Levy of vat on sale of sample / combo pack

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CA Jigar (Querist)
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21 May 2012 Hi,

A company intend to sale goods in a combo pack which are otherwise capable of selling independently also. The price of combo is not attributable to either of the products. In the combo pack, one of the products is subject to NIL rate of VAT tax and the other one is subject to 5% VAT when sold separately. In a scenario where products are sold in combo it neither falls in any of the schedule of MVAT Act In such case, kindly provide judicial pronouncement, if any, to determine the rate of tax of the combo pack to be sold.

Alternative 1. Whether 5% vat to be charged on combo considering the higher rate between the two and discharging the liability.

Alternative 2. Whether 12.5% MVAT to be charged considering a residual entry.

Look forward for reply with supporting arguments.

Thanks.

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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21 May 2012 Dear Mr. Jigar,

In such a case, the higher of two will be charged to combo pack.
It can not fall under residual head since the product is not changed.
It is very much similar to Excise duty provsions wherein iff different duties are involved then highest of them is levied to the pack.