Challan vs actual bill-evasion of tax

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Sachin sharma (Querist)
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18 January 2012 Dear all
Can you please assist me on the following:
My Company ABC send goods on challan and on challan an approx value is written without any tax.
after the goods reached their destination company make the bill.now in this case bill is made of low amount to escape the tax(CST and VAT)since the party pays in cash there is no problem with the party.what are the penal provisions in this regard.

U S Sharma

U S Sharma (Expert)
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19 January 2012 if challan is attached with bill, where the approx original value is mentioned, then its a case of evasion, but if the challan is destroyed, then the tax invoice value is final value.

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MJ Krishnamurthy

MJ Krishnamurthy (Expert)
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19 January 2012 Mr S Sharma,
Yes it is a bit of difficult case for the tax authorities to handle, but not all that impossible.First, if your dealer is caught sending the goods on a challan only and without proper tax invoice, it amounts to tax evasion and suppression of sales.On detailed inspection and getting links of purchasing the goods and their value the extent of sales suppression can be estimated. Generally the inspecting authorities go wild in arriving at the estiamation,making fancy additions etc.There will be very little defence for the evading dealer for saving himself.After doing such estimation and tax levy 10% penalty and interest @2% pm will be levied.The inspecting officers are empowered to enter the premises,seize all records, available stock and even seal the business premises and also seize the bank account,apart from cancelling the registration etc.So, it is not safe to continue such trading practices.

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