Books of VAT accounts

Books of VAT Accounts --Sale book, Purchase Book, Tax Invoice, Retail Invoice, Challans many more to discuss

1.  Introduction:

In general, terms books or books of account include ledgers, daybooks, cashbooks, account-books and other books, whether kept in the written form or as printouts of data stored in floppy, disc, tape or any other form of electro-magnetic data storage device. In case of a business, maintenance of accounts is compulsory due to different reasons like requirement by law, calculation of tax etc.

Through this article, I would like to share my knowledge regarding books of accounts in respect of VAT. As you, all know VAT is the state concept, which differs from state to state. Therefore, for your convenience, I am taking up Haryana VAT in this article.

2. Nature of accounts to be maintained by dealers and assesses:

(i) Every dealer is required to maintain separate account of sales and purchases in respect of sale/purchase made in the State, in the course of inter -state trade, in the course of import into India and in the course of export out of India.

(ii) Moreover, dealer is required to maintain separate accounts for different classes of goods taxable at different rates. The dealer shall maintain a 'Day Book' in which purchases and sales will be recorded on daily basis. Performa ‘Day Book’ is shown below:-

Sale side/book

Note 1:- Value of goods sold shall not include tax.

Note 2:- Columns (d), (e) and (f), classify the goods according to different rates of tax applicable. Add more columns, if necessary.

Purchase side/book

Note 1:- Value of goods purchased on tax invoices shall not include tax.

Note 2:- In columns (c), (d) and (e), classify the goods according to different rates of tax applicable. Add more columns, if necessary.

3. Who all are required to maintain books of accounts?

Certain dealers are required to maintain books of accounts under Haryana VAT as required by law which are as follows:

3.1 Dealers requiring filing Annual Commodity Tax return.

Every dealer who is required to file annual commodity tax return under rule 16 (3) of Haryana Value Added Tax Rules, 2003, shall further maintain separate Sale accounts in respect of each class of goods listed in Schedule II appended to these rules where such goods are sold for the first time in the State.

However, the phrase 'goods sold for the first time' used in above paragraph would mean sale of goods, which have not been purchased from VAT dealers in the State.

3.2 Commission agents, Brokers etc.

Every commission agent, broker, del-credere agent, auctioneer or any other mercantile agent doing business as a dealer, shall maintain accounts showing:-

a) Authorizations received for purchasing or selling goods on behalf of each principal and it should be separately for each principal;

b) Details of goods purchased or of goods received for sale on behalf of each principal each day; and

c) Details of purchases or sales affected on behalf of each principal each day.

3.3 Assessee requiring deducting tax at source

Every assessee who is required to deduct tax at source from payments made to payee(s), shall maintain the account of the payments made, whether by cash, adjustment, recovery of dues or in any other manner, to the payee(s) in respect of execution of the works contract(s) or the supply of goods, as the case may be.

However, dealer is required to maintain separate accounts for each works contract or each contract or supply of goods, as the case may be. Assessing authority has power to call for the books of accounts anytime.

3.4 Assessee requiring filing return under section 14(2) of the Haryana Value Added Tax Act, 2003

Every dealer liable to provide/ submit value added tax returns under section 14(2) of the HVAT Act then in such a case, he shall be required to preserve true, correct, unbiased and proper account of his business.

However, if the authority assessing such business man is of a bonafide view that such account is not adequately clear to enable him to make a proper check of the returns, he may require such dealer by notice in writing to keep such accounts, as he may, in writing, direct subject to anything that may, with a view to making proper assessment of tax.

4. Invoice, Delivery note, Time period of maintaining accounts.

Every dealer who is required to furnish returns under section 14 (2) of the Act shall,-

(a) in respect of every sale of goods, effected by him -

(i) to any dealer;

(ii) to any other person on credit;

(iii) to any other person on cash, where the sale price of the goods exceed prescribed amount[1], issue to the purchaser an invoice.

Where the purchaser is a VAT dealer then he shall be issued a tax invoice, otherwise a retail sale invoice will suffice.

Timings of issue of invoice:

Invoice may be issued according to following time schedule:

- In the case of specific or ascertained goods, at the time the contract of sale is made; and

- In the case of unascertained or future goods, at the time of their appropriation to the contract of sale;

However, if the contract of sale requires that the goods be delivered over a period of time, he may issue a delivery note showing the prescribed particulars at the time of dispatch of the goods, every time such dispatch is made.

(b) Maintain account of all sales not falling within the above point;

(c) In respect of every dispatch of goods otherwise than by sale, issue a delivery note at the time of the dispatch showing the prescribed particulars; and

(d) Preserve a carbon copy of every invoice or delivery note for a period of 8 years following the close of the year when the sale was made. Where some proceedings under this Act are pending, till the completion of such proceedings all records are to be maintained.

4.1  Rounding up of tax in each invoice not required. 

Provisions of Central Excise Act provides for rounding up of tax. However, this provision is applicable only while making monthly/quarterly payment to Government. It does not provide rounding up of duty in each Invoice. This provision is also applicable to service tax.

4.2  Details required to be shown in invoice/bill/challans.

Invoice/challan/Bill should contain the following items:-

(a) Sign of authorized person of provider of input services;

(b) Serial number; and

(c) Following details -

The rule does not make mention of date, but actually, date should be mentioned.

Section 12A of Central Excise Act provides that tax collected must be shown in the Invoice. This section has been made applicable to Service Tax. Thus, the service tax collected must be shown separately in Invoice/Bill raised by the person providing services.

5.  Meaning of following terms:

5.1 Tax Invoice: A tax invoice shall be issued by a VAT dealer when making sale of goods in the State to another VAT dealer for resale thereof or for use in manufacture or processing of goods for sale. A tax invoice shall at least be in triplicate. The original shall be given to the purchaser, the duplicate to the transporter, and the triplicate shall be kept in for a record. Duplicate and triplicate shall be carbon copies of the original.

5.2 Retail / Sale Invoice: A retail sale invoice shall be issued by a VAT dealer, a casual trader, or a lump sum dealer, when making sale of goods in the State to a consumer or to an unregistered dealer. A sale invoice shall be issued for sale of goods in all other circumstances. It shall not be compulsory to issue a sale invoice or a retail sale invoice in respect of a single transaction of sale made in cash not exceeding Rs. 300/- in valuable consideration except when the invoice is demanded by the customer. A retail sale invoice shall be at least in duplicate. The original shall be given to the purchaser and the duplicate - a carbon copy of the original - shall be kept in for a record.

5.3 Delivery Note: A delivery note shall be issued for effecting delivery of goods whether as a result of sale, dispatch on consignment, or for any other reason but when an invoice issued for sale of goods accompanies the movement of goods, it shall not be compulsory to issue a delivery note. Each invoice or a delivery note shall be machine numbered or shall bear a printed serial number in an ascending order. It must clearly bear the title for which it is to be used for, like, "Original - Purchaser's copy, "Duplicate - Transporter's copy", "Triplicate - Office Copy".

6. Production of Books of Accounts:

A taxing authority is authorized to inspect and examine books, documents or records of any dealer and for this purpose department may order such dealer to produce before him any record relating to his business for the purpose of inspection.

7. Case laws:

7.1 Grounds for rejection of books of account.

Tribunal rejected the assessee's account books on the ground that there was no verification of the raw materials used, the work done on job work basis has not been verified, imbalance in the production on the basis of electricity consumption etc. The High Court has considered these reasons and has not interfered with the findings of the Tribunal about non-maintenance of proper accounts and suppression of production and turnover. Thus, there is no force in this appeal and hence it is dismissed.

Melton India V. The Commissioner Trade Tax, U.P. (2007) 5 VST 613 (SC).

7.2 Inspection of books of accounts.

It is mandatory for the dealers to keep and maintain true and correct books of account. Such books of accounts are to be kept at the place of business. If they are not kept at the place of the business, the power of inspection in terms of Section 13 becomes redundant. Such non-production is a relevant factor which can be considered by the Assessing Officer while considering whether the books of accounts are to be accepted as to have been maintained in the regular course of business. It is incumbent upon the assessee to give reasonable explanation as to why they were not produced at the time of survey. The burden is on him to show as to why no adverse inference should be drawn.

Commissioner, Sales Tax, U.P. v. MOHAN BRICKFIELD, AGRA (2006)148 STC 638 (SC).

7.3 Notice to be sent to legal representatives in case of death of assessee.

Where the sales tax officer sends the notice to assessee to produce the books of accounts and other documents and assessee dies, a second notice to legal representatives is not warranted under the U.P. Sales Tax Act, especially when they were aware of the proceedings.

Homely Industries V Sales Tax Officer (1976) 37 STC 483 (SC).

8. Conclusion:

At the end, I would like to conclude that, Act specifies certain class of dealers who are required to maintain books of accounts in the manner specified and the assessing officer can call upon these books of accounts anytime. Contravening these provisions i.e. non-maintenance of books of accounts may land the assessee in trouble and he may have to face certain consequences as a result of this contravention.

CA. Rajat Mohan

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