Interest liability on seller on additional tax arises due to non -submission of FORM-C by purchaser

[Guest]

Please guide me on following issue-

Whether seller is also liable on interest payment on additional tax arises due to non-submission of FORM-C by purchaser.

Thanks

umesh

[MANDAVILLI RAMAKRISHNA]

sorry your question is not clear.

[Guest]

My understanding of your issue is as follow:

You have sold the material against Form-C by charging 2 percent CST (against Form-C) in your invoice. The purchaser is not submitting Form-C to you against your 2 percent CST sales.

Your liability on non-submission of Form-C is as follow:

• You need to pay difference of Tax.

If your material covered under 5 percent VAT under local VAT Act then 3 percent (5-2)

If your material covered under the 12.5 percent VAT schedule under local VAT Act then 10.5 percent

• Need to pay interest on difference of Tax. From date of invoice to date of payment of interest.
• Penalty is also attract if you paid difference of tax after the completion of business audit.

C.N. Kate

[Guest]

 

The matter differ from officer to officer. At present, the selling dealer declare the details of his sales to the registered buyers in his sales tax returns mentioning CST no of the buyer. Now, it is the liability of the buyer to issue form-c against his purchase at concessional rate CST 2 percent . The selling dealer will not gain anything on such sale at concessional rate.

Therefor, if the selling dealer fails to submit required Form-C before assessing authority or in higher stage, he is liable to pay tax at the full rate as applicable and also interest from the date of raising demand notice till date of payment. He is not liable to pay interest from the invoice date as the demand was raised out of assessment not an admitted due as per return.

Thanks.

Gopal.

 

 

AI Summary

Seller interest liability on tax shortfall when purchaser fails to furnish Form-C, with potential penalties and assessment timing impact. Seller liability arises where the purchaser fails to furnish Form-C: the seller must pay the tax shortfall (difference between local VAT rate and concessional CST) and interest on that difference, with penalties possible if paid post-audit. An alternative administrative position treats interest as payable only from the date of assessment/demand, not from the invoice date.