Notional calculation for sales tax exemption availed - CST & State Sales Tax

[NAUSHERAWAN SM]

We had availed sales tax exemption under Bihar Industrial policy 1995 under Notification No. S.O. 479 and S.O. 481 (Bihar & Jharkhand ). The govt. exempted manufacturing unit from levy of sales tax on sale of finished products within state and in course of interstate trade and commerce for a specified period or prescribed monetary limit whichever is early. Assessment of exempted units is to be completed notionally at the prescribed rate of goods i.e. concessional rate of tax 2% or 3% as the case may be to watch prescribed monetary limit of exemption. We are manufacturing automobiles parts and also excavator parts which being finished products are sold to the different registered manufacturers. The automobiles parts and excavator parts therefore are being directly use in the manufacture of automobile or excavator. Therefore, in view of of section 13 (1) (b) of B.F. Act, 1981 is to be taxed at the special rate of 2% or 3% of its product which are being sold to automobile manufacturers or excavator manufacturers. The Sales Tax deptt. re-assessed our books and accounts on the basis of Audit objection raised by AG and charged full rate or of tax @ 8% or 10% as the case may be on the ground that no Form-IX and C-Form has been submitted at the time of Assessment.

Your valuable suggestion in this regard is needed.
Whether Form-IX or C-Form is mandatory for arrival of notional calculation on concessional rate of tax or the notional caluclation of Sales will be charged full rate of tax in absence of Form-IX or C-Form..

S.M.Nausherawan

Sr.Manager (Indirect Taxes)

RSB TRANSMISSIONS (I) LTD.

JAMSHEDPUR.

AI Summary

Concessional tax forms required for exempted sales may determine notional tax liability versus full tax rate.
Whether exempted sales under a state industrial policy require submission of Form-IX (intrastate) or Form C (interstate) to attract concessional rates for notional assessment is contested. The taxpayer availed exemption and charged no tax, but the assessing authority reassessed and applied the regular tax rate because statutory forms were not produced. The issue is whether absence of these forms compels application of full tax in notional calculation or whether concessional rates may be applied to exempted sales without them.