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Sales tax survey

Piyush Gupta (Partner) (24 Points)

28 February 2012

I have a query relating to sales tax survey which i am posting for your valuable suggestions

During survey following variation was observed:

1. Stock in books as per tally was Rs 30 lacs and physical stock was Rs 20 lacs.

2. Cash in books was as per tally was Rs 2 lacs and physical cash was Rs 1 lac.

What would be the assessable tax and would penalty be imposed. Rate of tsx is 5%.

3. If at the time of survey 3 sale bill were not entered in tally or books for Rs 5 lacs which was discoved after survey, due to which stock would be reduced by another 5 lacs.

What would be the assessable value as per books Rs 30 lacs or Rs 25 lacs.

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MJ Krishnamurthy (ACCT(Retd)) (7197 Points)
Replied 12 March 2012

Mr P Gupta,

Once a surveying team finds some difference in stock and cash it would mean that the accounts are not regularly maintained. However,as per rules of all states the entire books of a/c are to be verified before determining the exact turnover. The dealer should be given enough opportunity to explain his position on points of objection raised by tax authorities. If such answers furnished by the dealer are not satisfactory,then the authoriries can determine higher turnover and escaped/suppressed T.O. On this evaded tax(of suppressed T.O.) 10% penalty and interest @ 1.5%(or 2%) can be levied......MJK.