Sub: Scrutiny of Returns filed by the dealers under the Assam Value Added Tax Act, 2003.

This Commissionerate had issued instructions in the past for scrutiny of returns filed by various dealers under the Assam Value Added Tax Act, 2003. However, it has been found expedient to issue a further circular on this subject, now.

This Prescribed Authorities in various Units are aware that Section 33 of the Assam Value Added Tax Act, 2003 has provided for scrutiny of the returns filed by dealers for any period. The returns include those filed periodically by the dealers themselves and those called for submission by issuing of notices. These also include the Annual Return filed by registered dealers under section 29(2). It is expected that the Prescribed Authorities have already initiated action under this Section to scrutinize the returns to verify the correctness of calculation, application of correct rate of tax and interest and input tax credit (ITC) claimed therein and full payment of tax and interest payable by the dealer during such period. Those returns, which have not yet been scrutinized by the Prescribed Authority in the Units, must be scrutinized now in a time bound manner. For this purpose, an ideal time frame should be of 15 (fifteen) days from the filing of such return. A register should be maintained by every VAT Circle to keep a brief record of the exercise done as above for further action. This register may be kept in the following manner:-

It must be borne in mind that the spirit of VAT requires facilitation for honest tax-compliance and, therefore, any mistake detected as a result of scrutiny of returns as discussed hereinabove has to be pointed out to the dealer through a notice in Form-19. In the event of the dealers curing the defects and submission of a new correct and complete return within the period specified in the notice evidencing payment of the extra amount of tax and interest, the dealer shall be deemed to have submitted a correct and complete return.

In case, the dealer fails to furnish fresh return with extra tax and interest as per law by curing the defects as pointed out to him, the Prescribed Authority should proceed for provisional assessment under section 34 of the Act after allowing the dealer an opportunity of being heard.

The manner of completion of provisional assessment has been laid out in section 34 of the Act, which the Prescribed Authorities should exercise. It is note-worthy that such cases of provisional assessment will require Audit Assessment under section 36 of the Act and, therefore, the information of action under section 34 should be invariably furnished to the Joint Commissioner of Taxes, in-charge Central Audit Team under VAT in the Apex Office and the Deputy Commissioner of Taxes of the respective Zone. The Zonal Deputy Commissioner of Taxes should ensure that all periodic returns have undergone scrutiny under section 33 by the respective Unit Offices within a reasonable time.

The Prescribed Authorities should bear in mind that scrutiny of returns, filed by dealers are crucial to the process of selection of cases for Audit Assessment as envisaged in section 36 of the Act. As the success of VAT mainly depends on the effectiveness of audit mechanism, sound selection of cases for audit is instrumental and, therefore, the scrutiny of returns will give definite inputs.

Once the scrutiny of return is complete, the exercise should result in the formation of opinion regarding the general nature of the business. Therefore, the Prescribed Authority should insert the cases coverable by Rule 22 of the Assam Value Added Tax Rules, 2005 in a separate register narrating the criterion/criteria, which covers the particular case for a full fledged Audit Assessment under section 36 of the Act. A fortnightly report listing such scrutinized cases should be generated by the Prescribed Authority in the circle in the Unit and be transmitted to the Joint Commissioner of Taxes, in-charge of Central Audit Team under VAT in the Apex Office and the Deputy Commissioner of Taxes of the respective Zone.