The Hindu : Front Page : Commercial Taxes Department rapped

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Friday, Aug 08, 2008
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Commercial Taxes Department rapped

Y. Mallikarjun

HYDERABAD: The Vigilance and Enforcement Department has faulted the Commercial Taxes authorities for “brazen non-compliance” by traders of ‘textile made-ups’ in payment of VAT, causing revenue loss to the State.

Official sources said the loss could run into crores of rupees, while a “sample survey” revealed non-realisation of tax of Rs.71 lakh.

The study conducted on the tax compliance of traders showed that the dealers were not maintaining proper account for textile made-ups and not paying due taxes.

Ambiguity about the definition of made-ups, non-levy of tax in States from where they were imported and non-enforcement of law by the CT department were cited as the reasons for non-compliance. Textile made-ups along with certain other items attract 4 per cent tax.

Accounts lacking

Vigilance sleuths, who randomly scrutinised the account books of 47 dealers in the State, found that none was maintaining a separate account for purchase and sale of textile made-up and paying tax on the actual sales.

Dealers importing the made-ups like work sarees and dress material with embellishment from other States were showing them as “textiles” instead of ‘textile made-ups’ in the purchase bill.

The study noted that the dealers were adopting “an arbitrary percentage” of sales turnovers and remitting tax which bears no relationship with the actual turnover. It observed that the CT Department had not enforced the law effectively resulting in “brazen non-compliance by textile dealers”.

The Vigilance Department recommended withdrawal of a Commercial Taxes circular issued in June 30, 2006 asking officials to concentrate on dealers with turnover of Rs. 1 crore per annum. Stating that there was a risk of permanent revenue loss due to non-payment of tax by dealers with lower turnover, the sources contended that these instructions could not override the statute which did not prescribe any ceiling for levy of tax.

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