Transcript Regional Training Institute, Ranchi

Regional Training
Institute, Ranchi
Structured Training Courseware
on State Receipts Audit
Audit of Entry Tax
1
Session Objectives
At the end of this session, the participants
will be able to
• Explain the nature of Entry Tax
• Understand the procedures relating to
registration, assessment and collection of
entry tax and
• Discuss audit checks relating to entry tax
RTI, Ranchi
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Introduction
• Entry tax falls under State List of
the Seventh Schedule of the
Constitution
• It is levied on entry of goods into a
local area for consumption, use or
sale
RTI, Ranchi
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Entry Tax vs. Octroi
• Both entry tax and octroi are levied on
entry of goods into a ‘local area’. However,
• Octroi is levied by a local body (e.g.
Municipality, Market Committee) on goods
entering into area administered by it
• Entry tax is levied by State Government
RTI, Ranchi
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Entry Tax vs. Octroi
• Entry tax has been introduced in lieu
of octroi by many States
• Some States have both entry tax and
octroi
RTI, Ranchi
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Statutes
• In Bihar & Jharkhand, Sales Tax Law
relating to assessment, collection and
other matters is applied to Entry Tax
as well
• Rates of entry tax, penalty, fines
etc. figure in Bihar Tax on entry of
goods into Local Area Act, 1993
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Scope of Entry Tax
• Entry tax is levied,
– When a dealer purchases goods for sale
– When a person purchases goods for
consumption / use
– When a dealer / person imports any
scheduled goods above a specified
quantity
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Local Area
• Local area is defined by most States as
area within the limit of municipality, gram
panchayat or any other local authority
– Entry of goods into local area is thus either
entry of goods from outside the State into a
local area, or from any other local area within
the State to another local area
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Exemptions and
Reductions
Following exemptions are given to avoid
multiple or cascading effects of taxation
• Where entry tax is paid at the first point
of entry of goods into the State,
subsequent sale of goods into other local
areas within the State is exempted from
payment of tax
RTI, Ranchi
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Exemptions and
Reductions
• Dealers can claim reduction in the
liability of sales tax on account of
entry tax paid in some States,
subject to proper documentation
RTI, Ranchi
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Penalties and Fines
• Penalties are levied on dealers in
respect of entry tax for,
– Evading payment of tax
– Acting in contravention of provisions of
Act
– Short accounting of imported goods
– Wrong affidavit for discontinuance of
business
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Organizational Set up
Same as for Sales Tax
Commissioner of
Commercial Taxes
Sr. Joint
Commissioner
(Hdqrs.)
Jt. Commissioner
(Investigations)
Divisions
Jt. Commissioner
Cirlce
Dy. Commr./Asst. Commr/
Commercial Taxes Officer
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Forms and Registers
FORM-ET-I
FORM-ET-II
FORM-ET-III
FORM-ET-IV
FORM-ET-V
FORM-ET-VI
FORM-ET-VII
FORM-ET-VIII
Application for registration
Certificate of registration
Monthly Return
Quarterly Return
Annual Return
Challan
Application by an importer of a motor
vehicle for issuance of a certificate for
production
Certificate of registration for Motor
Vehicles
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Forms and Registers
(contd.)
FORM-ET-IX
Declaration received from the selling dealer
FORM-ET-X
Statement of claim for reduction in the
liability of sales tax payable consequent
upon payment of Entry Tax
FORM-ET-XI
Purchase of scheduled goods from
registered dealers where tax was realized
at first point of entry
FORM-ET-XII
Security bond
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Forms and Registers
(contd.)
Register II
Register III
Register IV
Register V
Register VI
Register VII
Register VIII
Register XII
Register XIII
Register XIV
Register XVI
Application for registration
Cancellation of registration
Application for amendment of Regn. Certificate
Register of registered dealers
Dues and collection register
Disposal register for officers
Progressive Collection register
Requisition from appellate & requisition officer
Register of securities
Seized Book of Accounts and disposal
Inspection of unregistered dealers
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Tax Administration
Registration
• Dealer liable for tax should make application for
registration separately in respect of every place
of business within 7 days of becoming liable
• Officer-in-Charge of Circle grants registration
certificate within 30 days
• Security not exceeding estimated amount of
annual entry tax payable may be demanded
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Tax Administration
(contd.)
Returns
• Every registered dealer liable to pay tax is
required to furnish the following:
– Abstract Monthly Return
– Quarterly and Annual Return
For import of all scheduled goods and tax payable
thereon
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Tax Administration
(contd.)
Assessment
• Assessment is finalized on any of the
following basis:
– On the basis of returns furnished
– After calling for accounts and other evidence
– Ex-parte after providing reasonable
opportunity to the assessee
Assessee to remit balance tax due within 45
days of receiving demand notice
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Tax Administration
(contd.)
Payment of tax
• Assessee is required to deposit every
month entry tax due, into Government
treasury, by challan
• For import of motor vehicles (other than
dealer) entry tax is to be paid before
applying for registration of the vehicle
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Tax Administration
(contd.)
Reduction from Sales Tax
• Where entry tax paid on goods
dealer can claim reduction in liability
of sales tax
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Appeal, Revision & Review
• Procedure for appeal, revision and
review of assessments of entry tax is
similar to that followed for sales tax
assessments
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Audit Checks
• Whether application for registration
submitted within specified time frame
• Whether registration granted within
stipulated period
• Whether registration received within
prescribed period of submission of renewal
application
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Audit Checks (contd.)
• Whether security for payment of tax
furnished within 2 months
• Whether market survey to unearth
dealers been conducted each year
• Number of dealers against whom
proceedings have been initiated
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Audit Checks (contd.)
• Whether returns submitted in time and
tax deposited within due date
• Whether penalty imposed for delayed
filing and delayed payment of tax
• Whether dealer furnished details of
quantity and value of goods received, along
with annual return
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Audit Checks (contd.)
• Whether gross turnover determined on
the basis of quantity / annual returns and
compared with books of accounts
• Whether exemptions were allowed with
reference to rules
• Whether correct rates of tax were
applied
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Audit Checks (contd.)
• Whether appeal was preferred within
prescribed time frame
• Whether re-assessment initiated and
completed within prescribed time frame
• Whether claim for refund entertained
within stipulated time frame
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