N0.4/1/2010-Fin(R&C)
Government of Goa,
Finance (Rev. & Cont.) Department,
Secretariat, Porvorim,
Bardez, Goa.

Dated: - 23/02/2010

OFFICE MEMORANDUM

Sub: Insertion of condition of Registration under Goa VAT Act, 2005 in the NIT.

It has been brought to the notice of the Government, by the Commissioner of Commercial Taxes, that the Notice inviting Tenders issued by any Employer, like PWD, WRD, Forest, Urban Development Agency, GTDC, Zilla Panchayats, Village Panchayats, GSIDC or any other corporation or Agency of the Government, do not stipulate the condition of the registration of contractor as dealer under Goa Value Added Tax Act, 2005 and Goa Tax on Entry of Goods Act, 2000, as a result of which, the contractor avoid assessment of tax or sometimes even evade the tax payment in the State of Goa.

Section 28 of Goa Value Added Tax Act, 2005, cast obligation on the Employer to deduct tax at 1% of the bill amount (TDS) and credit the same to the Government account either by adjustment through Government account or payment by challan into treasury. The contractor in acknowledgement of such deduction, is issued a TDS Certificate in Form VAT-VII, which he is required to claim by filing returns in Form VAT-III. However, many of such Contractors, neither take registration nor claim refund or adjustment of TDS, and allow such deductions to forfeit to Government, the reason, having registered under Goa Value Added Tax Act, 2005, they are required to pay more tax on the goods, which have not suffered tax at the point of purchase, either for reason of having purchased such goods from any un-registered suppliers, or purchase without proper bills or purchase from interstate suppliers, which ultimately results in direct evasion of tax and also creates in-balance in quoting of tender. The local contractor having registration under VAT, is required to pay tax, whereas, a non-resident dealer i.e. an un-registered dealer buys goods outside the State and avoid payment of local taxes, having no registration in Goa.

The rate of tax on specified goods is 4%, whereas on un-specified goods it is 12.5%. The TDS is provided at low percentage of 1% because, the goods purchased locally are generally suffered tax and in the Works Contract (deemed sales) only value addition and URD purchases are to be captured. But, the advantage is always taken by the tax evaders and therefore, it is found necessary to bring accountability to all the contractors, for their assessment of tax under VAT and Entry Tax.

The issues raised by Commissioner of Commercial Taxes were legally examined through Law Department and the Government has decided to incorporate the condition of registration of the contractors under VAT and Entry Tax in the NIT itself so that the concerned successful tenderer produces a photo copy of the valid registration certificates immediately upon acceptance of the tender and all TDS Certificates issued by the Employer clearly indicate his TIN in such Certificates.

The condition to be incorporated in the NIT shall be as under:

"The  Contractor  upon  acceptance  of tender should get himself registered under Goa Value Added Tax Act, 2005 and Goa Tax on Entry of Goods Act, 2000, and true copies of the certificates of such valid registrations should be filed with this office, before issue of Work Order, which will form part of the agreement".

The Employer upon issue of Work Order shall endorse one copy of the work order to the respective Commercial Tax Officer, by quoting the TIN of the Contractor so that the concerned Commercial 1 ax Officer immediately creates a file for such jobs and assess the dealer (Contractor) for every financial year. Further as provided in Rule 25(2) of the Goa Value Added Tax Rules, 2005, the Employer is required to maintain a register in Form VAT XXVIII of TDS certificate issued by him and file quarterly statement of such deductions to the Commissioner of Commercial Taxes in Form VAT-XXVII of TDS Certificate issued by him to facilitate him to cross verify the declaration/returns filed by the contractors. None of the Government departments is providing such information and the Contactor take advantage of escaping assessment of tax.

All the State/Central Government Departments, Semi- Government Offices, Corporations, Autonomous Bodies, Municipalities including Corporation of City of Panaji and Public Sector Undertakings of the State/Central Government, other Corporate Offices and Banks etc. shall therefore, incorporate the above condition in the Notice Inviting Tender and get the compliance done by the contractor before issue of work order. They shall also file the periodical information to the office of Commissioner of Commercial Taxes, Panaji in Form VAT XXVII.

Any lapse on the part of the Employer is likely to be viewed seriously fixing responsibility on the Officer concerned.

This OM also applies to the Private Employers floating tenders for award of works for execution.

These issues with the approval of the Government.

(Vasanti H. Parvatkar)
Under Secretary Fin(R&C)