Punjab Government has promulgated an Ordinance dated 17-08-2011 vide Notification No. 33-Leg/2011 whereby proviso to section 8(1) and section 62(5) of Punjab VAT Act, 2005 have been amended. Proviso to Section 8(1) deals with rate of tax on declared goods whereas section 62(5) deals with pre-deposit of 25% before entertaining of any appeal under PVAT Act, 2005.

In the proviso to section 8(1) the words “four per cent or” has been omitted, as a result the amended proviso to section 8(1) runs as under:

“Provided that the rate of tax applicable on purchase or sale of declared goods, shall not exceed such rate, as specified in clause (a) of section 15 of the Central Sales Tax Act, 1956.”

Thus after amendment in the said proviso, the rate of tax on declared goods cannot exceed the ceiling rate of declared goods i.e. 5% as specified u/s 15(a) of CST Act, 1956. It should be noted hereby that the above amendment has not resulted in change of rate of tax on declared goods from 4.4% to 5%. Declared goods(except wheat and paddy which are schedule B items and are taxable @ 5%) are still taxable @ 4.4%(including surcharge).

Proviso to section 8(1) only provides that rate of tax on declared goods shall not exceed the ceiling rate as specified u/s 15(a) of CST Act, whereas the actual rate of tax on declared goods is specified as 4% in schedule C-1 of PVAT Act, 2005. Unless and until the rate of tax on declared goods under schedule C-1 is changed to 5% the rate of tax on declared goods in Punjab will continue to be 4.4%.

Another amendment that has been made vide the ordinance dated 17-08-2011 is the replacing of words u/s 62(5) “total amount of tax” with total amount of additional demand created.

Thus now the amended provision of section 62(5) runs as under after the said ordinance.

“No appeal shall be entertained, unless such appeal is accompanied by satisfactory proof of the prior minimum payment of twenty-five per cent of the total amount of additional demand created, penalty and interest, if any.”

P&H HC in Ahulwalia Contracts case and following that PVAT Tribunal in many cases have held that there is no need to deposit 25% of additional demand created by the assessing officer as the words total amount of tax, penalty and interest is mentioned u/s 62(5).

But now the words total amount of additional demand created have been added u/s 62(5) as a result of which the assessee may have to deposit 25% of additional demand created before their appeal is being entertained.

The full ordinance is being produced herebelow:

GOVERNMENT OF PUNJAB

DEPARTMENT OF LEGAL AND LEGISLATIVE AFFAIRS

Notification No. 33-Leg/2011 dated 17.8.2011

The following Ordinance of the Governor of Punjab promulgated under clause (1) of article 213 of the Constitution of India on the 16th August, 2011 is hereby published for general information :

The Punjab Value Added Tax (Fourth Amendment) Ordinance, 2011(Punjab Ordinance No. 10 of 2011)

An Ordinance further to amend the Punjab Value Added Tax Act, 2005 Promulgated by the Governor of Punjab in the Sixty -second year of the  Republic of India Whereas the Legislative Assembly of the State of Punjab is not in session and the Governor is satisfied that circumstances exist, which render it necessary for him to take immediate action;

Now, therefore, in exercise of the powers conferred by clause (1) of Article 213 of the Constitution of India, the Governor of Punjab is pleased to promulgated the following Ordinance, namely :-

  1. Short title and commencement – (1) This Ordinance may be called the Punjab Value Added Tax (Fourth Amendment) Ordinance, 2011

(2) It shall come into force on and with effect from the date of its publication in the Official Gazette.

  1. Amendment in section 8 of Punjab Act 8 of 2005- In the Punjab Value Added Tax Act, 2005, (hereinafter referred to as the principal Act), in section 8, in sub-section (1), in the proviso, the words “four per cent or” shall be omitted.

  2. Amendment in section 62 of Punjab Act 8 of 2005 – In the principal Act, in section 62, in sub-section (5) for the words “total amount of tax”, the words “total amount of additional demand created” shall be substituted.

(Author – Amit Bajaj Advocate, Bajaj & Bajaj Advocates, 128, Sangam complex, Milap chowk, Jalandhar City (Punjab), Email: amit@amitbajajadvocate.com, M +919815243335)

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