Single point of taxation introduced in Punjab VAT

[AMIT BAJAJ ADVOCATE]

Punjab Government has surprisingly introduced single stage tax system under the Punjab VAT Act, 2005. Punjab Government has notified certain goods, most of which are consumable goods, on which tax under Punjab VAT Act has been levied only at the first stage of its sale.

The tax will be payable on such goods by the first importer and the manufacturer only. At subsequent stages when such goods are sold by whole seller, distributor or retailer, the same will be sold as tax free.

That means no tax will be paid on the value addition of such goods at subsequent stages. System of VAT is a multiple point of taxation. Single point of taxation is inconsistent with the VAT system and also the preamble of the Punjab VAT Act, 2005 which runs as under:

" An Act to provide for the levy and collection of value added tax and turnover tax on the sales or purchase of goods and for the matters connected therewith and incidental thereto, and for the repeal of the Punjab General Sales Tax Act, 1948."

In spite of the above said amendment being in contradiction with the preamble of the said Act, in my view the State Government is very much competent and within its right under Entry 54 of the State List of the seventh schedule to the Constitution of India, to levy tax on the single point of sales within State and make subsequent stages tax free.

The sigh of relief in the said amendment is that no single point of tax has been levied on goods which could have been used as raw material for any industry, otherwise it could have resulted in tax cascading.

The special rates of tax at the rate of 14.5 percent and 22.5 percent have been notified for such goods on which tax will be payable at first stage. It should be noted that surcharge at the rate of 10 percent u/s 8-B will be separately leviable on such goods, thus making the rate of tax from 14.5 percent to 15.95 percent and from 22.5 percent to 24.75 percent .

The relevant notifications are as follows:

 GOVERNMENT OF PUNJAB

DEPARTMENT OF EXCISE & TAXATION

(EXCISE AND TAXATION-II BRANCH)

NOTIFICATION

The 13^th December, 2013

S.O.116/P.A8/2005/S.8/2005/S.8/2013 – Whereas the State Government is satisfied that circumstances exist, which render it necessary to take immediate action in public interest;

Now,  therefore, in exercise of the powers conferred by sub section (3) of section 8 of the Punjab Value Added Tax Act, 2005 (Punjab Act No. 8 of 2005) and all other powers enabling him in this behalf, the Governor of Punjab is pleased to make the following amendments in Schedule ‘A’, appended to the said Act, with effect from 1st January, 2014, by dispensing with the condition of previous notice, namely:-

AMENDMENT

In the said Schedule ‘A’, after serial No. 85, the following serial No. 86 to 91 and the entries relating thereto, shall be added. These commodities shall be tax free at the wholesaler or distributor or retailer stage provided that tax has already been paid at the first point of sale i.e manufacturer or first importer’s stage.

Sr. No	Commodity Name
86	All types of Televisions, Refrigerators, Washing Machines, Microwave
	ovens, Oven Toaster Grillers (OTGs), Home Theatres, and Air
	Conditioners
87	Kitchen Appliances like sandwich makers, tea/coffee makers, juicer mixer
	grinders (JMGs), hand blenders, electric rice cookers, electric tandoors,
	induction cook tops, electric chimneys, electric fryers
88	Cold Drinks (Aerated Drinks)
89	All types of personal care products such as 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 and after shaving lotion
90	All types of soaps and detergents such as washing bars and soaps, fabric
	softeners, bleach, gentle wash, dish wash, color care, Neel
91	All types of branded or packaged food products such as chips, wafers, chocolates, toffees, ice creams, Corn Flacks, pasta, macroni, biscuits, frozen desserts, frozen products, meal makers, instant soups , instant noodles, ready to eat products, namkeens, custard powder, snacks, bakery products, baby foods etc.

D.P. REDDY,

Financial Commissioner Taxation and

Secretary to Government of Punjab,

Department of Excise and Taxation

GOVERNMENT OF PUNJAB

DEPARTMENT OF EXCISE & TAXATION

 (EXCISE AND TAXATION-II BRANCH)

NOTIFICATION

The 13th December, 2013

NO  S.O  117/P.A.8/2005/S.8/2013 – Where as  the  State  Government  is satisfied that circumstances exist, which render it necessary to take immediate action in public interest;

Now, therefore, in exercise of the powers conferred by subsection (3) of section 8 of the Punjab Value Added Tax Act, 2005(Punjab Act No.8 of 2005) and all other powers enabling him in this behalf, the Governor of Punjab is pleased to make the following amendments in Schedule ‘E’, appended to the said Act, with effect from 1st January, 2014, by dispensing with the condition of previous notice, namely:-

AMENDMENT

In the said Schedule ‘E’, after serial No. 14, the following serial No.15 to 20 and the entries relating the reto, shall be added. These 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
15	All types of Televisions, Refrigerators, Washing Machines, Microwave ovens, Oven Toaster Grillers (OTGs), Home Theatres, and Air Conditioners	14.5per cent
16	Kitchen Appliances like sandwich makers, tea/coffeemakers, juicer mixer grinders (JMGs), hand blenders, electric rice cookers, electric tandoors, induction cook tops, electric chimneys, electric Fryers	14.5per cent
17	Cold Drinks (Aerated Drinks)	22.5 per cent
18	All types of personal care products such as deodorants, shaving products, beauty soaps, shampoos, hair oil, conditioners, serums, hair care products,  toothpastes, hand wash,  body wash, beauty products hair gels, bathing gels, talcum powders, creams, anti- persiprants, petroleum jellies, baby care products, skin care lotions and after shaving lotion	14.5per cent
19	All types of soaps and detergents such as washing bars and soaps, fabric softeners, bleach, gentle wash, dish wash, color care, Neel	14.5per cent
20	All types of branded or packaged food products such as chips, wafers, chocolates, toffees, ice creams, Corn Flacks, pasta, macroni, biscuits, frozen desserts, frozen products, meal makers, instant soups, instant noodles, ready to eat products, namkeens, custard powder, snacks, bakery products, baby foods etc.	14.5per cent

D.P. REDDY,

Financial Commissioner Taxation and

Secretary to Government of Punjab,

Department of Excise and Taxation