Confirmation by Supplier

[Siraj Shaikh]

I purchased some goods from a suuplier of Rs. 344551 (TAX rate 5%) in the year 2004-05 and made the payment by cheque. During the VAT assessment, Our Sales Tax Officer has received the confirmation from my supplier of Rs. 103,365. The STO is asking for the confimation of 100% amount or else he will raise the demand on us for the balance VAT.

We made several follow up with the Supplier to give the confirmation of the 100% payment.

We have got all the invoices and bank statement to prove that the payment has been made to the supplier.

Still,our consultant advised us the the STO is authorised to raise the demand on us for the differential amount.

Can someone throw some lights on the clairty of the law ????

[YAGAY andSUN]

Once you have paid the tax on your purchase then nothing left to the MVAT Department to tax on purchases which had not been confirmed by your supplier in terms of receipt of payment against these purchases.  It seems that MVAT Department is acting on suspicion.

In this scenario, please ask you supplier to co-operate with you to get rid of any unwanted situation.

Further, as per Geru Lal judgment ( P&H ), if you had paid VAT on your purchases and your supplier don't deposit the tax to the Government, even then, bonafide dealer can't be restricted to avail the ITC.

 

[YAGAY andSUN]

Please discuss with your consultant that which Section or Rule the STO is empowered to raise the demand on you under abovementioned sceanario whether it is under best judgment assessment.

Please get the clarification and share it with me to further discussions.

[YAGAY andSUN]

Please go throuhg the Section 23 of the MVAT Act on the aforesaid matter.

AI Summary

Purchaser Faces VAT Demand Over Unconfirmed Transaction; Consultant Recommends Reviewing MVAT Act and Supplier Cooperation A purchaser raised a query regarding a VAT issue where a supplier confirmed only part of a transaction amount, leading the Sales Tax Officer (STO) to demand confirmation of the full amount or face a VAT demand. Despite having invoices and bank statements, the purchaser's consultant advised that the STO could still raise a demand for the differential amount. A respondent suggested that if VAT has been paid, the MVAT Department should not tax unconfirmed purchases. The respondent also advised consulting the relevant MVAT Act sections and ensuring supplier cooperation to resolve the issue.