SS (VP) 12 August 2014

Kvat refund claim

Sirs,

There was a peculiar case that has happened. A project organisation in Karnataka obtained a work order from a customer in Andhra. They start ed to bill for Karnataka VAT instead of CST while they despatched material from Karnataka to Andhra.

Now they have paid about 7 lacs of VAT in Karnataka. All this happened about 9 months ago. Now they want to correct it and at the same time claim the wrongly paid tax of 7 lacs to Karnataka VAT. Is it possible to rectifyy this mistake and also get refund of the tax wrongly paid. Please advice in details what procedures to follow this.

Thanks

Sridhar

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3 Replies

Rama chary Rachakonda (Secunderabad/Highcourt practice watsapp no.9989324294 ) 12 August 2014

You can correct certain errors whose net value is below the error correction reporting threshold by adjusting your VAT Return.

At the end of the VAT period when you discovered the errors, adjust your own VAT account of output tax due or input tax claimed by the net amount of all errors. Make sure that your VAT account shows the amount of the adjustment you make to your VAT Return.

Then, adjust either box 1 or box 4 on your return, as appropriate.

M.VENKATAGIRI (ADVOCATE AND TAX CONSULTANT) 15 August 2014

Under Karnataka Value Added TAx Act you can revise the monthly return for the preceeding 6 months from the end of the relevant tax period. Therefore your possibility to get refund is for the previous 6 months only. But you have dispatched goods to A.P. you are liable to pay CST on your turnover at 2% or the local rate of tax which ever is applicable.

SS (VP) 18 August 2014

Sirs,

In this case on one side claiming rufund from the Karnataka Commercial takxes (paid due to an error). The other issue is the Andhra Commercial Taxes person is saying that the CST is not applicable for Works Contract. Actually this is unit rate contract for a part of a project. The work order is on Bangalore address of the company. They are saying this company have to pay the entire 14.5% VAT as applicable in Andhra. The input materials were procured in Karnataka and supplied to the site in Andhra. In that case only CST at 2% (against form C) is applicable. The material input has already suffered 14.5% input VAT in Karnataka. There is value addition since the company take this material and provide installation services at the site in Andhra for which the service tax will be applicable. How can they ask tax on the same material twice? In addition they seem to be saying that there will be penalty of 1.5 times which will total to about 20 Lacs. instead they are saying they'll adjust it if we agree to pay 5 lacs tax and 5 lacs bribe. How can industry grow in such conditions? This is a small company and it will close down under heavy loss if every error is penalised like this. How will entrepreneuship get encouraged in such an environment?