The Hindu : New Delhi News : Tax forum decries VAT provisions

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Friday, Sep 19, 2008
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New Delhi

Tax forum decries VAT provisions

Staff Reporter

NEW DELHI: The All India Tax Advocates’ Forum has criticised the provision of default assessment and heavy penalty prescribed in the Delhi VAT Act, 2004, terming them “draconian” and inimical to the distributive character of the city.

In a statement, Forum president M. K. Gandhi said although the provision stipulates discretion on the part of the authorities for imposing penalty, they seldom exercise it in favour of the dealer and as a rule impose maximum penalty prescribed under the law. He also questioned why when the Act empowers the authorities to exercise the discretion judiciously -- on the lines of judicial discretion given to the judge before awarding any penalty -- the tax authorities seldom use it.

Demanding that the tax authorities must go into the causes of default and hear the defaulter’s defence for the lapse and only after considering the defence in the right perspective impose a penalty judiciously, Mr. Gandhi said the authorities hardly go into the merit of the case and as a rule impose exorbitant penalties.

‘Complicated’

Mr. Gandhi said one of the aims of introducing VAT was to simplify the procedures for filing returns and collection of statutory forms. But even here the medicine had proved worse than the cure as the procedures instead of being simplified under the VAT regime had become more complicated, creating problems for illiterate and semi-literate traders.

He also criticised the time schedule for filing e-returns stating that the law provides that by the 25th day the return must be sent electronically followed by filing of a hard copy of the returns within three days. “If the dealer has to ultimately file a hard copy, then what is the purpose of filing the return electronically,” he asked, adding that the time for filing the return should be increased and the electronic returns should be treated as final.

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