Notional calculation for sales exemption if Form C and Form IX submitted

[NAUSHERAWAN SM]

Sir,

We are manufacturing MV Parts and Excavator Parts. The sales tax exemption granted by the Jharkhand state under S.O. 479 and S.O. 481 of Bihar finance Act. We had availed sales tax exemption benefit from 2000-01 to 2005-06 and accordingly VAT assessment conducted as per our books and record and return submitted. The supply made to registered dealer who was registered under rule 13(1) B of Bihar finance act ( they are entitled to purchase goods under concessional rate of tax ). We had adjusted sales tax exemption on monitory limit and notional calculation done on concessional rate of tax. The deptt. has assessed our books and accounts and no C-form and Form-IX demanded at the time of assessment. The Departmental Audit objected to sales tax department that notional calculation on concessional rate of tax will be full rate of tax and not concessional rate of tax because the party has not submitted statutory forms. The depart has re-assessed our records for all period and demanded huge tax on us.

Let me know whether statutory forms is required for notional calculation on concessional rate of tax. The notification S.O. 479 and 481 does not say that statutory forms is mandatory for notional calculation on concessional rate of tax.

Regards,

S.M.Nausherawan

AGM (Indirect Taxes)

RSB Transmissions (I) Ltd.

Jamshedpur.

[Ganeshan Kalyani]

Sir, a Notional tax benefit is given for X amount. As and when sales takes place the sales tac on the same would be reduced from the given Notional benefit. If the sale is local then applicable local tax rate has to be applied to arrive at the tax amount to be adjusted. Similarly if the sale is interstate then the CST@2% is to be reduced. The concessional rate of 2% is applicable on a condition that the assesse submits Form C duly collected from the interstate customer. The requirement of Form C is mentioned in CST Act. Thus it is required to be obtained to enjoy the benefit under sales tax. This is my view. I welcome views of my collegue experts. Thanks.

[Ganeshan Kalyani]

Sir, additonally you should check for period of limitation of assessment. The period is quite old, so you must check for and challenge. Thanks.

[SURESH ASTEKAR]

Sir,

Please refer to the following cases on the issue involved which appear to be favourable to your case.

1. 2012 (7) TMI 871 - KARNATAKA HIGH COURT Other Citation: [2013] 64 VST 519 (Kar) - Adeshwar Granites Pvt. Ltd. ; Anusha Stones Pvt. Ltd. ; State of Karnataka Versus Additional Commissioner of Commercial Taxes, Zone-II, Bangalore and Another; Anantha Spinning Mills Pvt. Ltd.

2. 2013 (1) TMI 750 - KARNATAKA HIGH COURT Other Citation: [2014] 73 VST 445 (Kar) Telco Construction Equipment Co. Ltd. Versus State of Karnataka and others

3. 2013 (7) TMI 668 - BOMBAY HIGH COURT Other Citation: [2012] 54 VST 104 (Bom) PRISMCEMENT LTD & AKSHAY RAHEJA Versus STATE OF MAHARASHTRA, FINANCE DEPARTMENT & OTHS. MUMBAI

 

AI Summary

Notional tax benefit adjustments require Form C to claim concessional interstate tax rate; absence may trigger reassessment. Assessee adjusted a notional tax benefit against tax on supplies and applied a concessional rate for registered purchasers; the department, noting absence of C form/Form IX, recomputed tax at full rate and reassessed. Forum replies state that the notional benefit is reduced on sale by applying the local or interstate concessional rate, but the concessional interstate rate is conditional on production of Form C under the CST framework and limitation periods should be examined.