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The
Department has tried to take a progressive view of
allowing Information Technology in accounting and
billing by dealers in view of the advantages it offers
by way of economies, transparency and speed of access.
Section
40 of the KVAT Act, 2003 read with Rule 58 requires
dealers to maintain true and correct accounts and such
other records showing such particulars as may be
prescribed. Section 40A requires dealers to compulsorily
issue a bill / invoice /cash memorandum for sale of
taxable goods involving an amount of one hundred rupees
or more. Rule 58(20) requires dealers maintaining
accounts by electronic means to intimate the concerned
assessing authority in advance along with the password
for operating the electronic system.
Unfortunately
it has come to notice that these stipulations are being
observed more in the breach. Electronic Billing machines
that re-start numbering every day erasing traces of
bills issued earlier, inability of personnel in a
business premises to give data immediately to the
Department regarding stocks, sales and purchases and
other relevant matters owing to data being stored
outside the State or on systems without access rights
for the Department has cast doubts on the credibility of
data stored by electronic means.
VAT
involves self-assessment by dealers, which requires the
credibility of systems for billing and accounting to be
of a high standard.
Monitoring
of compliance is significant in bridging the gap between
the tax due and the tax declared by the dealer.
Hence
it is proposed to clearly lay down the obligations of
dealers wishing to use IT for billing and accounting
systems. A new proviso has been inserted by Finance
Bill, 2008 in Section 40 that dealers shall be permitted
to use electronic billing and accounting subject to such
restrictions and conditions as may be prescribed.
Accordingly,
it hereby made clear that dealers shall be permitted to
use electronic billing and accounting systems subject to
the following conditions:
(1)
Such dealers will intimate their assessing officer of
the deployment of electronic billing and accounting
systems. The fact of such deployment shall be indicated
in the KVATIS in the Registration Module.
(2)
Such dealers will inform their assessing officer the
names and addresses of their software developers and
vendors. This shall be done when deploying newly
developed software and for its subsequent customisation
/ modification, by whatever name called.
(3)
Such dealers shall maintain up-to-date documentation of
the software and system deployed, with full disclosure
of all methods of capturing data in their software and
its operational flow, including all menus, in their
principal place of business in the State; the same shall
be produced to the CTD officials on demand.
(4)
Software developers and vendors shall be liable to sell
and deploy to dealers under the KVAT Act only software
compatible with the provisions of the KVAT Act &
Rules.
(5)
Dealers shall be liable to deploy only software that
truthfully reflect their tax liability under the KVAT
Act, 2003.
(6)
If in the course of any investigation it is discovered
that the software deployed has induced, aided or abetted
tax evasion, the software developer and vendors are
liable to be proceeded against along with the dealer for
the loss of revenue to the Government and shall be
liable to be penalized under section 67 of the Act.
(7)
Such dealers shall give Administrator's UserID and
Password for the software, database and systems in a
sealed cover to their assessing officer before putting
the system into use. Any changes in the Administrator's
User ID and Password shall be similarly intimated to the
assessing officer.
a.
The system deployed by the dealer shall be such as to
enable the Department to get all other UserIDs and their
Passwords, using the Administrator's User ID and
Password.
b.
All additions/deletions and changes to the data should
be possible only through the software after
authentication by a valid UserID and Password.
c.
While updating each transaction, the UserID of the
updating user shall be recorded in the database.
d.
UserIDs in the software that are no longer needed should
only be made invalid and there should be no provision
for deleting them.
e.
The software deployed should have daily, weekly and
monthly autobackup facility and dealers shall be liable
to submit these back-ups on demand to the Department.
If
on inspection or verification the disclosures by the
dealer in respect of the above matters are found to be
untrue, the entire books of accounts are liable to be
rejected and assessment of tax liability of the dealer
done as per law.
(8)
The dealer shall provide necessary interface to the
Commercial Taxes Department for administering (querying
only) the database locally at the dealer's premise.
(9)
Electronic billing machines used by dealers in the State
shall not have any option for re-starting numbering of
the bills issued. Such machines if found deployed shall
be liable to be seized for further investigation by the
Department.
(10)
Unregistered dealers using electronic methods of billing
and keeping accounts shall also be liable to follow the
rules regarding these matters in the KVAT Act.
(11)
Dealers using electronic billing and accounting systems
will have mandatorily to file VAT Returns
electronically.
(12)
A true copy of all data captured in business
establishments in the State shall be maintained in the
business premises where it is captured regardless of
where the server is hosted, and access to the same shall
be made available to inspecting officers from the
Department.
(13)
If at any time it is found that data stored by or for a
dealer on an external device differs from that available
in the approved system / database, then the accounts of
the dealer are liable to be rejected and assessments
done as per law.
(14)
The Commissioner may from time to time cause
verification of the software and systems deployed by
dealers by any agency of his choice to ascertain the
extent of compliance.
Consequential
changes in the Rules are being effected.
All
officers shall ensure that the above instructions are
complied with.
Commissioner
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