Single Stage or first Point taxation levied under Punjab VAT ACT, 2005 on certain commodities wef 01.03.2014

TG Team 16 Mar 2014 12,671 Views 0 comment Print Goods and Services Tax | Articles

CA Narinder GuptaPunjab Excise and Taxation department vide notification no. S.O 17/P.A.8/2005/ S.8/2014 dated 21.02.2014 has notified additional commodities for single point taxation. This notification is effective from 1st March 2014 and is in addition to notification issued on 13.12.2013 which was effective from 1st January, 2014.Notification No. S.O.117/P.A8/2005/S.8/2013dated 13th December 2013 became redundant practically, because item at Sr. No.15 of schedule ‘E’ has been amended and substituted and items at Sr. No. 16 to 20 have been omitted. These items at Sr. No 15 to 20 were added to schedule ‘E’ vide above said notification S.O.117/P.A8/2005/S.8/2013 dated 13-12-2013.

Section 8-C to Punjab Vat Act 2005 was introduced to levy tax at single stage on MRP of certain goods covered under the Standards of Weights and Measures (Packaged Commodities) Rules, 1977. Through a clarification, it was 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. But by this new notification schedule ‘A’ and Schedule ‘B’ of the Act has also been amended. Certain commodities, specifically the spices, Desi Ghee, Edible Oil, pickles, phenyl and toilet cleaner are being sold in loose form i.e. without any standard/ non standard packing. What will be rate of tax of such commodities when sold in loose form since these have been omitted from schedule ‘B’? Similarly there are number of soap & detergents units which are manufacturing washing soaps, washing powders and detergents in the State. What will be rate of tax on theses commodities, when sold without any packing?

But the new clarification issued on 04-3-2014 regarding first stage goods taxation has not touched upon the issue of unbranded washing powder and detergents. But the entries relating to unbranded washing soap mentioned at serial no.124 of schedule ‘B’ has neither been deleted nor amended which shows that unbranded washing soap is still a separate commodity. But what rate of tax on unbranded washing powder shall be levied – no clarification at all. Karyana goods have been bifurcated on the basis of the quantity of packing of goods, instead of branded and non branded goods. Point 6 of new clarification says that the objective behind introduction of single stage taxation is to impose single stage taxation on the goods sold in retail to the end consumers at karyana stores and in which no further value addition is being done. Many associations like Oil Millers and Dealers Association and Federation of the Karyana & Dry Fruit Commercial Association have submitted representations that some commodities mentioned in this notification are being used by the manufacturers as inputs and whole sale trade is facing a setback in Punjab. In this context, it is clarified that:

In Schedule E: In case of commodities mentioned at serial no 8,9,10,11,12,13, 14,15, 17, 23 and 24, they shall be taxable at the first point of sale i.e manufacturer or first importer’s stage, at the rates specified against these entries provided they are packed in retail packing of not more than 15 kgs. If the commodities mentioned in the serial no 8,9,10,11,12,13, 14, 15, 19, 23 and 24 are in the packing of more than 15 kgs, ITC will be available to the manufacturer at the subsequent stage.

In case of commodities mentioned at Serial No. 16 and 19, they shall be taxable at the first point of sale i.e manufacturer or first importer’s stage, at the rates specified against these entries provided they are packed in retail packing of not more than 1 kg. If the commodities mentioned in the serial no 16 and 19 are in the packings of more than 1 kg, ITC will be available to the manufacturer at the subsequent stage.

In Schedule A: In case of commodities mentioned at serial no 8,9,10,11,12,13, 14,15,17, 23 and 24, they shall be tax free at the wholesaler or distributor or retailer’s stage provided that the tax has already been paid at first point of sale i.e manufacturer or first importer’s stage, provided they are packed in retail packing of not more than 15 kgs. If the commodities mentioned in the serial no 8,9,10,11,12,13, 14,15, 17, 23 and 24 are in the packing of more than 15 kgs, then they will be taxed at rates specified in Schedule E and ITC will be available to the manufacturer at the subsequent stage.

In case of commodities mentioned at Serial No. 16 and 19, they shall be tax free at the wholesaler or distributor or retailer’s stage provided that the tax has already been paid at first point of sale i.e. manufacturer or first importer’s stage, provided they are packed in retail packing of not more than 1 kg. If the commodities mentioned in the serial no 16 and 19 are in the pickings of more than 1 kg, then they will be taxed at rates specified in Schedule E and ITC will be available to the manufacturer at the subsequent stage.

This notification and clarifications has created more confusion and ambiguity among the trading community. Clarification says that in case commodities mentioned at Sr. No 16 and 19 are sold in retail packing of more than 1 Kg then these will be taxed at rate specified in schedule ‘E’ and ITC will be available to manufacturer. But what about ITC, to subsequent dealer has not been clarified. Traders will have to maintain different stock records for same commodity i.e. stock as on 31-12-2013, stock as on 28-02-2014 and stock of goods purchased after 01-03-2104. Taxable and tax free commodities on the basis of packing quantity of goods etc. Branded and unbranded goods. Let us take the examples of edible oil, Desi Ghee, Maida, suji , besan, unbranded washing soap and detergents, Tea excluding Green tea, Tissue papers, Cups and glasses of paper and plastic. These items may be branded as well as non branded goods. The rate of all these commodities has also been increased by deleting these goods from schedule B of Punjab VAT. Now I shall be analyzing this notification clause wise.

AMENDMENT TO SCHEDULE ‘A’ (EFFECTIVE FROM 1^st MARCH 2014 )

Serial No.50 and the entries relating thereto, for bracket and words “(Halwai goods only), the bracket and words “(Halwai Goods except branded snacks)” has been substituted. By this amendment Branded snacks are excluded specifically and are made taxable at first stage.

Besides all items which has been added to Schedule ‘E’ by this notification have also been added to schedule ‘A’ making these goods tax free in hands of wholesaler or distributor or retailers at subsequent stage provided that tax has already been paid at these commodities at the first point of sale i.e. in hands of manufacturer or first importers at first stage in the State of Punjab.

AMENDMENT TO SCHEDULE ‘B’ (EFFECTIVE FROM 1^st MARCH 2014 )

Two types of amendments have been made to Schedule ‘B’ of Punjab VAT Act by this notification. Some commodities have been deleted from schedule B and some commodities have been amended .Commodities mentioned against serial Nos. 12, 21, 29, 31, 33, 41, 88, 98, 109, 117, 127, 155, 156 and 159 and the entries relating thereto, have been omitted. Similarly in serial No. 81 and the entries relating thereto, the words “tissue paper” have been omitted. The practical effect of this amendment is that commodities mentioned against these serial numbers now onwards shall be taxed at first stage only, and further more, the criteria of branded or unbranded goods of these commodities have been omitted.

Whereas the entries in serial Nos. 26, 48 and 165 have been amended. In Serial no 26, and the entries relating thereto, for the words and brackets “cottage cheese (paneer)”, the words and brackets “unbranded cottage cheese (paneer), shall be substituted. In serial No. 48 and the entries relating thereto, for the word “honey”, the words “unbranded honey” shall be substituted, and in serial No. 165 and entries relating thereto, for the words and brackets sevian (Vermicilli), the words and brackets “unbranded sevian (vermicelli)” shall be substituted.

AMENDMENT TO SCHEDULE ‘E’ (EFFECTIVE FROM 1^st MARCH 2014 )

By this notification Schedule ‘E’ has also been amended. Serial Nos. 16, 17, 18, 19 and 20 and the entries relating thereto ,which were recently introduced vide notification dated 13-12-2013 has been omitted and for Serial No. 15 and the entries relating thereto, the following serial No.15 has been substituted. These following commodities shall be taxable at the first point of sale i.e. manufacturer or first importer’s stage, at the rates specified against these entries in the Table given below, namely:-

Sr. No	Commodity Name	Rate of Tax
1	All types of Televisions, Refrigerators, Washing Machines, Microwave ovens, Oven Toaster Grillers (OTGs), Home Theaters, Air Conditioners, *Heaters, Blowers, Vaccum Cleaners, Music Systems including CD players, VCD players, DVD players, ROs and Water Purifiers, Dish Washers and Geysers*	14.5 per cent
2.	Kitchen Appliances i.e sandwich makers, tea/coffee makers, juicer mixer grinders (JMGs), hand blenders, electric rice cookers, electric tandoors, induction cook tops, electric chimneys and electric fryers	14.5 per cent
3.	Cold Drinks, Aerated Drinks and *Soda*	22.5 per cent
4.	All types of personal care products i.e. deodorants, shaving products, beauty soaps, shampoos, hair oil, conditioners, serums, hair care products, tooth pastes, hand wash, body wash, beauty products, hair gels, bathing gels, talcum powders, creams, anti- persiprants, petroleum jellies, baby care products, skin care lotions, *sanitary napkins, after shaving lotion and tooth brush*	14.5 per cent
5.	All types of soaps and detergents i.e washing bars and soaps, fabric softeners, bleach, gentle wash, dish wash, color care and Neel	14.5 per cent
6.	All types of branded and packaged food products i.e chips, wafers, chocolates, toffees, *chewing gums and bubble gums, ice creams, Breakfast Cereals, Muesilli, Corn Flacks, pasta, macroni, biscuits, frozen desserts, frozen ready to eat products,* meal makers, instant soups , instant noodles, ready to eat products, custard powder, bakery products, baby foods, *coffee powder, ice tea, coffee premix, tea premix, jellies, ketchups and spreads*	14.5 per cent
7.	*Mineral water*	14.5 per cent

Note: The commodities mentioned in bold italics in above table have been added by this notification.

8.	Processed fruits and vegetables i.e Fruit jams, pickles, fruit squash, paste, fruit drinks, and fruit juice (whether in sealed container or otherwise) *Note : These commodities were mentioned at Sr No 88 of Schedule ‘B’ earlier, which has now been omitted and the* *criteria of branded or unbranded goods of these commodities have also been omitted.*	6.25%
9.	Roasted or fried grams and groundnuts, namkeens and branded snacks *Note : These commodities were mentioned at Sr No 41 & 98 of Schedule ‘B’ earlier, which has now been omitted and the* *criteria of branded or unbranded goods of these commodities have also been omitted. Further Namkeens and branded snacks are the new commodities added to this clause.*	6.25%
10.	Branded Honey *This commodity has been newly added by this notification and commodity mentioned at Sr. No. 48 to Schedule ‘B’ has been changed and amended as unbranded honey from honey as was mentioned earlier*	6.25%
11.	Branded Atta, Maida, Suji and Besan Note : These commodities were mentioned at Sr No 12 of Schedule ‘B’ earlier, which has now been omitted. But non branded atta, maida and suji still exists at Serial No. 37 of Schedule ‘A’ and are tax free. Unbranded besan is mentioned at Sr. No. 12 of schedule ‘E’ is taxable @ 1.5%. However, (comma) inserted after Atta, maida, may create confusion regarding branded or unbranded commodity.	6.25%
12.	Branded Cottage Cheese (Paneer), processed cheese including mozzarella, parmesan and other varieties of processed cheese These commodity have been newly added by this notification and commodity mentioned at Sr. No. 26 to Schedule ‘B’ has been changed and amended as unbranded cottage cheese (paneer) from cottage cheese (paneer) as was mentioned earlier	6.25%
13.	Desi Ghee *Note : This commodity was mentioned at Sr No 156 of Schedule ‘B’ earlier, which has now been omitted and the* *criteria of branded or unbranded Desi Ghee have also been omitted.*	6.25%
14.	Edible Oils, Vegetable Oil including gingili oil and bran oil *Note : These commodities were mentioned at Sr No 33 and 127 of Schedule ‘B’ earlier, which has now been omitted and the* *criteria of branded or unbranded goods of these commodities have also been omitted.*	6.25%
15.	Sweetened Flavored Milk *Note : This commodity was mentioned at Sr No 155 of Schedule ‘B’ earlier, which has now been omitted and the* *criteria of branded or unbranded sweetened Flavored Milk have also been omitted.*	6.25%
16.	Tea excluding Green tea *Note : This commodity was mentioned at Sr No 117 of Schedule ‘B’ earlier, which has now been omitted and the* *criteria of branded or unbranded tea have also been omitted.*	6.25%
17.	Coffee beans and seeds, cocoa pod and chicory *Note : These commodities were mentioned at Sr No 21 of Schedule ‘B’ earlier, which has now been omitted and the* *criteria of branded or unbranded goods of these commodities have also been omitted.*	6.25%
18.	Drugs and medicines including vaccines, syringes and dressing, mediated ointments produced under drug license, light liquid paraffin of IP and other grades, medical equipments/devices and implants *Note : These commodities were mentioned at Sr No 31 of Schedule ‘B’ earlier, which has now been omitted and the* *criteria of branded or unbranded goods of these commodities have also been omitted.*	6.25%
19.	Spices of all varieties and forms including cumin seed, aniseed, turmeric and dry chillies *Note : These commodities were mentioned at Sr No 109 of Schedule ‘B’ earlier, which has now been omitted and the* *criteria of branded or unbranded goods of these commodities have also been omitted.* However it may be noted that Serial No. 87 (xix) of Schedule ‘A’ mentioned branded Spices of all varieties and forms including cumin seed, aniseed, turmeric and dry chillies	6.25%
20.	Mosquito Repellants, toilet cleaners, wood preservatives, chemicals for killing domestic insects, termicides, phenyl and similar other products, which are not used for agricultural purposes. *Note : These commodities were mentioned at Sr No 159 of Schedule ‘B’ earlier, which has now been omitted and the* *criteria of branded or unbranded goods of these commodities have also been omitted.*	6.25%
21.	Tissue Papers *Note : This commodity was mentioned at Sr No 81 of Schedule ‘B’ earlier, which has now been omitted there from and the* *criteria of branded or unbranded Tissue Paper have also been omitted.*	6.25%
22.	Cups and glasses of paper and plastic *Note : These commodities were mentioned at Sr No 29 of Schedule ‘B’ earlier, which has now been omitted and the* *criteria of branded or unbranded goods of these commodities have also been omitted.*	6.25%
23.	Branded Vermicilli This commodity has been newly added by this notification and commodity mentioned at Sr. No.165 to Schedule ‘B’ has been changed and amended as unbranded sevian (vermicelli) from sevian (vermicelli) as was mentioned earlier	6.25%