Sub: System based Assessment of mismatch of Annexure 2A-2B in respect of Composition dealers covered under section 16 of DVAT Act 2004.

1. A representation dated 18.2.2019 has been received from Sales Tax Bar Association, Delhi wherein various difficulties being faced by the dealers opted for Composition scheme under Section 16 of DVAT Act 2004 have been highlighted with regard to System based Assessment of mismatch of Annexure 2A-2B of these dealers and requested to issue necessary clarifications to the Assessing Authorities of the Department in this regard.

2. In the said representation, Sales Tax Bar Association has referred to the provisions of Section 16 (5) (a) to (f) of DVAT Act 2004, which are as follows : -

"(5) A dealer who elects to pay tax under the section shall-

[(a) Not purchase goods from a person who is not registered under this Act.

[PROVIDED that this restriction shall not apply for the purchase of goods from an un-registered dealer dealing exclusively in goods mentioned in the First Schedule"]

[(b)] not compute his net tax under section 11 of this Act

[(C)] not be allowed to claim credit under section 9, section 14 and section 15 of this Act.

[(d)] not be entitled to issue tax invoice;

[(e)] not be allowed to collect any amount by way of tax under this Act; and

[(f)] continue to retain tax invoices and retail invoices for all of his purchases as required under section 48 of this Act"

3. The Sales Tax Bar Association has requested to stop online 2A-2B Mismatch Assessments of the Composition Dealers citing following reasons/grounds

(a) AII the purchases made from another composition dealer are in accordance with law and no adverse action is called for. The composition dealers are not required to file 2B, as such the purchases

reflected by the recipient composition dealer are reflected as mismatch, which is contrary to the provisions and intention of the Act. Further, clause (f) of sub section (5) of section 16 stipulate that the composition dealer shall retain tax invoice and retail invoice for all his purchases. Stipulation of purchases on the basis of retail invoices reinforces the proposition that he is authorized to make purchases from composition dealers. The matching of the purchases with sales on the basis of retail invoices is not visualized under the Act.

(b) At times, selling registered dealer do not mention the TIN of the purchasing dealer, who has elected to pay taxes under the composition scheme or the selling dealer makes the sales on the basis of retail invoices. Even, in such cases, the matching is not visualized under the provisions of the Act. No adverse action is called for against the composition dealer, who has made purchases from registered dealer on the basis of retail invoices or on the basis of Tax invoices, in which his TIN is not mentioned.

(c) Mismatch reports of dealers covered under composition scheme are not available on the portal of the Department or in other words composition dealers cannot view their mismatch report whenever they login to their respective Account. Therefore, Assessments on the basis of Mismatch reports available with the Assessing Authority with regard to dealers covered under composition scheme will cause undue hardship, if Assessments are made on the basis of data available on the system of the Assessing Authority.

4. This issue has been examined in accordance with the provisions of DVAT Act 2004 read with DVAT Rules 2005. It has been confirmed by the System Branch that at present no Mismatch reports with regard to Annexure 2A & 2B is available on the portal of the Department in the login of a Dealer covered under composition scheme. Further, it has also been informed that in the drop down of Annexure 2A with regard to composition dealers, the icon "Purchase against Tax/Retail Invoice is visible" under same Head.

5. Therefore, keeping in view the above stated position of system and also keeping in view the relevant provisions of DVAT Act of 2004 read with DVAT Rules 2005, it is hereby clarified to all Assessing Authorities of this Department that no system based Assessment of mismatch in Annexure 2A & 2B with regard to dealers covered under Composition scheme u/s 16 of DVAT Act 2004 shall be carried out now onwards. However, for the tax payers for which Assessment is yet to be completed, the Assessing Authorities wherever they deemed fit in view of mismatch in annexure 2A & 2B of composition dealers which is visible to them, may complete the Assessment under DVAT Act after giving proper opportunity of being heard to the composition dealers, and in accordance with the relevant provisions of Law.

6. Further, with regard to the already completed System based Assessments, Assessing Authority may review the Assessment orders in accordance with the provisions of Section 74B of DVAT Act & Rules related thereto, to avoid any hardship to those dealers.

7. This issue with the approval of Commissioner (T&T), Government of NCT of Delhi.

(ALOK SHARMA)

Asstt. Commissioner (Policy)