04 February 2012
A search & seizure action was conducted on the dealer and lots of unrecorded sales and purchase invoices were found. Naturally, he has to pay tax on unrecorded sales. Whether set off is available on corresponding unrecorded purchase?
As per the MVAT Act, 2002 Liability arises immediately after the Sales Turnover crossed the limit prescribed in Act. Moreover Credit of the purchase available in the Financial year in which the invoice recoreded in the books of Accounts. Further, you have to show such purchase turnover alongwith Input Vat details in your Return to obtain the set-off against the output vat liability. Hence question of credit of unrecoreded purchase is not arised if it is not recorded in books of accounts and shown in return.
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