Clarifications Regarding Single Stage Taxation Under Punjab VAT act, 2005

Excise & Taxation Department has issued a clarification letter in reference to notification no. S.O.116/P.A8/2005/S.8/2005/S.8/2013 & S.O. 117/ which was made necessary as the same was issued under section 8(3) & it also clarifies that it has nothing to do with section 8 (c) which deals with optional scheme. This notification has in fact increased the rate to 15.95% from 14.30% although department has facilitated the dealers by permitting them to use stamp for a period of one month which is prescribed in the clarificatory letter. Here it is worthwhile to mention that in clarification it was made clear that the notification is applicable only on the goods specifically notified there in. The clarification also castes burden on the dealers to furnish the declaration of stock to avail the benefit of rate of tax prevalent before 01^st January 2014. Moreover it was also clarified that in serial no. 19 of Schedule E only branded items will be taxable @ 15.95%.

By virtue of this notification the dealers at the subsequent stages after manufacturers/first importers have to declare their stocks as on 31 December 2013. The dealers at the at the subsequent stages after manufacturers/first importer will continue to pay the tax according to the provision of Punjab Vat Act, 2005 on this stock  until completely sold or disposed off. The stock purchased by the dealers at the subsequent stages after manufacturer/ first importer on or after 01^st January 2014, will be tax free at the subsequent stages after manufacturer/first importer’s stage. Clarification prescribes the matter to be printed on the invoices to reflect ITC available to the subsequent dealers.   . Copy of the clarification issued by the Excise & Taxation Department is reproduced below.

Authored by :  J S BEDI Advocate, Email ID: bediadvocate@yahoo.co.in, Contact Number: 98140-66336

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Clarifications Regarding Single Stage Taxation

Reference Notification No. S.O.116/P.A8/2005/S.8/2005/S.8/2013 and NO S.O 117/P.A.8/2005/S.8/2013 dated 13^th January, 2013

In light of the above notifications we are receiving queries from various dealers and lawyers. In response to this, following clarifications are being issued:

1. These notifications have been issued under the powers vested in Government under section 8(3) of VAT Act, 2005 to modify the rates of tax.

2. These notifications have nothing to do with newly introduced section 8-C of Punjab VAT act, 2005 which has provisions for introduction of optional scheme.

3. In light of these notifications any transactions in the hands of manufacturer/first importer will be taxed at the rates mentioned against these commodities. CST provisions will be applicable on the Manufacturer/First Importer as earlier.

4. In light of these notifications any transactions in the hands of subsequent dealers will be tax free. So, if any subsequent dealer makes any inter-state sale of the notified goods, the tax liability will be nil and at the same time ITC available will also be nil.

5. Some lawyers have pointed out that some of the items notified now like tea, bread etc. were earlier taxed on the rates mentioned in Schedule –B or were tax free and covered under Schedule A. But, now after this notification, their rate seems to have been substantially increased to 14.5%. In this context, it is clarified that the above mentioned notifications cover only those items which were in Schedule-F earlier (13% rate of tax). In case any item was earlier covered in Schedule-B or Schedule A, then that item continues to remain in Schedule-B or Schedule A as the case may be.

6. Moreover, the words mentioned in the notification – the words “such as”, “like” and “etc.” have been used for further addition of goods in future. This notification is applicable only on the goods specifically notified therein.

7. 10% surcharge is applicable in addition to the tax rates mentioned in these notifications.

8. Some of the dealers, trade associations, bar council members etc have requested that they need time to change their SAP / ERP systems and will not be able to print computerized retail invoices at such a short notice. Such dealers are given the time of 1 month to change their systems. But 1st January onwards all the Tax invoices must be stamped as given below:

The Subsequent dealer i.e Wholesalers/Distributors and retailers will also mention on his invoice as below:

Declaration of Stock

I,____________________ Proprietor/Partner/Managing Director/Karta/ Authorized Signatory ____________________of M/s. ____________________ , Address  _______________________________________, holding TIN No.   __________________, registered under Punjab VAT Act, 2005 since ____________________, trading in ____________________, hereby, declare stock lying on my premises as on 31st December, 2013 as follows:

I understand that I shall be liable to pay tax on the value addition on the above mentioned stock as per the provisions of Punjab VAT Act, 2005 at the rate of tax prevalent before 1^st January, 2014 as and when I sell/dispose this stock.