VAT/ Sales Tax registration is required for any business that is into sales either by way of trading, manufacturing, whether individuals, partnerships, Companies, or other forms of businesses.

Every dealer who effects inter-state sale is required to register with State sales tax authorities who are empowered to grant registration under CST Act.


Service tax is the tax levied by the Government of India for the service provided within India. Service tax registration is an Centralized registration, where the application has to be made to the Central Government.

If in an financial year, your company or firm reaches Rs. 9 lakh turnover, you have to register yourself under Service Tax Authority.

CBEC introduced self-assessment in respect of Central Excise in 1996. With the introduction of self-assessment, the department also provided for a strong compliance verification mechanism with Scrutiny of Returns. As assessment is now the responsibility of the assesse, the main function of the department is to scrutinize the tax return submitted by assesse to ensure the correctness of duty assessed in terms of the effective rate of duty claimed, the taxable value declared, and the Cenvat credit availed. E-filing of returns through ACES was made mandatory with effect from October 2011. As per the manual for the scrutiny of Central Excise returns, 2008, a monthly report is to be submitted by the Range Officer to the jurisdictional Assistant/Deputy Commissioner of the Division regarding the number of returns received and scrutinised. Scrutiny is done in two stages i.e. preliminary scrutiny by ACES and detailed scrutiny, which is carried out manually on the returns marked by ACES or otherwise.

Preliminary scrutiny

As per the provisions under Rule 12 of the Central Excise Rules 2002, every person liable to pay Central Excise Duty has to submit monthly/quarterly returns, as the case may be, by 10th day of the following month/quarter to which it relates. Filing of returns by the assesses as well as preliminary scrutiny of returns by Range Officers is carried out online through ACES.

As per the provisions under Para 2.1 of the Manual for Scrutiny of Central Excise Returns, 2008 preliminary scrutiny of all the returns is to be conducted within three months from the date of receiving the returns. We discuss below our audit findings relating to preliminary scrutiny as seen during the course of examination in selected ranges.

Review and Correction

Under ACES, preliminary scrutiny of returns is carried out by the system andreturns with discrepancies are identified by the system for review andcorrection. The returns marked for review are to be validated in consultationwith the assesse and re-entered into the system.

Non-payment of interest

Where any duty of excise has not been levied or paid or short levied or shortpaid or erroneously refunded, the person liable to pay duty as determinedunder section 11A of Central Excise Act, 1944, is in addition to the duty, liableto pay interest at such rate not below ten per cent and not exceeding thirtysixper cent per annum, as the Central Government may fix by notificationfrom time to time.

Detailed scrutiny of assessment:

The purpose of the detailed scrutiny is to ascertain the correct reason forabnormal trends exhibited for the risk parameters identified in the Board’sguidelines. Besides establishing the validity of the information furnished inthe tax return, the other major purpose of detailed scrutiny is to establish thecorrectness of self-assessment by ensuring correctness of valuation,ability in respect of products which may have escaped assessment.

Incorrect valuation of goods cleared

Rule 8 read with proviso to rule 9 of the Central Excise Valuation (Determination of Price of excisable Goods) Rules, 2000, stipulates that where excisable goods are not sold by the assesse but are consumed by the assesse or on behalf of the assesse by a related person for manufacture of other articles, the assessable value of such goods shall be 110 per cent of thecost of production or manufacture of such goods. Further, the Board had clarified that the value of goods consumed captively should be determined in accordance with the Cost Accounting Standards (CAS-4) method only. Further, section 11AB of Central Excise Act 1944, requires payment of interest on delayed payment of duty.

Incorrect availing of abatement

As per section 4A of the Central Excise Act, 1944, the Central Government may, by notification in the Official Gazette, specify any excisable goods, chargeable to duty of excise with reference to value, then, notwithstanding anything contained in section 4 of the Act ibid, such value shall be deemed to be the retail sale price declared on such goods less such amount of abatement, if any, from such retail sale price.

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