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

[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.

Posts / Replies

[Ganeshan Kalyani]

Sales tax incentives and concessional rate of tax are two different things. Sales rax incentives is on account of investment made by setting up of industries at remote places. And concessional rate of taxes are purely subject to submission of concessional form duly collected from customers in sale. In absence of such forms regular tax rate is applicable and it is liable to be reduced from incentives if balance available otherwise payable. This is my view. However experts view in this query will encourage discussiona and enrich knowledge. Thanks.

[NAUSHERAWAN SM]

The querry is if we don't avail incentive/exemption we charge concessional rate of tax under section 13 (1) B of Bihar finance Act i.e. 2%, 3% or 4% in case of CST sales against statutory forms. Our case is we have sold our goods to registered manufacturer who is entitle to purchase goods on concessional rate of tax and registered under 13(1) B of Bihar finance act. No sales tax has been charged on the ground of exemption granted to us. Whether Form-IX or C-Form is required to submit as evidence that we have sold to registered manufacturer on exemption. But, the customer has refused to provides statutory form on the ground that this is not purchase under 13 (1) B i.e. concessional rate of tax. The point of law is whether statutory forms are required on such type of sales to arrive notional calculation on concessional rate of tax or notional calculation will be full rate of tax.

Regards,

S.M.Nausherawan

[Ganeshan Kalyani]

Sir conditions regarding the form requirements should have been given in either Eligibility certificate or Entitlement certificate or in scheme papers. i am tryin to get copy of the BIhar Finance to draft a suitable reply.

[NAUSHERAWAN SM]

Sir, Form- Ga (in Hindi) is prescribed for purchase tax exemption only. But, for sales tax cases no form is prescribed for exempted sales. The deptt. is arguing that Form-IX for state sales and Form-C for Central sales is required to submit for arrival of notional calculation at concessional rate of tax. The question is whether Form-IX or C-Form is applicable for exempted sales.

Thanks,

S.M.Nausherawan

[Ganeshan Kalyani]

Hope your query is resolved Sir.

[NAUSHERAWAN SM]

Till now, our query not resolved. The question whether form -IX or C-Form is prescribed for exempted sales for notional calculation of tax at concessional rate or in absence of Form-IX or C-Form the notional calculation of tax will be full rate of tax for sale within state or inter state to registered dealer.