Claims:We claim:
1. A system to trace tax liability due on business houses and business people comprising a working module (1) connected with a server (2) being provided to trace tax liability, an enterprise module (4) connected with the server (2) being provided to keep the record regarding purchase of the raw material (input), and final products (output) obtained after processing the raw material, a distributer module (5), connected with a point of sale (POS) module (7), the enterprise (4) and the server (2), being provided to keep the record regarding purchase of finished goods and sale of goods to the POS module (7), a banking module (6), connected with the POS module (7), server (2) and enterprise module (4), being provided to keep money transaction (landing and recovery) record taken place between the bank and enterprise (4), bank and distributer module (5), and bank (6) and POS (7).
2. The system to trace tax liability as claimed in claim 1, wherein the working module is connected with a server through a block chain technology.
3. The system to trace tax liability as claimed in claim 1, wherein the enterprise module is also connected with the distributer module and banking and financial module.
4. The system to trace tax liability as claimed in claim 1, wherein the POS module is connected with the distributer module, the server and to the banking module
5. A process to trace tax liability due on business houses and business people comprising implementing the invented system at offices of registered enterprises, purchasing input (raw material) by the enterprise and entering information about source of input and tax paid by the enterprise in enterprise resource planning (ERP), processing the raw material by the enterprise in order to manufacture the goods (output), entering details about indirect tax paid by the enterprise during processing of the input to obtain the output, entering details about sale of goods by enterprise to the distributer including transportation, entering details about the point of consumption (sale of goods) by the distributer to the retailer, calculating tax liability to be levied by the enterprise and retailer on the sale of the output and entering details about such tax, entering details of the tax obtained by the retailer from the customer on sale of the goods to the customer, monitoring entries and detecting discrepancies by the system relating to the information / documents / tax liability automatically and reporting the same to the concerned authority in order to take corrective action.
6. The process to trace tax liability due on business houses and business people as claimed in claim 1, wherein the system is adapted to work along with the ERP existing at the office of the enterprise.

Description:FORM 2

THE PATENTS ACT, 1970
(39 of 1970)
AND
The Patents Rules, 2003

COMPLETE SPECIFICATION
(Section 10 and Rule 13)

TITLE
A SYSTEM FOR TRACING TAX LIABILITY

APPLICANT
(a) Bharuwa Solution Private Limited,
(b) An Indian Company,
(c) Block E, Sector - 7, Dwarka,
New Delhi - 110045, INDIA,

PREAMBLE TO THE DESCRIPTION
The following specification particularly describes the invention and the manner in which it is to be performed.
FIELD OF THE INVENTION
This invention relates to a system to trace tax liability due on business houses and business people. Particularly this invention relates to a system and process to trace input of the commodity to the business houses and / or business people and output of the commodity from the business houses and / or business people so as to trace tax liability, products, and payment made by the business houses and business people. The system is useful to work with the block chain technology.
BACKGROUND OF THE INVENTION
The Government of a country need revenue to perform its duties, for example, law and order condition, supply of essential and non-essential goods to fulfil demand of the public, provide transport services to the public, etc. etc. But the challenge is to carefully choose not only the level of tax rates, but also the tax base. The Government also need to design a tax compliance system not to discourage the taxpayers from participating, but to collect the due taxes from the taxpayers. The efficiency with which tax revenue is converted into public goods and services varies from country to country.
Efficient tax administration is helpful to encourage businesses houses / people to register themselves and thereby expanding the tax base and increasing tax revenues. Tax administration that is unfair and capricious is likely to bring the tax system into disrepute and reduce the government’s legitimacy. Also, compliance with tax laws is important to keep the system working for all and supporting the programs and services that improve lives. One way to encourage compliance is to keep the rules as clear and simple as possible. Complicated tax rules / systems are associated with high tax evasion. High tax compliance costs are associated with larger informal sectors, more corruption, and less investment. Economies with simple, well-designed tax rules / systems can boost businesses activity and, ultimately, investment and employment.
Tax administration is changing as the ecosystem in which it operates becomes broader and deeper, mostly owing to the vast increase in digital information flows. Tax administrations are responding to these challenges through the introduction of new technology and analytical tools. The government and tax authorities must rethink how they operate, offering the prospect of lower costs, increased compliance, and incentives for compliant taxpayers.
US patent application (US20010032138A1), discloses a method of providing taxable product information comprising: providing a product for distribution through a distribution chain; tracking the product through at least a portion of the distribution chain to determine product location information along the distribution chain; and making the product location information available such that a tax assessment may be made on the product.
PCT patent application (WO2001080139A2), discloses a product tax stamping system comprising: a product tag associated with a product, said product tag having tax payment information; a remote reading device for accessing said tax payment information from said product tag; and a processor operatively connected to said remote reading device and adapted under the control of software to include a tax authentication engine; wherein said remote reading device transfers said tax related information to said processor for processing by said taxation engine.
PCT patent application (WO2000046734A2), discloses a method of tracking tax payment information for taxable items, the method comprising: affixing a unique machine-readable identifier to each of the taxable items; storing each of the unique machine-readable identifiers in a computer readable memory; and storing a tax payment status for each of the items in the computer readable memory.
US Patent (US7295998B2), discloses a method for managing tax audit (TA) information for a business entity using a server system coupled to a centralized database and a plurality of computer systems, said method comprising: associating at least one computer with at least one auditor, the auditor is associated with a taxing jurisdiction and facilitates determining whether a correct amount of use tax has been paid by the business entity to the associated taxing jurisdiction; associating at least one computer with the business entity; receiving at the server system TA information from a user using the business entity computer, the TA information including data relating to a plurality of business transactions entered into by the business entity wherein each transaction is potentially subject to a use tax; storing TA information received at the server system in the centralized database; tracking TA information stored in the centralized database; updating the centralized database periodically with newly received TA information to maintain TA information; providing the auditor with access to specific TA information stored in the database by a user associated with the business entity; prompting the auditor to submit an inquiry to the server system from the auditor computer for TA information relating to a selected business transaction that the auditor has been granted access to; displaying TA information for the selected business transaction including at least one document representing the business transaction on the auditor computer; and determining by the auditor based on a review of the displayed TA information whether the business entity has paid a correct amount of use tax to the taxing jurisdiction associated with the auditor for the selected business transaction.
US Patent (US5774872A), discloses a sales tax reporting system for automatically reporting financial transactions, which are subject to sales tax, to a central location, said system comprising; at least one taxable transaction terminal disposed at each of a plurality of remote vendor locations for automatically recording taxable transaction occurrences on sales at said remote locations and including: means for automatically inputting a first numeric value representing a price attributable to a taxable transaction into said terminal; means for entering a second numeric value representing sales tax due for each said taxable transaction; means for storing said first and second numeric values; means for automatically generating transmissible data representing said stored first and second numeric values; and means for generating a printed tax receipt in response to said means for automatically generating transmissible data, said printed receipt displaying said first and second numeric values; at least one data collection sub-station in electronic, two-way communication with a portion of said plurality of taxable transaction terminals and operative to contact, on a rotating periodic basis, each of said taxable transaction terminals within said portion and receive therefrom said transmissible data; a central processing unit disposed at said central location and including a database having a data file corresponding to each said remote vendor location for storing said transmissible data generated at said remote vendor location, said central processing unit being programmed to generate on a periodic basis or when requested by an operator, a report of sales and tax due thereupon at a particular remote vendor location and stored in the respective data file; and an electronic data link connecting each said data collection sub-station with said central processing unit for automatic transmission of said transmissible data collected by said data collection sub-station.
US Patent (US5799283A), discloses a point of sale tax reporting system for automatically reporting sales tax to a governmental authority so as to allow for enforcing tax laws and verifying that a retailer pays collected sales and use tax to the governmental authority, the system comprising: at least one tax register located at a retailer location, said at least one tax register for processing consumer sales transaction data at the retailer location and computing sales tax data to be paid to the retailer by the consumer based on the amount of a sale, said at least one tax register automatically forwarding said transaction data and said sales tax data for each transaction to a first governmental authority remote location; a printer located at the retailer location and in communication with said at least one tax register, said printer for printing consumer receipts, said receipts having listed thereon the computed sales tax paid to the retailer by the consumer; automatic reporting means for allowing for the enforcing of tax laws and verifying that the retailer pays collected sales tax to the governmental authority, said automatic reporting means including:
a) a first governmental authority computer and corresponding first memory disposed at said first governmental authority remote location, said first computer and memory for receiving and storing said forwarded transaction and sales tax data;
b) a first communication link connecting said tax register at said retailer location to said first computer and memory at said first remote governmental authority location, said first communication link including means for forwarding said transaction and sales tax data from said tax register to said first computer and memory for each transaction whereby said transaction and sales and use tax data from the retailer is stored at said first remote governmental authority location; and
c) said automatic reporting means for enabling said governmental authority to verify that for each retail transaction upon which a receipt for tax paid was issued, the collected sales tax has been paid by the retailer to the government by using said sales tax data from said first computer and memory.
US Patent (US6078899A), discloses a point of sale tax reporting system comprising: at least one tax register located at a retailer location, said at least one tax register for processing consumer sales transaction data at the retailer location and computing sales tax data to be paid to the retailer by the consumer based on the amount of a sale, said at least one tax register forwarding said transaction data and said sales tax data to a first remote location; a printer located at the retailer location and in communication with said at least one tax register, said printer for printing consumer receipts, said receipts having listed thereon the computed sales tax paid to the retailer by the consumer; a first computer and corresponding first memory disposed at said first remote location, said first computer and memory for receiving and storing said forwarded transaction and sales tax data; and a first communication link connecting said tax register at said retailer location to said first computer and memory at said first remote location, said first communication link for permitting said tax register to forward said transaction and sales tax data to said first computer and memory whereby said transaction and sales tax data from the retailer is stored at said first remote location in order to help enforce tax laws and prevent retailers from avoiding the payment to the government of collected sales tax.
There are disadvantages associated with the conventional systems and the processes. One of the disadvantages is that conventional systems can be implemented at one or two organizations, that is, small number of enterprises can be covered, but cannot be implemented at national level.
Another disadvantage associated with the conventional systems is that conventional systems are not capable to harmonize the enterprises even if the system is implemented.
Yet another disadvantage associated with the conventional systems is that implementation of conventional system requires conversion of products into a code or the packaging of the products requires to be changed.
Still another disadvantage associated with the conventional systems is that conventional system share only location of the product and therefore Government department cannot make decision based on the report.
A further disadvantage associated with the conventional systems is that the conventional systems are not capable to search and determine tax evasion by the business houses and business people.
Another disadvantage associated with the conventional systems is that tax estimation procedure are not appropriate for direct and indirect taxation.
Yet another disadvantage associated with the conventional systems is that it is very costly to implement the conventional systems.
Still another disadvantage associated with the conventional systems is that huge manpower is required to control, monitor and implement the conventional systems.
Therefore, there is a need to invent a system, which is capable of tracing tax liability and payment by the business houses and business people.
OBJECTS OF THE INVENTION
Therefore, an object of the present invention is to provide a system to trace tax liability due on business houses and business people which obviates the disadvantages associated with the prior art.
Another object of the present invention is to provide a system to trace tax liability due on business houses and business people and capable to be implemented on a large scale to cover all kinds of enterprises / businesses at national level.
Yet another object of the present invention is to provide a system to trace tax liability which is capable to provided unified reporting needed by the Government departments / agencies and is thus capable to harmonize tax system to all kinds of enterprises / businesses.
Still another object of the present invention is to provide a system which is uniform and consistent and is capable to be integrated with the existing billing accounting software or billing solutions.
A further object of the present invention is to provide a system which is a standalone system / program and is capable to be implemented with minor or no impact in any other areas of the enterprise.
Another object of the present invention is to provide a system which is capable to bring transparency in the system so that responsible people know about the actual amount of the taxation for the enterprise.
Yet another object of the present invention is to provide a system which is helpful to determine the actual tax payment for the enterprise and the tax according to the system implement by the tax governing authority of the country.
Still another object of the present invention is to provide a system which is transparent and is helpful to track the goods and services and thus make a nation’s economy strong.
A further object of the present invention is to provide a system having appropriate tax estimation procedure to determine direct and indirect taxes due on business houses and business people.
Another object of the present invention is to provide a system having transparent tax calculation process and is capable to generate tax reports needed by tax auditors.
Yet another object of the present invention is to provide a system which is flexible, easy and cost effective to maintain.
Still another object of the present invention is to provide a system which capable to work with the pre-defined globally accepted coding system, i.e. indirect tax system defines codes for product classification and tax rates.
A further object of the present invention is to provide a system capable to be implemented without any modification and changes in the system already available with the enterprise.
Another object of the present invention is to provide a system which meets the requirement of the revenue department, taxation department and authorities of the government.
Yet another object of the present invention is to provide a system which increases the transparency and hence reduces the tax evasion by the business houses and business people.
Still another object of the present invention is to provide a system which is helpful to solve most of the problems of the economy easily.
A further object of the present invention is to provide a system capable to provide more realistic data and reports and thus helps the Govt. department to provide realistic estimates of the tax collection.
Another object of the present invention is to provide a system which is helpful in implementing Government Plans, policies and programmes in a better way and their impact can be easily determined.
Yet another object of the present invention is to provide a system which is capable to trace the products, item wise, brand wise, period wise and stake holder wise at given place and time. The real time tracking of the invoices for any commodity is made.
Still another object of the present invention is to provide a system which is capable trace adulteration practices, duplicate goods, over invoicing and under invoicing of the products is traced and reported to the concerned authorities.
A further object of the present invention is to provide a system which is capable to provide real time tracing for import and export of the products and therefore increases tax compliances, GDP, cash flow monitoring.
Another object of the present invention is to provide a system which is capable to provide accurate data for demand and supply for the products and services and also the correct estimates of the revenues in an economy.
Yet another object of the present invention is to provide a system which is capable to implement complete tax traceability and to search and determine tax evasion by the business houses and businesspeople.
Still another object of the present invention is to provide a system which is capable to provide an alert in case fake due diligence credentials are submitted by an enterprise.
A further object of the present invention is to provide a system which saves cost and time of the Govt. authorities for searching the tax evasion cases.
Another object of the present invention is to provide a system which is capable to match export and import data based on the e-way bill and transportation details.
Yet another object of the present invention is to provide a system which is capable to trace goods in the entire system and even source of adulterated goods are traced.
Still another object of the present invention is to provide a system which is capable to be used as a tool for post disbursement due diligence.
STATEMENT OF THE INVENTION
According to this invention, there is provided a system to trace tax liability due on business houses and business people comprising a working module (1) connected with a server (2) being provided to trace tax liability, an enterprise module (4) connected with the server (2) being provided to keep the record regarding purchase of the raw material (input), and final products (output) obtained after processing the raw material, a distributer module (5), connected with a point of sale (POS) module (7), the enterprise (4) and the server (2), being provided to keep the record regarding purchase of finished goods and sale of goods to the POS module (7), a banking module (6), connected with the POS module (7), server (2) and enterprise module (4), being provided to keep money transaction (landing and recovery) record taken place between the bank and enterprise (4), bank and distributer module (5), and bank (6) and POS (7).
Further, according to this invention, there is provided a process to trace tax liability due on business houses and business people comprising implementing the invented system at offices of registered enterprises, purchasing input (raw material) by the enterprise and entering information about source of input and tax paid by the enterprise in enterprise resource planning (ERP), processing the raw material by the enterprise in order to manufacture the goods (output), entering details about indirect tax paid by the enterprise during processing of the input to obtain the output, entering details about sale of goods by enterprise to the distributer including transportation, entering details about the point of consumption (sale of goods) by the distributer to the retailer, calculating tax liability to be levied by the enterprise and retailer on the sale of the output and entering details about such tax, entering details of the tax obtained by the retailer from the customer on sale of the goods to the customer, monitoring entries and detecting discrepancies by the system relating to the information / documents / tax liability automatically and reporting the same to the concerned authority in order to take corrective action.
BRIEF DESCRIPTION OF THE ACCOMPANYING DRAWINGS
A system and a process to trace tax liability due on business houses and business people, according to a preferred embodiment of the present invention, is herein described and illustrated in the accompanying drawings, wherein:
Figure 1 – illustrates a block diagram of the system of the present invention,
Figure 2 – illustrates process chart of the system of the present invention,
Figure 3 – illustrates process flow diagram of the system of the present invention,
DETAILED DESCRIPTION OF THE INVENTION
A system for tax traceability with block chain, is herein described with numerous specific details so as to provide a complete understanding of the invention. However, these specific details are exemplary details and should not be treated as the limitation to the scope of the invention. Throughout this specification the word “comprise” or variations such as “comprises or comprising”, will be understood to imply the inclusions of a stated element, integer or step, or group of elements, integers or steps, but not the exclusions of any other element, integer or step or group of elements, integers or steps.
Referring to the drawings, figure 1, system to trace tax liability due on business houses and business people is shown and comprises a working module (1), adapted to be connected with a server / cloud server (2), through a block chain technology (3) is provided to trace tax liability and product. An enterprise module (4), adapted to be connected with the distributer module (5), banking and financial module (6) and cloud server (2), is provided to keep the record regarding purchase of the raw material (known as input) and final products (known as output) obtained after processing the raw material. The distributer module (5), adapted to be connected to a point of sale (POS) / retailer module (7), the enterprise (4) and the server (2), is provided to keep the record regarding purchase of finished goods and sale of goods to the POS/ retailer module (7). The POS / retailer module (7), adapted to be connected with the distributer module (5), the server (2) and to the banking / financial institution module (6), is provided to keep the purchase and sales record. The banking / financial institute module (6), adapted to be connected with the enterprise (4), distributer (5), POS / retailer module (7) and server (2) is provided to keep the money transaction (landing and recovery) record taken place between the banking / financial institution module (6) and enterprise module (4), banking / financial institution module (6) and distributer module (5), and banking / financial institution module (6) and POS / retailer module (7).
The working module (1) comprises a direct tax block (8) to keep information about the direct tax, indirect tax block (9) to keep information about the direct tax, custom and excise block (10) to keep information about the custom and excise, bank block (11) to keep information about the money landing to the enterprise, distributer and / or retailer, and a block (12) to keep other information. The system provides real-time billing details, stock & inventory report, and project progress report of a said business, thereby ultimately generating a traceability report. Such a traceability report is used as a tool for assessing the credit information as well as GST returns details (indirect taxes) and taxable income (direct taxes). All the data is stored in the system server / cloud server (2) and therefore the system provides the data to the Govt. department as per their requirement of direct tax, indirect tax, custom and excise, bank and any other entity as per their requirement. The system thus platform will maintain the 100% transparency of tax. In one embodiment the system is adapted to work / integrated with the enterprise resource planning (ERP) existing at the office of the enterprise.
The enterprise module (4) comprises a raw material purchase block (13), processing block (14), finished goods block (15) and all the blocks (13, 14, 15) are adapted to be connected with an enterprise resource planning (ERP) server (16). The raw material purchase block (13) is provide to keep the record regarding purchased material obtained from agriculture / mining / other source, imported material and / or processed material. The processing block (14) is provided to keep the records relating the products obtained after processing the raw material. The finished goods block (15) is provided to keep the records about the finished goods (FG). All the information / details relating the raw material, processing, finished goods and manpower involved in such activities are managed with the help of ERP server (16). The products so obtained are either kept in the warehouse and inventory is maintained or sold / supplied to the distributer (5).
The Enterprise purchase the raw material (both raw material and processed material) and the system assesses all transaction relating to purchase and movement information. The raw material is then moved to processing line for manufacturing desired goods which are further processed to obtain finished goods (FG). The finished goods are ready for sale or to store in warehouse. The Enterprise, sale the product to the distributor, retailer, exporters and / or the customer and all the accounting and billing associated with transaction, purchase and movement are transparently visualized at any time and also assessed within a given supply chain network. The finished goods are listed item-wise, brand-wise, time-wise and stakeholder party-wise, thereby assessing the whole profile of the business as well as the distributor / retailer / customer and also the whole data and information are stored in enterprise resource planning (ERP) server (8).
The Distributor (5) sale the finished goods (FG) to the retailers module (7) and all the data relating to purchase, transactions, movement, etc. is accessible on real time basis and also the whole data is stored in the distributor server (12). The retailer / POS sale the products / finished goods to the customer. All the data relating to sale and consumption is accessible on real time basis and also whole data is stored in POS / retailer module (7). The banking / financial institute module (6) is provided to keep records / data relating to funding, loan, saving and investment and such data is stored in the bank server. All kinds of data of the enterprise, distributor, POS / retailer and banking & financial institute is stored on the cloud server (2) through blockchain and all such data is shared with the working module (1) which is connected with the cloud server (2) through block chain (3).
In one embodiment, the system serves as a tool for performing due diligence analysis needed to maintain the transparency of tax. To perform due diligence, documents, for example, registration number of the entity / firm / institute, direct tax registration of the business entity, indirect tax registration, bank account detail of the firm, registration number with local and state authority, import and export registration, and place of business entity / firm / institute, are needed to obtain desired level of information about the business and to provide the same for conducting due diligence. Information about the above mentioned documents are provided by the enterprise / distributer and / or retailer as it is mandatory on their part. The above mentioned documents provide the desired level of information about the business and the due diligence provide the required information needed to trace tax liability. Each and every aspect is checked thoroughly and documented during the due diligence process. The due diligence is conducted for every movement of the stock from one point to the other point. The above mentioned documents are interlinked, hence one can know the status of other document by providing info about any one document disclosed during the due diligence. The due diligence process is to be implemented in the complete system.
Referring to figure 2, the process to trace tax liability, due on business houses and businesspeople, comprises capturing all the information, by the system, for example, mode of transportation, input (purchased raw material), source of input and tax liability on input . All these information are fed to the working module (1) of the system of the present invention. By virtue of such a real-time information tracking of billing and purchase of all commodities, RM (raw material), processed, etc., the system calculates the tax liability on the Input on real time basis. The input then move for the processing and the system captures all the movement, transaction information and details at real time basis. The process capture the quantity of input used for the processing, and rest of them calculate as stock inventory of input. The system, based on the above info calculate the direct tax of process. After processing the raw material, the products are ready for sale to distributor or retailer or directly to the consumer and is known as output. All the information like billing detail, mode of transport, export if any, stock inventory, points of consumption, tax liability on output etc., used in output process, are captured by the working module (1) of the system. The system also captures all the process involved during input to output and provides real-time billing details, stock and inventory report, and project progress report of business, thereby generating a traceability report. Such a traceability report is use as a tool for assessing the credit information as well as GST returns details (indirect taxes).
According to an embodiment unified coding is implemented in the entire system. The coding is done based on the nature, type, or variety of the product. These codes are mapped with the taxation code for the products. The entire system uses the unified coding system for tracing the products in the system. The system covers tax reporting country and location, supply plant country and location, sale organization country and location, shipping country and location, shipping destination, vendor country and location, vendor due diligence, shipping details, shipping capacity of the vehicle, service tax group, product tax group, tax classification, Import document number, export document number, import indicator, export indicator, price of the product, tax breakups, quantity of the products, volume of the product etc. on the basis of these the system determines the actual tax liability of the enterprise.
There is an online transportation management system like e-way bill to be implemented in the country. Each input and output is to be registered to online transportation management system for transportation. The transportation management is mentioned during the e-way bill generation. The product information like quantity, volume weight etc. are to be taken. The vehicle information to be verified with vehicle registration information provided by transportation at the time of registration of vehicle with the authorities. Both details are matched and the discrepancies, if any, is reported to the department.
The enterprise module (4), the distributor module (5), retail module (7) and the banking / financial institute module (6) are linked to the server / cloud server (2) and all data is processed by the system. The system provides the data to the direct tax authorities, indirect tax authorities, custom & excise authorities, bank authorities and others local authorities through block chain technology.
Also, the system provides real-time billing details, stock & inventory report, and project progress report relating to a business, thereby ultimately generating a traceability report. Such a traceability report can be used as a tool for assessing the credit information as well as GST returns details (indirect taxes) and taxable income (direct taxes). All the data is stored in the cloud server (2). The system provides the data to the department, as per the requirement, about the direct tax, indirect tax, custom & excise, bank and any other entity as per their requirement. The system maintains 100% transparency about the taxes.
As described herein above all the information of like, input, mode of transportation, sources of input, tax liability on the input all the process are captured by the system, by virtue of such a real-time tracking of input goods and services. After capturing all the information, the system also calculates the tax liability on the input on real time basis. The system then reports the indirect authorities through system about the tax liability of the transaction. The department compares the same with the actual amount paid and then the corrective action is taken. The system also provide the collective reports on the basis of the time, transaction, party, period, or any other parameter.
The system captures real time conversion process for output. The process captures the quantity of input used for the processing, and rest of them calculate as stock Inventory of Input at particular place and time. The System calculate the output generated. In addition, the expenses and nature of the expenses incurred for converting the input to output thus calculates the income generated. The department can compare the same with the actual amount paid and then the corrective action can be taken.
After processing the input (raw material), the products and services are ready for sale to the distributor or retailer or to the consumer directly. All the information for output process like billing, transportation details, export if any, stock Inventory, points of consumption, tax liability on output etc., are also captured by the system. The Govt. department compares the same with the actual amount paid and then the corrective action can be taken. The system is capable to provide the collective reports on the basis of the time, transaction, party, period, or any other parameter.
The system also captures all the, goods movement detail, real-time purchase / sale details, stock & inventory report, and project progress report of business, thereby ultimately generating a traceability report. Such a traceability report can be used as a tool for assessing the tax information as well as indirect taxes returns and direct taxes details.
The system matches total input used by the enterprise, output generated by the enterprise, total sale by the enterprise, total inventory available with enterprise, total purchase by distributor, total Sale by distributor, total Stock available with distributor, total purchase by retailers, total Sale by retailers, total Stock available with retailer, total imports, total exports, output flow chart, input flow chart and transaction log. On this basis the system monitors the deviation and / or evasion of tax and report the same to the authorities. Like the difference in the transportation system and actual material flow, output and the martial sale and inventory available and unified reports are submitted to each Govt. department in order to find out if there is any contradiction in the reports submitted to each department and corrective action is taken by the Govt. department.
Referring to figure 3, the process flow diagram, to trace tax liability and goods, of the present invention is shown. According to the process, in block 1, the invented system is implemented at the office of the enterprises, distributers and retailers and registration of the enterprises, distributers and retailers is completed. In block 2, input (raw material) by the enterprise is purchased and details, about the purchase and source of input are entered in the system. In block 3, details about the tax paid by the enterprise on the purchase of the input (ram material) are entered in the system. In block 4, raw material is processed by the enterprise in order to manufacture the goods known as output. In block 5, details about the indirect tax paid by the enterprise during processing of the input (raw material) in order to obtain the output (product) are entered in the system. In block 6, output (finished goods) are sold by the enterprise to the distributer and details about the sale and transportation of the finished goods are entered. In block 7, details about the point of consumption (sale of goods) by the distributer to the retailer are entered. In block 8, tax liability to be levied on the sale of the output (finished goods) is calculated and details about such tax levied by the enterprise and retailer are entered in the system. In block 9, goods are sold to the customer and details about the sale of the finished goods and tax obtained from the customer are entered. In block 10, the system monitor the entries and detect discrepancies relating to the info / documents / tax liability automatically and reports the same to the concerned authority. In block 11, the concerned authority takes the corrective action and inform the concerned business house / business people.
Thus, according the process of the present invention the enterprise has to provide the following information, as required by the Government, for registration of enterprise to start a business. The following information are usually code based information;
• Information about registration certificate of the enterprise. Generally, the registrar or a designated authority issue a certificate of registration displaying some unique codes, e. g. CIN.
• Information about registration with direct tax authorities, e. g. PAN.
• Information about registration with the indirect tax authorities, e. g. GSTIN.
• Information about additional state wise / locality-based registration with the local / state or federal level authority.
• Information about import and export registration code.
• Bank Account Information.
• Information about principal place of business and other locations of the business.
All the above information are interlined and required to be entered in the system. The due diligence is completed with the help of the above information / documents. The authorities at regional and / or state level check these information by mentioning anyone of these information. The system of the present invention is capable to detect, monitor and report the discrepancies, relating to the above info / documents, during the due diligence process in respect of the enterprise.
The input (raw material) is purchased by enterprise and the information are entered in the enterprise resource planning (ERP) system or billing and accounting system implemented by the enterprise. Following information are fed / present in the ERP system of the enterprise;
• The input’s (raw material) vendor information.
• Kinds of raw material, that is, agriculture, mining, imported or secured form the distributor, trader, or manufacturer.
• Details of the vendor, in case of mining, imported or secured form the distributor, trader, or manufacturer, are captured and verified for the indirect tax liability.
• Details of the transporter if the inputs is to be transported through the transportation.
• Details of the transportation bill is captured in the system.
• The system checks for verification of the capacity, volume, and size of the transportation vehicle through the vehicle registration detail.
• Vendor’s input tax detail will be captured in the system.
The input (raw material) is then processed in order to manufacturing the output (goods) and the system of the present invention capture the following information:
• Details of the manufacturing process and all inputs and services required for the output (finished goods),
• Details of the input (raw material) needed for processing and cost of the inputs,
• Quantity and value of the output,
• Details about the sale, time and inventory available at the place,
• Details of the sale along with the e- way bill system,
• Details about the verification of the capacity, volume, and size of the transportation vehicle through the vehicle registration detail,
• Details of the tax levied on the output (finished goods),
• Details about the verification done by the authority,
• Tax determination on the invoice / outgoing output send from one enterprise to another.
Tax, for example, direct tax / indirect tax, on input and output, is determined with the help of the unified product code system of a country which are usually written on the tax invoice of the billing party. Details of such tax paid by the enterprise are entered in the system. In one embodiment the unified coding system is implemented in the entire system. The coding is done based on the nature, type, or variety of the product. These codes are mapped with the taxation code for the products. The entire system uses the unified coding system for tracing the products in the system.
The output of the enterprise / manufacturer becomes the input for the other and then the process moves to the next stage and onwards. If the product or services goes to the final consumption, then the products move through the supply chain. The conventional supply chain covers the distributor and retailers and act in the following manner;
• The distributors buy the input (products) from the enterprise / manufacturer and such information are captured through the billing and accounting block in the system.
• The distributor details are also captured in the system through the billing and accounting block.
• Information about the transportation bill of the products are captured as explained in the step 3.
• The Input and output indirect taxes will be captured in the system
• The balance inventory will be captured in the system and can be verified by authorities at any time.
• The next step will be distributed sells the product to the retailers.
• Vendor Information as per Step 2
• The system will capture the transportation bill detail in the system.

The sales and purchase by the enterprise covers the following information;
Tax reporting country & location, Supply plant country & location, Sale organisation country & location, Shipping country & location, Shipping destination, Vendor country & location, Vendor due diligence report, Shipping details, Shipping capacity of the vehicle, Service tax group, Product tax group, Tax classification, Import document number, Export document number, Import indicator, Export indicator, Price of the product, Tax breakups, Quantity of the products, Volume of the product
The retailer will further bill to the final consumer having the following particulars / information;
• Customer mobile number as the mobile number is linked with the direct tax registration of the customers to enable the system to analyse the total billing to each customer and therefore total sale by each retailer is captured.
• Details of the inventory with the retailer.
The system of the present invention matches the following particulars and determine the tax liability;
Total input used by the enterprise, Output generated by the enterprise, Total sale by the enterprise, Total inventory available with enterprise, Total purchase by distributor, Total sale by distributor, Total stock available with distributor, Total purchase by retailers, Total sale by retailers, Total stock available with retailer, Total imports, Total exports, Output flow chart, Input flow chart, Transaction log id, and Taxes according to the input and output flow chart,

The complete system can be assessed by the direct tax, indirect tax, banking, customs & excise, and other departments to determine the actual tax liabilities with the help of the data available with the department for paid tax liabilities due on an enterprise / distributer and / or retailer. Also, the system monitors the deviation and report the same to the authorities in respect of the following;
• Difference in the transportation as per the system and actual material flow,
• Output (finished goods) and the martial sale and inventory available.
Unified reports are submitted to each department and in case of any contradiction in the reports corrective action is taken by the concerned authority.
Certain features of the invention have been described with reference to the example embodiments. However, the description is not intended to be construed in a limiting sense. Various modifications of the example embodiments as well as other embodiments of the invention, which are apparent to the persons skilled in the art to which the invention pertains, are deemed to lie within the spirit and scope of the invention.