27 February 2010
WE HAVE PURCHASED IN UTTAR PRADESH SILVER FOIL CALLED VARKH FROM M/S ABC TAXED @ 1%. THIS ITEM IS USED IN MITHAI AND MEETHI SUPARI. IN OUR CASE THE A.C. IS OF THE CONTENTION THAT THE SILVER FOIL IS NOT ARTICLE OF SILVER AND SHOULD BE TAKEN IN THE 12.5% VAT TAX RATE. IN WHAT COMMODITY AND TAX RATE SHOULD THE SILVER FOIL CALLED VARKH BE TREATED IN UP
The silver foil(varkh)will not come under schedule III where Bullion, siver, gold articles along with other items will be taxed at 1% The silver foil it self is a item known with its own nomenclature Though it is made from silver. To bring every thing made from silver under schedule III will be wrong. Let us take an example if a machinery part is made of pure silver, we can not take that to be an article of silver, certainly it is a machinery part and will be taxed as such. Similarly Varkh (silver foil) though made of silver it can not be caller an article of silver. I will certainly go with the learned A C and silver foil will not fall in the IIIrd schedule.
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