AMIT BAJAJ ADVOCATE

As we know State Governments cannot levy any tax on the sale or purchased of  goods exported outside India and the sale or purchase in the cource of export i.e Penultimate export as per section 5(3) of CST Act 1956 and Article 286 of the Constitution of India. For a sale to qualify as penultimate sale one of the conditions u/s 5(3) of CST Act is that the goods sold to the exporter must be the same goods as are being exported in pursuance of the export order in the hands of the exporter.

In  the finance Act of 2011 the Additional Duties of Excise (goods of special importance) Act, 1957 has been amended.  Sugar and textile have been removed from the first schedule of the said Act.

After this amendment, states are free to levy value added tax on sugar and textile.These commodities  were put under the scheduled commodities, with the enactment of the Additional Duties of Excise Act in 1957 by the Nehru government.

When a capital asset is converted into stock in trade then capital gain u/s 45(2) of Income Tax Act arises in the year of sale and not in the year of conversion. But in vice versa situation i.e conversion of stock in trade into capital asset there doesnot arise any capital gain.

Section 62(5) of Punjab VAT Act provides for a mandatory condition of minimum payment of 25% of the total tax, penalty and interest, if any before any appeal under Punjab VAT Act 2005 is entertained.

The  15th      April 2011

The  25^th  April  2011

Delhi High Court in an important judgment in a case namely CIT vs. Govind Nagar Sugar Limited (2011) ISI B-469 Del. (H.C.), has held that “The effect of Section 32(2) is that unabsorbed depreciation of a year becomes part of depreciation of subsequent year by legal fiction and when it becomes part of current year depreciation it is liable to be set off against any other income, irrespective of the fact that the earlier years return was filed in time or not.”

VAT 23 AND VAT 24 Return Forms under Punjab VAT Act 2005 have been amended vide notification  dated 14-03-2011. By this notification the condition of   allowing  ITC on purchase of goods upto 4^th stage of purchase from manufacturer or importer has also been done away with. The relevant provisions relating to it i.e Rule 21(7) and clause (m) of sub rule (4) of  Rule 54 which were added last year vide notification dated 17-03-2010, have been deleted.

As we know C forms are required to be submitted by a seller with the sales tax authorities after obtaining the same from the purchaser of goods if the sale is an interstate sales and CST has been charged at concessional rate of 2% as per the requirement of section 8(4) of CST Act 1956. Sometimes a dealer if has made an interstate sales at concessional rate of CST against C form then afterwards, the purchaser doesnot provide the requisite C form to the seller then in such case difficulties are faced by the seller at the time of finalizing of his assessment proceedings.

The question arises whether in such cases any penalty or interest on the additional tax due can be levied on the seller for non submission of requisite C form? An attempt has been made here to find answer to this question as follows:

Section 80CCC of Income Tax Act 1961 deals with the deductions and income in respect of contributions to certain Pension funds by an individual assessee. Herebelow the relevant provisions of section 80CCC are discussed.

Section 15 of PVAT Act 2005 deals with the Net Tax Payable by a taxable person. Sub section 1 of Section 15 provides that the output tax under PVAT Act shall be adjusted from the Input Tax Credit for determining Net Tax Payable by a taxable Person. If any excess ITC is still left then it is to be adjusted from the CST liability under CST Act 1956 at the option of the taxable person as per section 15(2) of PVAT Act.