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New amended provisions have been inserted under the DVAT Act, 2014 through the DVAT (Third Amendment) Act, 2015, which was passed on 4th December, 2015. New provisions shall introduce levy and collection of advance tax from persons importing goods from outside INDIA and also minimize the chances of evasion of tax. These provisions shall also help in making the tax administration more efficient.
Provisions containing punishments for offenders under the DVAT Act, 2004, have become more deterrent after the amendments, as the punishment and the amount of minimum fine to be levied has increased.
Also, new amended provisions will facilitate the dealers in filing the returns through digital signatures or other electronic options, making the system more dealer friendly by reducing the time and efforts which were earlier put in by dealers for filing DVAT 56 in person in the Department.
The effects of the above Act in detail are as follows:-
Amendment in Section 3 of the DVAT Act, 2004: Sub-section 3(11) shall be inserted. As per this new provision:
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The importer has to pay advance tax and the credit of such payment will be taken at the time of computing tax liability.
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Presumptions for payment of tax in advance: Unless it is proved by the importer, it shall be presumed that imported goods are meant to be :
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Sold or
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Used in the manufacturing or processing of goods meant for sale and
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Sold at not below the price at which such goods have been imported.
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The Government may by notification exempt any person or class of persons from payment of tax in advance or reduce the rate at which such tax is to be paid.
Explanation: This provision is brought to avoid the tax evasion. In earlier provisions, importer was not required to pay any tax so it was not reported in the DVAT return also. But, now as per the amended provision, there will be burden on importer to prove that the goods have been imported for the purpose of export only otherwise he has to pay advance tax.
Amendment of Section 29 of the DVAT Act, 2004: Sub-section 29(2) shall be inserted. As per this new provision, the Commissioner may require any dealer or class of dealers to file the returns only through electronic mode appending DSC or any other electronic identification process.
Explanation: Above provision is brought to make the return paperless and to increase the authenticity of the return. It will also help in dispensing with the requirement of deposit of hard copy of Form DVAT -56 in the department. However, efficient running of DVAT site is very much essential.
New Section 50A (Electronic communication of sale information): The Government may by notification require any dealer or class of dealers to give information of sale invoices through the installation of physical compliance devices or software. The cost of such device shall be borne by the Dealer.
Explanation: After the insertion of above provision, dealer has to report all sales invoice wise as and when sales takes place to minimize the chances of manipulation of sale data. However, it will increase the cost to a small dealer and effective running of DVAT server would be very much essential. We feel that such provision, if implemented, will have a far reaching effect. Also effective implementation of this rule shall take some time. DVAT dealers shall not be forthcoming since this shall be viewed as cumbersome procedure.
Amendment of Section 89 of the DVAT Act, 2004:
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As per Section 89(1) of this Act, if any person
a) falsely represents that he is or was a registered dealer or
b) keeps false account or does not maintain account of the value of goods bought or sold or
c) Issue false invoice, bill, cash-memorandum, voucher or other document.
Punishment: Imprisonment for 6 months and fine equal to tax deficiency or Rs. 50,000 whichever is higher but fine shall not exceed 4 times of tax deficiency.
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As per Section 89(2) of this Act, if any person furnish false information regarding return, bill, voucher, declaration or registers or accounts to the Commissioner, then punishment shall be as per tax evaded:
I. If tax evaded exceeds Rs. 50,000, then imprisonment of 6 months.
II. If tax evaded is below Rs. 50,000, then imprisonment of 6 months and fine equal to tax deficiency or Rs. 50,000 whichever is higher but fine shall not exceed 4 times of tax deficiency.
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As per Section 89(3) of this Act, if any person wilfully attempts to evade payment of tax, penalty, interest or all of them under this Act, he shall be punished on conviction according to the amount involved.
For simplicity and better understanding, the old and new provisions have been stated in a tabular manner below:
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Old Provisions |
New Provisions |
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1) Exceeds Rs 50,000
Punishment: imprisonment for 6 months and fine |
1) Exceeds Rs 1 Cr.
Punishment: imprisonment for 6 months to 2 Years and fine equal to tax deficiency or Rs. 50,000 whichever is higher but fine shall not exceed 4 times of tax deficiency. |
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2) Other cases
Punishment: imprisonment for 3 months and fine |
2) Rs. 50,001 to Rs. 1 Cr.
Punishment: imprisonment for 6 months and fine equal to tax deficiency or Rs. 50,000 whichever is higher but fine shall not exceed 4 times of tax deficiency. |
|
3) Rs 1 to Rs. 50,000
Punishment: imprisonment for 3 months and fine equal to tax deficiency or Rs. 50,000 whichever is higher but fine shall not exceed 4 times of tax deficiency. |
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As per Section 89(4) of this Act: Whenever a person
a) Carries a business without being registered and is mandatorily required under sec 18(1) of this Act.
b) Fails without sufficient cause to furnish information regarding amendment of registration under sec 21 of this Act.
c) Fails to surrender his certificate of registration as provided under sec 22(7) of this Act.
d) Fails without sufficient cause to furnish any returns as required under sec 27 of this Act.
e) Violates the provisions contained in sec 40 relating to wrongly collection of the tax.
f) Fails without sufficient cause to issue invoice under sec 50 of this Act.
g) Fails without sufficient cause to keep books of accounts when directed so to do, under sec 48 of this Act in accordance with the directions.
h) Does not comply with the requirement of audit, special audit or inspection of records or obstructs any officer to do search, seizure or inspection.
i) Obstructs any officer to perform his functions
j) Does not comply with the requirement of section 68 regarding stop, search or detention of vehicle goods being owner in charge of a goods vehicle.
k) Obstructs Commissioner or any officer exercising any other power conferred under this Act,
Punishment: Imprisonment for 6 months and fine equal to tax deficiency or Rs. 50,000 whichever is higher but fine shall not exceed 4 times of tax deficiency.
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As per Section 89(5) of this Act: Whoever aids or abets any person in the commission of any act specified in sub-sections (1) to (3) of this section shall, on conviction, be punished with imprisonment for 6 months and fine equal to tax deficiency or Rs. 50,000 whichever is higher but fine shall not exceed 4 times of tax deficiency.
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As per Section 89(6) of this Act: Whoever commits any of the acts specified in sub-sections (1) to (5) of this section and the offence is a continuing one, then fine of Rs. 500 will be levied in addition to the punishment under this section.
Explanation: Above amended provisions shall increase the punishment for potential offenders thereby reducing the number of potential offenders.
You might be interested in reading other articles on topics related to the DVAT Act, 2004:
Registration under Delhi VAT Act
Mismatch report after filing the DVAT Retun
Addition of Business Place under DVAT
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