Traders can breathe easy as VAT notices to be recalled

Thiruvananthapuram: Soon after the traders observed state-wide protest on Tuesday, the Kerala government has decided to withdraw the notices issued to businesses, pointing out discrepancies in the filing of Value Added Tax (VAT) returns. The decision was taken at a meet of the tax officials called by Finance Minister Dr T M Thomas Isaac here on Tuesday.

The meet pointed out that flaws in the software module called General Scrutiny had caused the problems. It was developed to find out the irregularities in the sales data submitted by the traders.

The problem arose as the government aimed to levy additional tax from the traders after taking into account the irregularities as revealed during the assessment of their sales returns when the VAT was in effect.

As there was no option to specifically enter the details on export, tax exemption deals, and interstate business, the software gave misleading figures which were interpreted by the erstwhile VAT authorities as due to concealing of real turnover and sales. Without checking this, the officials issued notices to traders. Those who had even stopped business and traders, who had duly submitted the details, were stunned to receive the notice. Though a petition was submitted earlier to the minister, the issue was not resolved.

The minister finally called for the meet after the traders called for a strike and some resorted to take the extreme step.

Although the latest government decision is a welcome relief for businesses, probe would be initiated and action taken on the incidences of tax evasion found during the direct inspections conducted by the officials.

The VAT, which came into effect from April 1, 2005 in many Indian states, has now been superseded by the Goods and Sales Tax regime. However, traders used to get notice over unsettled VAT dues.

The apex traders' body Kerala Vyapari Vyavasayi Ekopana Samithi which had called for the dawn-to-dusk strike on Tuesday had demanded a written assurance from the Kerala government that it would withdraw the notices seeking data from the 2011-12 period. It also asked for the withdrawal of flood cess and to include their representative in the amnesty committee that takes a call on the settlement of arrears.