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Regional Training Regional Training Institute, RanchiInstitute, RanchiRegional Training Regional Training Institute, RanchiInstitute, Ranchi

Structured Training Structured Training Courseware on State Receipts Courseware on State Receipts

AuditAudit

Audit of Entry TaxAudit of Entry Tax

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Session ObjectivesAt 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

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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

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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

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Entry Tax vs. Octroi• Entry tax has been introduced in

lieu of octroi by many States• Some States have both entry tax

and octroi

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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

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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

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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

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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

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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

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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

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Organizational Set upSame as for Sales Tax

Commissioner of Commercial Taxes

Sr. JointCommissioner

(Hdqrs.)

Jt. Commissioner(Investigations)

DivisionsJt. Commissioner

CirlceDy. Commr./Asst. Commr/Commercial Taxes Officer

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Forms and RegistersFORM-ET-IFORM-ET-IIFORM-ET-IIIFORM-ET-IVFORM-ET-VFORM-ET-VIFORM-ET-VII

FORM-ET-VIII

Application for registrationCertificate of registrationMonthly ReturnQuarterly ReturnAnnual ReturnChallanApplication by an importer of a motor vehicle for issuance of a certificate for productionCertificate of registration for Motor Vehicles

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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

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Forms and Registers (contd.)

Register IIRegister IIIRegister IVRegister VRegister VIRegister VIIRegister VIIIRegister XIIRegister XIIIRegister XIVRegister XVI

Application for registrationCancellation of registrationApplication for amendment of Regn. CertificateRegister of registered dealersDues and collection registerDisposal register for officersProgressive Collection registerRequisition from appellate & requisition officerRegister of securitiesSeized Book of Accounts and disposalInspection of unregistered dealers

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Tax AdministrationRegistration• 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

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Tax Administration (contd.)

Returns• Every registered dealer liable to pay tax

is required to furnish the following:– Abstract Monthly Return– Quarterly and Annual ReturnFor import of all scheduled goods and tax

payable thereon

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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

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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

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Tax Administration (contd.)

Reduction from Sales Tax• Where entry tax paid on goods

dealer can claim reduction in liability of sales tax

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Appeal, Revision & Review

• Procedure for appeal, revision and review of assessments of entry tax is similar to that followed for sales tax assessments

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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

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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

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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

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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

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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