Government of Andhra Pradesh s11

GOVERNMENT OF ANDHRA PRADESH COMMERCIAL TAXES DEPARTMENT

Office of the Commissioner of Commercial Taxes

A.P:: Hyderabad.

CCT’s Ref.No. AI (1)/126 /2015, Dated:-06-10-2015

CIRCULAR

Subject: CST Act, 1956- Registration- Insisting of Security/Additional Security and Provisional Assessemnt under CST Act - Certain instructions - issued- Regd. * * *

It has come to notice during the review of certain Circle offices that, many dealers of the sensitive commodities are obtaining CST Registration, taking huge number of CST waybills, camouflaging them as CST sales by availing concessional rate of tax @2% and then closing business activities all of a sudden without giving any intimation to the Department. Further they are not submitting any statutory forms in respect of these transactions as prescribed in the CST Act. By the time these dealers are assessed, they are found absconding and the best judgement demands raised exparte remain uncollected. Mere taking these demands into the DMU serves no purpose. In order to curtail these kind of clandestine practices, certain proactive measures are to be taken by the Commercial Tax Officers/Registering Authorities. Therefore, keeping in view the above cited observations, the following instructions are issued.

Obtaining Security:

As per section 7 (3A) of CST Act, 1956 read with Rule 5(1) CST AP Rules, the Registering Authorities may insist for security and/or additional security at any time while such Registration Certificate is in force. Therefore, all the Registering Authorities are hereby directed to obtain security and/ or additional security from the Dealers dealing in Evasion Prone Commodities , based on the risk parameters stated below:

The following commodities shall be treated as Evasion Prone Commodities for this purpose:

i. All kinds of Pulses and Dhalls.

ii. Granites

iii. Hides and Skins

iv. Automobile Spares and Accessories

v. Iron and Steel including Scrap

vi. Any other commodity with the consent of the DC concerned

The following are the risk parameters for considering a dealer as suspicious:

a. Return Turnover less than Waybill Turnover

b. CST Waybills heavy under invoicing

c. High Non credible purchases

d. Abnormal Waybill utilisation

e. Abnormal Sales Vs Purchase ratio

f. No purchases, but having CST sales, Branch and Consignment Transfers

g. Huge Branch and Consignment Transfers

h. Huge Indirect Exports (H form )

i. Any other parameter with the consent of the DC concerened.

Quantification of the Security and /or additional security shall be done as per the sub- section 3BB of Section 7 of the CST Act, 1956.

For the above purpose, a) For all existing dealers dealing in evasion prone commodities, the Registering authorities should watch and evaluate their performance based on the above parameters and should obtain Security/Additional Security, whenever necessity arises.

b) For fresh Registrations in evasion prone commodities, the Registering authorities have to watch and evaluate the performance of the dealers based on the above parameters for 03 months and if the dealer is falling in the risky category, he should obtain security/Additional Security immediately.

c) Concerned DCs/CTOs/AC LTUs should monitor the issues mentioned in para (a) and para (b) above and should ensure that registering authority obtains security /additional security whenever necessity arises.

The Registering Authorities should obtain the Security/ Additional Security only with the approval of the Commercial Tax Officer/AC LTU concerned.

Provisional Assessment:

Further, as per Rule 14-A(1)(b) of CST (AP) Rules, 1957 every dealer shall submit to the Assessing Authority along with return the originals of declarations in Form C, Form F, Form E-I and Form E-II. If the dealer fails to submit such declarations along with the returns, he may be assessed provisionally under Rule 14-A (4) of CST (AP) Rules, 1957.

Therefore, all the Assessing Authorities are hereby directed to take-up provisional assessments inrespect of all those dealers (both existing as well as newly registered) identified as suspicious ( as per the criterion given above ) who fail to comply with Rule 14- A (1) (b) of CST (AP) Rules, 1957.

The provisional assessments shall be done in cases where the dealers falling under the risk category fail to file the required statutory forms within the time time prescribed under the Act.

Forfeiture of Security:

Further, all the Registering Authorities are hereby directed that the security/Additional Security obtained by above means shall be forfeited for realizing any tax/penalty (including provisional demands) under the Act or in cases of misuse of statutory forms as envisaged under section 7 (3D) of CST Act, 1956. The above circular instructions should be followed scrupulously and any deviation will be viewed seriously. Sd/- J.Syamala Rao

COMMISSIONER (CT)