1 Regional Training Institute, Ranchi Structured Training Courseware on State Receipts Audit Audit of Entry Tax

RTI, Ranchi2 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, Ranchi3 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, Ranchi4 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, Ranchi5 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, Ranchi6 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

RTI, Ranchi7 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

RTI, Ranchi8 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

RTI, Ranchi9 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, Ranchi10 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, Ranchi11 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

RTI, Ranchi12 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

RTI, Ranchi13 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

RTI, Ranchi14 Forms and Registers (contd.) FORM-ET-IX FORM-ET-X FORM-ET-XI FORM-ET-XII Declaration received from the selling dealer Statement of claim for reduction in the liability of sales tax payable consequent upon payment of Entry Tax Purchase of scheduled goods from registered dealers where tax was realized at first point of entry Security bond

RTI, Ranchi15 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

RTI, Ranchi16 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

RTI, Ranchi17 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

RTI, Ranchi18 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

RTI, Ranchi19 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

RTI, Ranchi20 Tax Administration (contd.) Reduction from Sales Tax Where entry tax paid on goods dealer can claim reduction in liability of sales tax

RTI, Ranchi21 Appeal, Revision & Review Procedure for appeal, revision and review of assessments of entry tax is similar to that followed for sales tax assessments

RTI, Ranchi22 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

RTI, Ranchi23 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

RTI, Ranchi24 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

RTI, Ranchi25 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

RTI, Ranchi26 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