Filling Station dealers i.e. Retail outlets of oil companies are not required under the Punjab VAT Act 2005 to calculate output tax or input tax on the sale and purchase of petrol and diesel in view of explanation 8 which was added lately to section 2(zg) explaining the sale price of oil companies in relation to the petrol and diesel under the Punjab VAT Act which runs as under:
“The amount received or receivable by oil companies for the sale of diesel and petrol, shall be deemed to be equivalent to the price, on which the retail outlets will sell these commodities to the consumer”
Thus it is clear that the sale price of oil companies in relation to petrol and diesel is same that of Retail outlets of such oil companies (i.e. Filling Stations). Which means that VAT on the value addition i.e. profit on sale of petrol and diesel of the retail outlets is paid by the oil companies.
Which implies that the retail outlets will not be paying any VAT on their value addition directly to the revenue rather the oil companies will be liable for that after collecting the same from their retail outlets. The interpretation of the above explanation 8 to section 2(zg) has been done by the dealers as well as department in such way that no input or output tax is to be calculated on the purchase or sale of the petrol and diesel by the retail outlets.
Although the filling station dealers are already not calculating any input or output vat after the above adding of explanation 8 to section 2(zg) of PVAT Act 2005 but there was no specific provision which clearly states that the input or output tax is not to be calculated on the purchase and sale of petrol and diesel by the retail outlets.
Now this position has been made clear by an order of the commissioner Punjab in case of application made u/s 85 of Punjab VAT Act 2005 by M/s Doaba Filling Station,G.T. Road, Tangra, Distt. Amritsar wherein it is decided that the filling stations are not required to charge VAT or claim input tax credit in respect of petrol and diesel.
Although there has been no corresponding change in the VAT form 15 return but the filling stations can claim deduction of the sale of petrol and diesel in the column 1(i) and that of purchase in the column 2(i) in the VAT form 15 so as to exclude the sale and purchase of petrol and diesel from the net taxable sale and purchase.
The said order u/s 85 is available for download at the official website of the Excise and Taxation Department, Punjab and the same is produced here below for ready reference:
Before Sh. A. Venu Prasad, IAS, Excise & Taxation Commissioner, Punjab
Name of the Applicant : M/s Doaba Filling Station,G.T.Road, Tangra, Distt. Amritsar.
Subject: Application u/s 85 of Punjab VAT Act.
The applicant vide his application dated 16.6.09 raised the following questions under section 85 of the PVAT Act, 2005 regarding the nature of sale of Diesel and petrol falling under clause (zg) of section 2 in the explanation item no. 8.
1. Whether the sale of Petrol and Diesel by the retail outlets / Petrol Pumps is liable to tax under the amended provisions or not as these commodities have neither been deleted from Schedule-E nor added in Schedule-A appended to the Punjab VAT Act, 2005?
2. Whether there is any other method which is required to be adopted by the retail outlets/petrol pumps for making calculation of tax in the light of the amended provisions of definition of “sale price”?
The requisite fee of Rs. 500/- has been deposited as per TR placed on the file. It has also been certified that in this case; no assessment proceedings u/s 29 of the PVAT Act, 2005 were initiated against the taxable person. The case therefore, qualifies to be taken up under section 85 of the PVAT Act, 2005. In response to the notice that Sh. G.S. Chawla Advocate is present today and submitted that he simply needs clarification whether the taxable person is to claim input tax credit and charge the output tax on Diesel and Petrol as many petrol pumps are neither paying tax nor claiming input tax credit whereas his client charges tax and claims input tax credit and the excess output tax is deposited with the Department.
It is clarified that the purpose of amending definition of “sale price” contained in section 2 (zg) for Diesel and Petrol in the form of explanation 8 was to charge the tax only at single stage and that too from the Oil Companies located in the State of Punjab. The exact language of explanation (8) to Section 2 (zg) is as below:
“ The amount received or receivable by oil companies for the sale of diesel and petrol, shall be deemed to be equivalent to the price, on which the retail outlets will sell these commodities to the consumer”
The plain reading of this explanation indicates that the tax is being recovered from oil companies at the price prevalent at retail outlets for Diesel and Petrol. Therefore, the filling stations are not required to charge VAT or to claim input tax credit on these items. It is irrelevant whether the two items fall in Schedule –A or not when the basic definition of sale price in respect of these items stands amended. The Schedule-E is not required to be deleted as tax free from the oil companies is being charged at the rates mentioned in Schedule-E.
The return in Form VAT-15 is being amended separately and the case is already sent to the Govt. The filling stations can make entry in respect of such sales in coloum 1 (i) in respect of diesel and petrol so that net sale subject to VAT are without the figures of these items purchased from within State of Punjab.
Similarly, the deduction of purchases of these two items can be posted in coloum 2 (k) so that there is no figure of such goods in coloum 2(l).
The questions raised are determined accordingly.
A. Venu Prasad
Patiala Excise and Taxation Commissioner, Pb
AMIT BAJAJ ADVOCATE, Jalandhar