month from the receipt of records. The findings will be communicated to the Unit within one month of the completion. If it is found after verification that the dealer is entitled to lesser amount of ITC on the brought forward stocks discussed above, the same will be communicated to the Prescribed Authority, who shall admit the claim as recommended by the Central Audit Team under VAT in the Apex Office, after due notice to the dealer.