Shillong, April 23: The short payment of tax due to the application of incorrect rate of tax has resulted in the Taxation Department losing revenue.
As per the report of the Comptroller and Auditor General (CAG) of India for the year ended March 2017, a dealer paid tax on sale of automobiles at 5 per cent instead of 13.5 per cent, 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 per cent.
The Superintendent of Taxes (ST) completed the scrutiny of returns (July 2015) up to September 2014 and accepted the returns as correct.
Examination of the case records of the dealer revealed that the dealer deals in automobiles and accessories only, which are taxable at 13.5 per cent.
“The dealer, thus, paid tax at an 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 not exceeding Rs 12.68 crore and interest of Rs 4.26 crore were also levied,” 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.
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 dealers also deals in tractors, tillers amongst other things, which are taxable at 5 per cent and there was no application of incorrect rate of taxation.
The audit noted that the dealers are authorized 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 per cent in his tax returns. Further, the Assistant Commissioner of Taxes had not furnished any evidence of purchase and sale of these items as mentioned.