REMOVAL OF COMMERCIAL TAX CHECKPOSTS - IN THE STATE OF U.P. - AN ERA OF FREE FLOW OF GOODS

[MUKUL GUPTA]

It is heartening to note that the long pending demand has been accepted for removal of Check Posts established by the Commercial Tax Department for checking of the goods at the point of their import into the state of U.P. and the decision has been actually implemented w.e.f. 1^st August 2008. An impediment in the free flow of movement of goods into the state of U.P. is now no more in existence.  It is a wise step in the right direction for the good of business as a whole. It has in-fact also smoothened the passenger traffic on the crowded roads.

Now, the goods being received for any purposes by the dealers in the State of U.P. may enter into the state of U.P. without being declared or verified at the Entry Check Post situated on the geographical boundary of the State. The vehicle containing the goods alongwith necessary documents for transportation i.e. Purchase Invoice/Challan, Goods Receipt Note/Builty (G.R) and duly filled Form-38/39 under U.P. VAT Act may come directly to the consignee/purchasing-dealer's place of business as declared in the documents. The drivers of the vehicle have not to stop the vehicle at the Entry Check Post of Commercial Tax Department.

Although, there is no need of declaration of import-transaction by presenting the Transport Documents at the Entry Check Post, but all the documents covering the transaction of import of goods must be available with the driver incharge of the vehicle. The consignment may be checked by the Mobile Squads of the Commercial Tax Department which will now be working more intensely.

Extra care has to be taken by the consignee /seller of the goods at the point of the handing over the documents to the transporter/driver incharge of the vehicle, so that all the necessary as well as duly completed papers including Form-38/39 must be available with the goods whenever they are moving on the road or in the transporter's custody till it reach the destination.

Out of the 93 Check Post at the boundary of state of U.P. on various routes, 46 Check Posts will be fully removed and the remaining 37 Check Posts will work for issuing/verification of the Transit Pass in-connection with the goods which are commencing the movement from outside the state of U.P. for any destination out side the state of U.P. after passing through the state of U.P.

The number of Mobile Squads is being increased to check and control the possible evasion of suppressed transactions after change in the system at the Entry Check Post. The consignments which are verified by the Mobile Squads will be informed within a week to the Assessing Authority of the dealer through internal channels of the Commercial tax Department. The genuine dealers must take precaution, so there should not be any lapse in the documentation covering the transaction and the goods. Earlier, there was an opportunity for removal of the deficiencies by the clearing-agents of the transport companies sitting before the Entry Check Posts. Since, now the vehicles containing the goods have not to stop at the Entry Check Post, so the option of scrutiny by the clearing-agents is not available.  Thus, the logistic persons involved for dispatch and transportation of goods must perform their duty seriously to check that all the necessary documents must be correctly available with the consignment.

Under the newly introduced system, it is desirable that the Consignor from outside the state of U.P. as well as the Transporter must realize their responsibility about the correctness and completeness of the documents as far as U.P.VAT Act is concerned.  

Most important of all as well as little cumbersome, under the new system every dealer shall submit the original copy of the 'Form for Import of Goods' i.e. Form-38/39 as well as self-attested copies of Delivery Receipt or Builty and concerned Invoice/ Bill/ Challan with its Assessing Authority within the prescribed period:

1. The Public Limited Companies or Corporations or Offices & Enterprises of the State and Central Governments have to submit the above referred documents with the Monthly Return of the period during which the goods have been received by them from outside the State of U.P.

2. All other dealers have to submit the documents after the import of goods from outside state of U.P. by the end of the next working day.

3. The dealers which have more than one branches/godowns then each such branch/godown have to submit the documents within the next working day after taking delivery of the goods before the Assessing Authority in whose territorial jurisdiction such branch/godown is situated.

It has been warned by the Commissioner of Commercial Tax, Uttar Pradesh that if a dealer does not observe the prescribed procedure, then it would be prima-facie presumed that he has not followed the system prescribed under the U.P.VAT Act for import of goods into state of U.P. and then the penalty proceedings in-accordance with the law shall take place. So, for the smooth functioning of the business, it would be necessary to understand the correct procedure and device ways and means to develop a fool proof system of import of goods into the state of U.P. under this new regime of free flow of goods without being declared or checked at the Entry Check Post. 

The Commissioner of Commercial Tax is intending to continue and maintain the offices of the 46 removed Check Posts, as offices of Mobile Squad at the entry point of the state to control the possible evasion of tax. In the present scenario it is feared that these 46 offices of the Mobile Squad may start working just as the Check Posts and thus could be a detriment in the free flow of the movement of the goods. Special care has to be taken with regard to these so called Mobile Squad Offices at the entry point of the state of U.P. so that the genuinely good motive behind the removal of check post be not frustrated. The Mobile Squads must work in accordance with the sprit & purpose with which they have been strengthened after removal of the Check Posts, excess must be contained other wise they may also die their own death.

The removal of Check Posts is certainly a welcome step under the new system of collection of Value Added Tax which have multi-point tax incidence and a mechanism of inbuilt check for prevention of evasion of tax on sale of goods. The free flow of goods between the states in this global village is certainly going to boost the economy of this region, we have witnessed the rapid growth of business in Noida where there were no Check Post since beginning and the dealers at Noida are also paying large amount of revenue to the State as well as Central Government.