More and more circulars are being issued by the Commissioner of Sales Tax to clarify issues arising in day-to-day transactions by dealers. The next major amendments, if any, are expected with the State budget proposals.

1. Cir. No. 1-T of 2006. – dt. 3-1-2006 Re: Clarification regarding Entry C-70 – “Paper”

The earlier Trade Circular No. 35T of 2005 dated 9-11-2005 was issued describing the scope of the Schedule entry C-70. Doubts were raised about Excise sub-heading 4806. Referring to this excise entry the CST has clarified that goods covered by 4806 would be subject to 4%.

Vegetable parchment, greaseproof papers, tracing papers and glassine and other glazed transparent or translucent papers, in rolls or sheets, will be covered by C-70.

It was further clarified that 4817 and 4820 of the Central Excise Tariff covers paper products
like :

Envelopes, letter cards, plain postcards and correspondence cards, of paper or paperboard; boxes, pouches, wallets and writing compendiums, of paper of paperboard, containing an assortment of paper stationery. These are not paper therefor not covered by
C-70.

Referring to earlier Circular No. 35T of 2005, it is clarified that only manifold business forms covered by 4820 would be subject to 4% . Other items in 4820 are not covered by the Schedule entry C-70. The sub-heading 4820 covers the following items This clarification will be effective from 1st April, 2005.

2. Trade Cir. 2-T of 2006 dt. 7-1-2006 Re: Provisional Refund: Early Refund: Second Circular

Trade Circular No. 33T of 2005 dated the 21st October, 2005 [hereinafter referred to as "first circular"] was on the issue of early grant of provisional refunds. Revised instructions are issued under this circular for grant of provisional refunds.

It shall apply to all returns filed before the date of issue of this circular and in respect of periods ending on or before the 30th November, 2005 wherein refunds have been claimed and are required to be granted as provided under section 51 of the MVAT Act. It was further clarified that under sub-section (5) of section 91 of the Act, a unit under the Package Scheme of Incentives is entitled for refund of sales tax paid on purchases of raw materials. This refund can be claimed as provisional refund in accordance with section 51 of the Act. This circular will apply to refunds claimed by PSI units as it applies to refunds claimed by other dealers.

The first proviso to sub-section (2) of section 51 lists the four categories of dealers eligible to claim refunds :–

1) An exporter 2) a SEZ unit 3) a PSI unit and 4) a person eligible for refund under sec. 41 (1) of the Act.

Out of them first three categories are eligible to claim refund as per this circular.

The application for refunds must be made in Form 501 of MVAT Rules. For dealers situated in Mumbai, the application is to be made to the Officer in charge of VAT Refund; i.e., Joint Commissioner, Refunds. For dealers situated outside Mumbai, the application should, at present, be made to the Officer-in-charge of VAT refund in the jurisdictional Sales Tax Office. The Annexure to the Form 501 provides for certain details regarding the purchases made and details regarding the suppliers. This information should, as far as possible, be provided both as a hard copy as well as a soft copy to be submitted along with the application in Form 501 on or before 31st January, 2006.

Although section 51 authorises the departmental authorities to ask for additional information [other than that provided in Form 501] before grant of refund under section 51, it has been decided that, at present, additional information will not be called for, before grant of refund. The information may, however, be called for, after the grant of refund. Where any additional information has already been sought before the issue of this circular, it should be furnished expeditiously. However, the grant of refund will not be withheld merely because the information sought prior to the issue of this circular has not been submitted by the date of grant of refund.

The refund as per return would be payable only in respect of the returns which the dealer is due to file as per the rules. For example, if a dealer is due to file a quarterly return but instead files a monthly return, then the refund would not be granted in respect of the monthly return. No refund under this circular will be allowed for a return filed for an incorrect period.

Of course, the return should be correct, complete and self consistent and the application in Form 501 should be consistent with the return.

If a dealer has filed the application in Form 501 and also furnished the requisite bank guarantee as required by the first circular, prior to the date of issue of this trade circular, in all such cases 100% of the refund as may be due, shall be granted by 31st January 2006.

If the dealer has filed the application in Form 501 before the issue of this circular but had not filed the requisite bank guarantee before the date of issue of this circular, then, 90% of the refund, as may be due, shall be granted by 31st January, 2006 and the balance refund of 10% be granted by 28th February, 2006.

In all other cases, wherein the Form 501 is not submitted for any period ending up to 30th November, 2005 before the date of issue of this circular the refund due shall be granted by 15th March, 2006 provided that the application in Form 501 must be filed on or before 31st January, 2006.

The last edition in circular is worth reproducing. It says "The grant of refund of the said amount will be subject to fulfilment of normal departmental procedures including scrutiny and refund audit".

If the bank guarantee is found to be not adequate or from a bank other than nationalize bank, then the case will be treated as one of no bank guarantee.

It is clarified by the CST that the provision regarding interest on refund [section 52] is not applicable to refunds under section 51. However, if the provisional refund is delayed [refund sanctioning order is issued but refund payment order is not issued], then interest on delayed refund would be payable to dealers under section 53.

3. Trade Circular No. 3-T of 2006 dt. 9-1-2006

Re. adm. relief for Cancellation of Registration Certificate under section 22(8) of B S T Act (Refer earlier cir. No. 25T/04 and 37T/38Tand 39T /2005)

This cir. gives relief to;

1. Dealer whose Registration was liable to be cancelled due to sec. 22(8) of BST act.
    

2. Non-Resident Circle Dealers who could not file TIN application.
    

3. The dealers where the constitution has been changed or the place of business has been changed from one local area to another local area.

Elaborate and detailed instructions are given for revalidating each type of dealers ,of course with payment of fine and subject to further conditions as follows

1. The dealer must file all the returns due (including annual returns) up to December 2005.
    

2. All the pending dues (including return and assessed dues) must be paid in full, except in cases where instalments have been granted or recovery has been stayed.
    

3. The dealer should attach the self attested copy of the challans/returns for the un-assessed periods along with relevant Form (107-A or 107-C).
    

4. The prescribed period for making the applications in Form 107-A, 107-B, 107-C and 108 will be from 16th January, 2006 to 10th February, 2006. It may be noted that the prescribed time limit will not be extended under any circumstances.
    

5. The order for grant of administrative relief will be passed latest by 28th February, 2006.

4. VAT Circular 4T-06 Re: Procedure for Issuance of statutory forms (C / F / H / EI / EII) under the Central Sales Tax Act, 1956.

This circular gives the procedure for obtaining above declarations, pan-India Tax Information Exchange System (TINXSYS) is being set up to help various States in online exchange of the interstate trade transactions data. In order to achieve this, an amendment, with effect from 1st October, 2005, has been made to the Central Sales Tax (Registration and Turnover) Rules 1957. In view of this amendment, the statutory form accepting dealers are required to furnish, to their respective Sales Tax department, the declarations in forms C and F and certificates in form H /EI /EII within three months after the end of the period to which the declaration or the certificate relates. A single declaration in form C and certificates in form H, EI and EII will cover all transactions in a period of three months whereas the declaration in Form F will cover all transactions in a period of one month only. To facilitate timely submission of these statutory forms by the form issuing dealers to the form-accepting dealers, there is a need to liberalize the procedure of issuance of these forms by the Department:

The procedure for issuance of statutory forms under the CST Act is being modified w.e.f. 16th January, 2006. The modified procedure is given in detail in this circular. . Central Repositories will be set up at all the locations of the Department having Registration Branch. Each Central Repository will issue various statutory forms to the dealers, registered within the jurisdiction of the concerned registration office. From 16th January, 2006, the dealers will have to approach the Central Repository, instead of the assessing officer. If a dealer has only one place of business within the State, the forms will be issued to him from the Central Repository having jurisdiction over the place of business of the dealer. In case a dealer has more than one place of business within the State, then the forms will be issued to him separately for each such places of business, provided he is filing separate returns for each such place. In such cases the forms will be issued from the respective Central Repository, having jurisdiction over each such place of
business. New format is prescribed for application.

The applicant dealer or his authorised representative will have to submit the application for supply of forms along with the ‘Statement of Requirement’. He will also have to:–

1. To show at least one counterfoil of any of the declarations or certificates, last issued to him by the department.
    

2. To submit Self-attested Photocopy of the challan of last VAT/CST return due and filed.
    

3. To submit Self-attested Photocopy of the highest value invoice, from any dealer mentioned in the ’Statement of Requirement’. If the highest value invoice is not readily available, the photocopy of the next available highest value invoice can be submitted.
    

4. If the dealer is applying for forms for the first time, then he will also have to submit the Self-attested copy of the proof of transport relating to the said invoice.
    

5. The dealer must pay appropriate fee (as per the table below) by way of court fee stamps. The court fee stamps should be affixed on the application form itself.
    

6. Fee payable for blank Forms is as follows:

Sr. No.	Type of form	Fee per form  (in Rs.)
1)	C	3.00
2)	F	3.00
3)	H	3.00
4)	EI	1.00
5)	EII	1.00

7. Henceforth, before issuing the forms, the proof of payment of tax arrears, if any, will not be asked for by the form issuing officer and the dealer applying for the statutory forms for the first time will not have to submit the bank guarantee.
    

8. The application form will not be accepted unless the accompanying ‘Statement of Requirement’ is filled in fully.
    

9. The Central Repository will issue forms for all the previous periods also, provided all the abovementioned conditions are fulfilled.
    

10. The Central Repository will issue forms against actual transactions only. Hence-forth, no advance forms will be issued.
     

11. Before issuing forms, the details of period/quarter of transactions, names of the form issuing dealer and the form accepting dealer, total number of invoices and total value of invoices will be filled in by the staff of the Central Repository. Other required details will have to be filled in by the form-issuing dealer before issuing Declaration/Certificate to the form-accepting dealer.

5. Trade Cir. – 5T of 2006 dt. 10-1-2006 Re: Schedule entry C-29 A (a)

This circular refers to devices notified from time to time by the Central Government under the Drugs and Cosmetics Act, 1940

As per C-29 A Devices notified from time to time by the Central Government under sub-clause (iv) of clause (b) of section 3 of the Drugs and Cosmetics Act, 1940 are subject to 4%.

The Central Government, by notification dated 17th March, 1989, had notified the following devices as drugs under sub-clause (iv) of clause (b) of section 3 of the Drugs and Cosmetics Act, 1940: i) Disposable Hypodermic Syringes ii) Disposable Hypodermic needles iii) Disposable Perfusion sets iv) In – vitro diagnostic devices for HIV, HbsAg and HCV.

Therefore these four devices were covered under the scope of the entry C 29 A(a) with effect from 1st April, 2005. Now the Central Government has issued another notification dated 6th October, 2005 and has further notified the following devices as drugs under sub-clause (iv) of clause (b) of section 3 of the Drugs and Cosmetics Act, 1940. They are i) Cardiac Stents ii) Drug eluting stents iii)   Catheters iv) Intra ocular lenses v) I.V. cannulae vi) Bone cements vii)   Heart valves viii) Scalp vein set ix) Orthopaedic implants, and x) Internal prosthetic replacements.

All the further notified devices will also be covered under the scope of the Schedule entry C -29A (a) and will be taxable @ 4% with effect from 6th October, 2005, i.e. the date of effect of the notification issued by the Central Government.