C I R C U L A R

Sub : APVAT Act,2005 - Video Conference held with DCs on 05-09-2005 - Certain clarifications - Issued - Reg.

During the course of video conference on 05-09-2005, the Deputy Commissioners (CT) have raised certain issues and clarifications were sought for. The following clarifications are issued.

1) Rate of tax on Tobacco Oil: As per Entry 67 of Schedule-IV to the APVAT Act,2005, all kinds of vegetable oils are taxable @ 4%. Tobacco oil also falls under this entry and hence is taxable @ 4%.

2) Is purchase of coal for steam generation eligible for input tax credit: The steam from coal can be used for generating power or for other purposes. In case steam generated from coal is used for power generation, then input tax credit should be restricted. However, if the steam is used for purposes other than power generation such coal will be eligible for input tax credit.

3) Sale of sim cards and recharge cards: Sale of sim cards and recharge cards are taxable. The goods actually sold in case of recharge cards is the air time. As the goods are intangible goods tax should be levied at the rate of 4%.

4) What is the proforma for seizure and confiscation of goods: As per Section 45(6) and Rule 56(1)(a) goods can be detained and for this purpose Form 610 can be used. However, a querry has been raised whether this form can be used for seizure and confiscation of goods under Section 45(7)(b) and Rule 56(2). It is hereby clarified that Form 610 can be used only for detention of goods. As no form is prescribed for seizure and confiscation of goods the officers can issue a notice quoting the provisions of the Act. The same procedure may be followed wherever specific forms are not prescribed and the enforcement of the Act requires issue of notices.

The receipt of the above circular may be acknowledged.