CIRCULAR AND DETERMINATION
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Body Trade Circular No. 04/2007 Memo No. 385 (325) I C.T./PRO3C/PRO/2006

Dated 27.04.2007

TRADE CIRCULAR

GOVERNMENT OF WEST BENGAL,

DIRECTORATE OF COMMERCIAL TAXES,

14, BELIAGHATA ROAD, KOLKATA - 700 015

Re: Salient features of Amendments in the W.B. V AT Act, 2003, WBST Act 1994 and WBTIDF Act, 2002

Subsequent to amendments made in the West Bengal Value Added Tax Act, 2003, West Bengal Sales Tax Act, 1994 and in the West Bengal Transport Infrastructure Development Fund Act, 2002 by the West Bengal Finance Act, 2007 and in the Central Sales Tax Act, 1956 by the Taxation Laws (Amendment) Act, 2007 Trade Circulars bearing nos. 2/07 dated 2.4.07 and 3/07 dated 5.4.07 have already been issued by this Directorate highlighting some of the changes effected in the WBST Act, 1994 and in the C.S.T. Act, 1956. Now as the West Bengal Finance Act, 2007 makes certain amendments in the West Bengal Value Added Tax Act, 2003, West Bengal Sales Tax Act, 1994 and in the West Bengal Transport Infrastructure Development Fund Act, 2002, salient features of which have not been discussed in the Trade Circular bearing no. 2/07, dated 2.04.07, it is expedient at this point of time to bring out another Trade Circular in continuation of those already issued with a view to focusing on the cardinal points of the substantive provisions of the Acts for informations to all concerned. For detailed information relevant provisions of the Acts may please be consulted.

The abridged forms of the changes effected by the amendments are:

A. Under "the West Bengal Value Added Tax Act, 2003.

All the changes, unless otherwise mentioned against each, are effective from 1.4.07.

(1) Sum charged for insurance at the time or before delivery of goods is excluded from the definition of sale price in clause (b) of subsection (41) of section 2 of the-Act.

(2) The definition of works contract has been widened by insertion of photocopying and developing in clause (d) of sub-section (57) of section 2 of the Act.

(3)(i) A registered dealer who is liable to pay tax on contractual transfer price cannot opt for paying tax at a compounded rate under sub-section (4) of section 18 when he is engaged also in reselling goods.

(ii) Sub-section (3) of section 18 of the Act has been amended in terms of which power is conferred upon the audit authority besides the assessing authority as far as the question to decide the credibility of the maintenance of accounts by a contractor for works contract is concerned.

(4) Clause (b) of sub-sec (5) of section 22 in relation to requirement of original invoice, cash memo, or bill for input tax credit against the purchase from the unregistered dealer has been omitted w.e.f. 1.8.06.

(5) Proviso to sub-section (8A) of section 22 has been amended in a manner that where a dealer has exercised option for refund in respect of any quarter of a year under this section, such option shall be deemed to be final and irrevocable for all subsequent quarters of the year for which such dealer is eligible for benefit under clause (a), or clause (b), or clause (c), of sub-section (1) of section 118.

(6) Industrial L.P.G. except in the case where the registered dealer is in the business of dealing in such goods has been placed against serial no. 14 of the negative list appended to section 22 of the Act. Therefore, no I.T.C. can be availed of in respect of purchases of Industrial L.P.G. except in such cases as mentioned above.

Explanation: To remove any doubt as to what industrial L.P.G. stands for and its rate of tax, it is clarified that L.P.G. used in an industry for manufacturing taxable or non-taxable goods shall be treated as industrial L.P.G. and to be taxed @ 4%. The sale of domestic L.P.G. is taxable @ 4% being declared goods and that all other types of L.P.G. used for the purpose other than above; viz., fuel for automobiles continues to be taxable @ 12.5%.

(7) Sub-see (4) of section 29 of the Act has been amended resultant to which the registration certificate cancelled under sub· section (1) of section 29 of the Act may be restored by the appropriate authority when the dealer, on the fulfillment of other conditions laid down in the said section, submits the return along with the challan showing payment of net tax, interest, if payable and penalty calculated at such amount not exceeding rupees two thousand for each month of default or part that of as may be prescribed. In this section a new proviso has been added to the effect that where the appropriate authority has granted the dealer any installment in respect of payment of net tax, the certificate of registration, on application made by the dealer, may be restored subject to such conditions and restrictions, and in such manner, as may be prescribed.

Note: The notable feature is that the payment of such penalty along with the return by the dealer is suo-motu by dint of the amended Act.

(8) Sub-section (2) of section 32 of the Act has been amended consequent to which every dealer before furnishing return shall pay full amount of net tax, interest, if any and penalty calculated at such amount not exceeding rupees two thousand for each month of default or part thereof as may be prescribed if any. According to the amended second proviso to the said section the dealer shall be required to pay net tax, interest and penalty, if any, within the time extended by the Commissioner in accordance with the provision of this section.

Note: The notable feature is that the payment of such penalty along with the return by the dealer is suo-motu by dint of the amended Act.

(9) Sub-section (1) of Section 40 of the Act has undergone a change to the effect that any bank, any hospital or nursing home or diagnostic centre and a partnership firm are included in the list of those responsible for deducting tax at source from payment to any dealer against execution of Works Contract referred to in section 14 of the Act.

(10) With effect from 1.4.05 revised return referred to in subsection (3) of section 32 of the Act also has come under the purview of the scrutiny of returns and verification of returns embodied in section 41 and section 42 of the Act respectively. Returns now can also be verified according to section 42 of the Act when the dealer fails to disclose in the returns interest payable under sub-section (1) of section 33.

(11) A new section known as section 61 (ab) has been introduced as a result of which a registered dealer can claim, prior to assessment, refund of the input tax credit after adjustment of reverse credit; if any, when his sales of goods in the course of export out of India within the meaning of section 5 of the C.S.T. Act, 56 are equal to or more than seventy five percentum of the total sales in a return period. No claim for such refund is admissible to a registered dealer if he fails to furnish a declaration appended to this section and obtained from the selling dealer in case the total purchase from such selling dealer during that return period exceeds rupees five lakhs. Section 46 of the Act is the appropriate section where circumstances leading to the assessment of a dealer are categorically spelt out. Following suitable amendment made in said section 46 by way of insertion of clauses (ea) and (ab) after clause (e) to sub-section (1) of section 46, assessment under section 46 of the Act shall be required to be made in respect of the registered dealer to whom refund has been made under sub-section (8A) of section 22 and under clause (ab) of section 61 and in respect of whom occasion arises for assessment for any year or part thereof under sub-section (2) of section 9 of the C.S.T. Act, 56.

Note: The declaration as aforesaid is appended for general information.

DECLARATION

This is to declare under clause (ab) of section 61 that the undermentioned sales have been effected and tax has been charged on the bi1l(s) raised on the dealer and this is to certify that the net tax, if any, as per the return for the quarter ending.................under the West Bengal Value Added Tax Act, 2003, has been deposited at the appropriate Government Treasury and the return for the said quarter has been filed with..................(name of the office) on...........(date).

I also declare that I do not enjoy any incentive by way of remission/tax holiday / deferment under section 118 of the West Bengal Value Added Tax Act, 2003.

Serial No.	Particulars	Amount
1.	Name of the purchasing dealer with VAT Regn. No.
2	Total sales effected to such purchasing dealer during the quarter ending........	Rs.
3	Total tax realized from the purchasing	@1% Rs.
	Dealer during the said quarter	@ 4%	Rs.
		@ 12.5%	Rs.
		Total	Rs.
4.	Nature of goods sold (Broad description to be given)
5.	Remarks, if any

Date of issue:

Signature of the selling dealer with name

And VAT Regn. No.

(12) (i) Sub-section (3) of section 84 has been omitted by virtue of which provision for setting aside any part of provisional assessment or any other assessment is done away with.

(ii) First proviso to section 86 has been omitted with the result that no revision petition shall lie before the Commissioner against an audit report.

13.Changes made in the Schedules of the West Bengal Value Added Tax Act. 2003.

(i) The following goods have been transferred from Part-I of Schedule C to Schedule' A and are declared as tax-free goods w.e.f. 1.4.07.

Bio-fertilizers and micro-nutrients, plant growth promoters and regulators; glass chimney, hurricane lantern, and kerosene lamp and accessories and components thereof; readymade garments of value, whether printed or otherwise, not exceeding Rs. 50 per piece, when sold from a Hat; zari and embroidery items namely - imi, zari, kasab, salma, dabkCt, chumki, gota, sitara naqsi, kora, glass bead, badla and gizai

(ii) The following substitution has been made w.d. 1.4.07 in the Schedule : .

Sl No	Description of goods under Entry No. 37B of Schedule A Prior to amendment i.e. upto 31.3.07	Description of goods under Entry No. 37B of Schedule A after amendment i.e. from, 1.4.07	Remarks
1	Tobacco, as referred to in the First Schedule to the Central Excise and Salt Act, 1944 (1 of 1944), including cigarette, cigar, cheroot, smoking mixture for pipe and cigarette, biri, chewing tobacco, snuff and tobacco for hookah, that is to say, tobacco paste, ready for use in hookah, when all such items are manufactured or made in India	Biri and raw and unprocessed tobacco leaves	The net effect of the amendment is that all tobacco products other than those mentioned against column 3 of this table are specified in Schedule CA of the W.B. VAT Act, 2003 with tax rate being 12.5% w.e.f. 1.4.07

(iii)The following goods have been transferred from Schedule CA to Part-I of Schedule C with rate of tax being 4% w.e.f. 1.4.07

Battery operated vehicle as defined in clause (u) of rule 2 of the Central Motor Vehicles Rules, 1989, blades, guards, sharks, arms and shafts of an electric fan; digestive preparations, commonly known as aam pachak, amla pachak, ajwain pachak, and jal jeera ; industrial LPG [except LP.G. referred to in the explanation to description against serial no (6) in this circular] ; lozenges; spare-parts of motor vehicles; stone-chips; plywood; stranded wire;

(iv) Purified terepthalic acid has been deleted from entry no 189 of Schedule C (Pt-III) w.e.f. 1.6.05 and has again been inserted against same entry no of Schedule C (part-III) with rate of tax being 4% w.e.f. 1.4.05. .

(v) the following goods have been transferred from Schedule CA to Schedule A w.e.f. 1.4.07.

Deoiled Rice bran: Handmade musical instruments, that is to say-tabla, khol, dhol, pakhwaj, mridanga, dhak, madal and dugdugi, flute, jaltannga and ghungru.

(vi) The following goods have been transferred from Schedule CA to Schedule C (Part III) with rate of tax being 4% w.e.f. 1.4.07 :

Pentaerythritol ; Light magnesium oxide, tolune di-isocyanate and calcium chloride.

(vii) The following substitutions have been made in Part-I of Schedule C of the West Bengal Value Added Tax Act, 2003 w.e.f. 1.4.07 :

Table

Entry against serial no	Description of goods before amendment	Description of goods after amendment
54B(xxv)	Machinery for refrigeration, and cooling towers including airconditioners	Machinery for refrigeration, cooling towers and airconditioners
55	Chappals and sandals made exclusively of plastic, hawai chappals; and parts and components thereof	Chappals and Sandals made exclusively of plastic or ethyle vinyl Acetate commonly known as EVA; hawai chappals; and sole and strap thereof

(yiii) Item against Entry under serial no 54B (xxix) of Schedule C (Part-I) has been omitted w.e.f. 1.4.07.

(ix) A new entry against serial no 54C has been inserted in Schedule C (part-I) w.e.f. 1.4.07 where the description of goods is shown as Spare parts, accessories and components of the plant and machinery mentioned in items (i) to (xxvii) in column (2) against serial no 54B, and spare parts, accessories and components of an airconditioner.

B. Under the West Bengal Sales Tax Act, 1994.

All the 'changes, unless otherwise mentioned against each, are effective from 1.4.07.

(1)Lottery Ticket has been excluded from the definition of goods in sub·section (13) of section 2 of the Act.

(2) According to the amendment which is deemed to have come into effect from 1.5.1995 and which is made in sub-section (3) of section 32 w.e.f. 1.5.95 interest shall be determined from the first day of the month next following the date specified in the notice originally issued under section 47 for payment thereof up to the month preceding the month of full payment of such tax or up to the month preceding the month of commencement of proceedings under section 52, whichever is earlier, upon so much amount of modified tax as remains unpaid. By newly introduced section 35A necessary validation has been made for all such interest levied or collected or purporting to have been levied or collected in accordance with the Act.

(3) With effect from 1.8.2006 time limit for bringing notice to the Commissioner by a dealer seeking refund by way of assessment under sub-section (1) of section 45 of the Act of the excess amount of tax or interest paid in the year covered by the deemed assessment under section 46A of the Act has been extended from six months to twelve months in terms of amendment made in sub-section 4(a) of section 46A.

Trade Circular No, 2/07 may please be consulted in this connection.

4) Sub-section (3) of section 79 has been amended resultant to which w.e.f. 1.8.06 the provision that the assessing authority shall make an assessment in respect of such portion of the assessment set aside by the appellate authority is done away with.

C. Under the West Bengal Transport Infrastructure Development Fund Act, 2002.

(1) Reliance Petro Marketing Private Limited has been substituted by Numaligarh Refinery Limited following an amendment made in clause (b) (viii) of sub-section (1) of section 4 of the Act.

(2) Haldia Petrochemicals Limited and Reliance Industries Limited are included against serial no (xii) and (xiii) respectively in the list of persons covered by clause (b) of sub-section (l)of section 4 and necessary insertions for the said sub-clauses (xii) and (xiii) have been made in the concluding part of clause (b) and item no (A) and item no (B) of the said section.

Sd/ - (H. K. DWIVEDI)

COMMISSIONER, SALES TAXES,
WEST BENGAL.