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Surcharge

Shivani (Learner) (1881 Points)

05 October 2013

Hi Members

In Punjab there is a surcharge of 10% on VAT rate.

My question is

1) If a dealer in Punjab makes an interstate sale to unregistered dealer or without Form C, then the CST rate will be VAT rate in Punjab.

Will surcharge also be taken in this case?

I mean will CST rate in such cases be VAT rate in Punjab considering 10% surcharge also?

2) Does this surcharge of 10% on VAT rate in Punjab has any effect on normal interstate sale made by dealer of Punjab for which it received form C.

I mean in such case normal CST of 2% will be charged na without considering any surcharge?

Thanks

Shivani

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4 Replies

V Vara Prasad (Chartered Accountant) (212 Points)
Replied 06 October 2013

Yes

In case of interstate sale without c form or to unregistered dealer then CST rate will be VAT rate and if c form is provided then CST rate is 2% and no surcharge applicable

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RUPESH CHOUDHURY (Student) (484 Points)
Replied 06 October 2013

Dear Sivani Ji

1) I think even in this case Surcharge ll be applicable..since the provision says the highest VAT rate is applicable..and VAT rate includes the surcharge..

2)And in case of normal due interstate sales with form C ,obviously there is no question of surcharge or say there is no question of VAT rate..

Thanks & regards

1 Like

CA LOVELY ARORA (C.A. B.Com (H) Graduate) (2151 Points)
Replied 10 October 2013

Dear Mam,

in both the cases, surcharge will apply...

In regard to confusion over 2nd point,

Section 8 of the CST Act, 1956 (the CST Act) provides that inter-state sales made by a dealer against Form C shall attract CST at the rate of 2% of the turnover or at the rate applicable to the sale or purchase of such goods inside the appropriate state under the sales tax law of that state, whichever is lower. In case the sale is not against Form C, the local VAT rate as applicable in that state would be the effective rate.

sub section (2) of Section 7A of the CST Act, specifically provides that additional surcharge is leviable as tax leviable under any other provisions of the Haryana Value Added Tax Act, 2003. Also, the Punjab & Haryana High Court in the case of Sidwal Refrigeration Ind. (P) Ltd reported in (1992) 102 PLR 201, held that wherever there is a provision for payment of a surcharge in addition to the tax, the applicable CST rate would be the rate as increased by such surcharge. Accordingly, the applicable rate of tax for the purpose of payment of CST would include such additional surcharge.

In other words, sec. 15 of Haryana act says about tax and sec. 16 says about Tax on Tax... i.e. surcharge.. which is levied over the tax... thus, take 2% CST rate and charge surcharge above that limit.

Kindly refer the highlighted case of P&H high court.

Best Regards,
CA Lovely Arora
ca.lovelyarora @ gmail.com

1 Like

Kamal Singh (Accounts Officer) (27 Points)
Replied 07 February 2014

Kamal Singh Rana

Kamdhenu Ispat Limited

We are a Haryana-based manufacturer and seller of leather products like bags, wallets, etc. In addition to VAT, an additional surcharge/cess of 5% of the tax is been levied on local sales made in Haryana. We also sell our products outside Haryana and charge central sales tax (CST) at the concessional rate of 2% against Form C. However, in some cases, we have not received Form C from the customers. Our consultant advised us that in such cases the CST rate would be the local VAT rate. Please let us know if we are liable to pay the surcharge on such inter-state sales as well. As per the Central Sales Tax Act, 1956, any sales made by a dealer against Form C shall attract CST at the rate of 2% or at the rate applicable to the sale in the state under the VAT law of that state, whichever is lower. In case the dealer is not in a position to furnish Form C, the local VAT rate as applicable in that state would be the effective rate. In this regard, the Haryana Value Added Tax, 2003 (HVAT Act), specifically provides that additional surcharge is leviable as tax leviable under any other provisions of the HVAT Act. Also, the Punjab & Haryana High Court in the case of Sidwal Refrigeration Ind. (P) Ltd, held that wherever there is a provision for payment of a surcharge in addition to the tax, the applicable CST rate would be the rate as increased by such surcharge. Accordingly, the applicable rate of tax for the purpose of payment of CST would be the local VAT rate and the additional surcharge.