No.VAT/Asso.(Timber)/2009/ 42(8)Adm- 6

Trade Cir. 35 T of 2009- Date:  24/12/2009

Sub: Rate of tax, Set-off on Timber for the period 1.04.2009 to 30.06.2009 – Clarification.


You are aware that rate of tax on timber was reduced to 4% in the Budget Speech of Hon’ble Finance Minister, Maharashtra for the year 2008-09. This reduction in rate has been made with retrospective effect from 1st April 2009. The Gazette Notification for the amendment was published on 1st July 2009.

2. Prior to this, the trade was informed vide Trade Circular No.l3T of 2009 dated 15th April 2009 that the rate of tax on timber from 1st April 2009 was 12.5% and the trade was asked to collect and pay tax accordingly. After the retrospective amendment in the Budget 2009-10, queries have been received from trade regarding tax already collected and  paid or set-off already claimed and the rate of 12.5% for the intervening period from 1st April 2009 to 30th June 2009. In this respect following instructions are now issued.

i)      Tax on sale of timber will be payable at the rate of 4% from 1.4.2009.

ii)      Where the dealers have collected tax at the rate of 12.5% on their sales, they   may  issue credit notes to the purchasers for the difference of 8.5% and file revised returns for the period for which taxes were collected and paid at higher rate. The dealers who have collected tax at the rate of 12.5% but do not issue credit notes and file revised returns, shall be liable for forfeiture to the extent of excess tax collected by them.

iii)       Purchase of timber will be eligible for set-off at the rate of 4% i.e. the scheduled rate of tax irrespective of the actual tax collection in their purchase invoices. Dealers who have claimed set-off at higher rate of 12.5% in their returns for the period April to June, are required to revise their returns accordingly.

3. Forest department selling timber by auction may have collected taxes at the rate of 12.5% on sales during this period. They should file revised returns for the periods for which the taxes are collected at higher rate and refund the excess tax collected from the purchaser. In case the taxes are paid by book adjustment by the department and cannot be refunded to the purchaser, the department should submit transaction wise statement of such tax collection. This excess collection shall be liable for forfeiture. Persons from whom tax was so collected at higher rate can claim refund u/s 32(6) of MVAT Act.

4.  This circular cannot be made use of for legal interpretation of provisions of law, as it is clarificatory in nature. If any member of the trade has any doubt, he may refer the matter to this office for further clarification.

5. You are requested to bring the contents of this circular to the notice of all the members of your association.

Yours faithfully,

(Sanjay Bhatia)

Commissioner of Sales Tax

Maharashtra State, Mumbai

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