Several newspapers have reported today that rate of CST against C Forms has been reduced to 2% with effect from 1st June 2008.
However, the relevant notification is not available yet in the website of the Finance Ministry.
The road map to GST in India envisages the reduction in CST rate from 4% to 0% by 1st April 2010 and accordingly, the CST rate should have been reduced to 2% from 1st April 2008. However, the Cental Government has not issued any notification reducing the rate so far.
Therefore, till the notification is issued, the rate of CST will continue to be 3%.
It appears that the question of compensation of the loss to the State Governments on account of the reduction has not been resolved yet and the notification will be issued on after an agreement is reached between the Central and State Governments in this regard.
Strange, but true.
The Commercial Tax Authorities have been contending that discount received should be treated as turnover and that the dealer should pay tax thereon.
I am unable to find any provision in the Act or the Rules that supports the contention of the authorities.
Sec 2(xliv) defines “sale price” as the consideration received less any discount allowed.
Explanation III(ii) to Sec 2(lii) says that any discount allowed shall not be included in the turnover where such discount is shown separately in the invoice.
Kerala introduced VAT from 1 April 2005. The assessments under the KGST Act were for 4 to 5 years in arrears in case of majority of assessees. The Finance Minister and the Commercial Taxes Department realised that completion of pending assessments under the KGST Act was affecting the proper administration of VAT. They then came out out with a novel scheme - Adalats to clear pending cases. Teams of 4 assessing officers were created to sit together and complete the assessments. Decisions were taken by the team on the spot and the assessee was informed the balance amount of tax due and a challan was issued. As soon as the assessee made the payment, assessment orders signed by all the members of the team was issued.
Today, 20th Nov 2007, a Mega Adalat was conducted for the Ernakulam Dist at Town Hall in Ernakulam. It is said that more than 3000 cases are likely to be cleared. The Finance Minister was at the venue personally to ensure that proper arrangements were made.
I record my appreciation of the arrangements made at the venue. The reception area was well manned and each person was issued a numbered token and directed to the booth were the assessing officers were available. Inside the hall, cubicles were arranged on the sides for the various circles and excellent arrangements were made for seating of the visitors. The Adalat was conducted in a very professional manner and the entire process completed in 15 to 20 minutes. The officers of the Department appear to have worked really hard to have all the paper work done in time. I must also commend the Department for ensuring the welfare of the officers by proving good food and other amenities.
Good work. And a big thank you from the assessees for hassle free completion of the assessments.
I had written on the above subject on 25th Sep 2007 that a clarification would help in resolving conflicting views being taken by assessing officers in Kerala on the rate of tax for Multi Function Printers capable of printing, copying, scanning, sending fax, etc
The Commissioner of Commercial Taxes, Kerala Sri Paul Antony has in a mail dated 19th October 2007, stated that “We have acted on your representation and have forwarded the list as per attachment to Government for notification of VAT @ 4% w.e.f. 1-4-2007″. However the list has not been notified till now.
The Assam High Court had occasion to decide whether the Assam VAT Act could levy tax on declared goods such as iron and steel used in works contracts at a rate higher than that allowed by Sec 15 of the Central Sales Tax Act, 1956.
The commercial tax authorities of Assam proposed to levy VAT @ 12.50 % on all goods used in works contracts. The Commissioner of Commercial Taxes, Assam clarified that the State can levy tax on works contract by treating the same as distinct species apart from the constituent materials undergoing bodily transfer. This meant that even declared goods would be taxed at 12.50%.
The Assam High Court, while delivering the judgement in ITC Ltd vs State of Assam & Others, held that the Assam Entry Tax (Amendment) Ordinance, 2005 is unconstitutional and invalid. The notifications dated 8th Jan 2002, 21st Aug 2003, 26th Aug 2006, 29th Sep 2004 and 28th Feb 2005 were also held to be ultra vires, unconstitutional, null and viod. [Date of decision: 17th November 2006]
It is to be noted that the Assam Entry Tax Act, 2001 is still valid. However, addition of new goods to the Schedule to the Act for imposing entry tax was held to be beyond the competence of the state legislature as the prior sanction of the resident was not obtained.
Multi Function Printers were under HSN Code 8471.60.27 till 31 Dec 2006 and were allotted HSN Code 8443.31 from 1 Jan 2007. Printers are now under HSN Code 8443.32.
The Kerala Finance Act, 2007 had modified the schedule entry relating to IT Products and printers are now a distinct entry under Sl No 69(22)(c) of the Third Schedule to the Kerala Value Added Tax Act, 2003 wef 1st April 2007.
Therefore it was assumed that MFPs under HSN Code 8443.31 would now suffer tax at 12.50%.
The Rajasthan High Court [Jodhpur Bench], while delivering the judgement in Dinesh Pouches Ltd vs State of Rajasthan & Others, held that the Rajasthan Tax on Entry of Goods into Local Areas Act, 1999 is unconstitutional and invalid.
The High Court held that the Act was not compensatory as no special services were provided to those from whom the tax was collected. The Act was held to impede interstate trade and commerce. The prior assent of the President was not obtained as required by Article 304(b) of the Constitution.
Date of decision: 21st August 2007
The Madhya Pradesh VAT Act was amended by Amendment Act, 2007 and the amendments came into effect from 1st April 2007. In Sec 7, a new clause to sub-section (1) has been inserted and the amended provisions are: