PVAT Act 2005 – Declared Goods except wheat and paddy will be taxable @ 4.4% w.e.f. 08/04/2011

Ceiling rate on declared goods have been enhanced from 4% to 5% by Central Govt in the Budget of 2011-12. Which follows that rate of tax on declared goods cannot exceed 5%. Rate of tax on paddy and wheat has been enhanced by the Punjab Govt from 4% to 5% by including these goods in schedule B of PVAT Act 2005.

Question arises what will be the rate of tax under PVAT Act on other declared goods. Declared goods are included in Schedule C-I of PVAT Act 2005 under which the rate of tax is 4%. Now the question is whether surcharge @ 10% will be applicable on other declared goods as well after the enhancement of ceiling rate on declared goods from 4 to 5% by Central Govt.

Section 8-B of PVAT Act which levies an additional tax @ 10% on the tax payable by a taxable person runs as under:

8-B (1) Levy of additional tax.
Notwithstanding anything contained in this Act, there shall be levied and collected on the taxable turnover of a person, other than the registered person, an additional tax, which shall be calculated at the rate of ten percent of the tax, payable by him under this Act:

Provided that the aggregate of tax and the surcharge payable under this Act, shall not exceed in respect of the goods, declared to be of special importance in inter-state trade or commerce under section 14 of the Central Sales Tax Act, 1956, the rate fixed under section 15 of that Act.

(2) Except as otherwise provided in sub-section (1), the provisions of this Act shall, so far as may be, apply in relation to the additional tax, leviable under sub-section (1) as they apply in relation to the tax, leviable under any other provision of this Act.

Section 8-B does not prohibit levy of surcharge on declared goods but it only says that the rate of tax on declared goods and surcharge payable under this act shall not exceed the ceiling rate as fixed u/s 15 of CST Act(Which is now 5% w.e.f 08-04-2011 after the passing of Budget 2011-12)

Thus from the proviso to section 8-B it follows that rate on declared goods (other than Paddy and wheat which are taxable @ 5% now), will be  @ 4.4%  and surcharge would be applicable on other declared goods as well, since the ceiling rate has been enhanced to 5% u/s 15 of CST Act by Central Govt. and such rate of 4.4% will be applicable w.e.f 08-04-2011 i.e. the date of passing of the Budget 2011-12.

Further Update on the above and official Press Release can be viewed at following Link:-

Punjab Vat- Govt confirms Surcharge on Declared goods other than Wheat and Paddy

Please Note views expressed herein are my personal views based upon my own interpretation of law.

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