On behalf of Oil & Spices dealers I have drafted the representation for withdrawal of notification No. S.O 17/P.A.8/2005/S.8/2014 dated 21.02.2014 which is effective from 01.03.2014 as this notification has not only enhanced the rate of tax rather created discrimination between the class of dealers who are dealing in similar goods and this notification is violative of article 14 and 19 of the constitution of India. So the representation was submitted to the Punjab Government which is as under:-
The Hon’ble Chief Minister, Punjab
Subject: Representation for withdrawal of Notification No. S.O 17/P.A.8/2005/S.8/2014 dated 21.02.2014.
Emboldened by the spirit of your rightness and keen sense of justice, we the members approach your good office with a fervent hope that your honour will consider our grievance sympathetically, legally and judiciously.
That Punjab Government has issued Notification dated 21.02.2014 by virtue of which, the scope of first stage tax on goods and rate of tax enhanced and this Notification have also abolished the distributors, traders who are acting between the importer and consumer from time immemorial as this Notification is violative of Article 14 of the Constitution of India. Besides this, Notification has hampered the entire trader circle as no manufacturer will prefer to buy any product from any taxable person who are purchasing the goods from the taxable person within the State of Punjab. This notification is not only Article 14, rather it also violates Article 19 (1)(g) of the Constitution of India as notification has levied the retrospective tax under the grab of restriction of ITC when the commodities are sold in open market, purchased from the local seller.
That the notification has levied the first stage tax on edible oils, vegetable oils including gingili oil and bran oil, Besides this, spices of all varieties and forms including cumin seed, aniseed, turmeric and dry chilies are also covered under this notification with the increase in rate of tax.
That if this notification is retained than the existence of distributors, traders will eliminate reason being as no one will prefer to buy any material from them, moreover this notification will result in rise in prices and also increases the price of finished products. There are number of factors which clearly reflects that notification issued is not in consonance with the basic spirit of the Punjab VAT Act, 2005, infact, Punjab VAT Act, 2005 has its own concept and scheme for levy of tax. VAT system is to rationalize the tax burden and bring down in general the price level and to bring in simplicity and transparency in the tax structure thereby improving the tax compliances and eventually to ensure revenue growth, concept of input tax credit has its own importance in the Punjab VAT Act, 2005 regulating the claim of input tax credit is within the powers of legislative competence as the entire design of VAT is input tax credit which is crucially based on documentation of tax invoice. The tax sufferance proved by original tax invoice, production of original invoice proves that the transaction has suffered the tax and subsequent buyer is entitled for the claim if the same is as per the provisions of the act. But, the present notification has totally eliminate the basic spirit of VAT Act, 2005.
That the notification creates the discrimination between the importer, manufacturer and the traders, this notification has levied the tax on the basic raw material and usually in every trade, there is a involvement of 5 to 6 persons from importer, manufacturer to consumer. Here, it is pertinent to point out that items like oils and spices are the basic raw material for every food product, so levy of tax at first stage without allowing the claim in the hands of subsequent sellers will create the discrimination among the trade circle which, is never ever the intention of the legislature every notification and law should be framed as per the Constitution of India but this notification is not in consonance and consistent with the Constitution of India.
That this Notification will also increase the evasion of tax as when the goods will be purchased from the person other than importer and manufacturer is not entitled for any input tax credit than he will not prefer to conduct the business through proper and genuine invoice as he looses his significance from the trade circle.
That by virtue of this notification, Govt. officers who are acting as an Designated Officers has no assess over the persons in whose hands the same taxable goods will be treated as tax free goods. Hence, it will only increase the evasion of tax, this fact is explained as under :-
A is the manufacturer of goods, he sells the goods to B and B is selling the same goods to C but C is neither entitled for input tax credit nor liable to pay tax. Hence, he is outside the purview of the department as he is dealing with the goods which falls under Schedule-A of the Punjab VAT Act, 2005. So, he is under no obligation to issue any invoice or to maintain any record. This will create evasion of tax as when he has no checks by the department than by arranging one tax paid invoice he can conduct number of transactions.
That infact, Govt. has issued this notification which is against the public interest rather results in increase in prices beside this, every dealer will face difficulty in maintenance of books. Moreover, it is not viable to maintain two types of stock in a single premises especially when the same are in the loose form.
The levy and collection of tax should be in accordance with the basic spirit of the act but this type of notification will ruin the entire business of oils and spices as it creates hindrance in economic growth of nation as Govt. should issue the notifications which should simplify the taxation system so that tax evasion can be easily deducted but this is very unfortunate that Govt. is issuing the notifications which is totally against the interest of growth.
Even on moral plank, I hope that your goodself will definitely consider our genuine grievance to protect the trade of Oils and Spices in the state of Punjab otherwise the notification issued will hamper the entire trade and will force the dealers either to close down their business or to adopt the passage of evasion of tax as the dealers who is acting as an middle man will not survive for the long period as no one in the market will prefer to purchase the goods from them. So, kindly withdraw this notification and issue the notification as per the spirit of Punjab VAT Act, 2005.
(Authored by- J S BEDI Advocate, Email ID: [email protected], Contact Number: 98140-66336)