| Notification Detail :
Punjab Government has surprisingly introduced single stage tax system under the Punjab VAT Act, 2005. Punjab Government has notified certain goods, most of which are consumable goods, on which tax under Punjab VAT Act has been levied only at the first stage of its sale.
The tax will be payable on such goods by the first importer and the manufacturer only. At subsequent stages when such goods are sold by wholeseller, distributor or retailler, the same will be sold as tax free.
That means no tax will be paid on the value addition of such goods at subsequent stages. System of VAT is a multiple point of taxation. Single point of taxation is inconsistent with the VAT system and also the preamble of the Punjab VAT Act, 2005 which runs as under:
" An Act to provide for the levy and collection of value added tax and turnover tax on the sales or purchase of goods and for the matters connected therewith and incidental thereto, and for the repeal of the Punjab General Sales Tax Act, 1948."
Inspite of the abovesaid amendment being in contradiction with the preamble of the said Act, in my view the State Government is very much competent and within its right under Entry 54 of the State List of the seventh schedule to the Constitution of India, to levy tax on the single point of sales within State and make subsequent stages tax free.
The sigh of relief in the said amendment is that no single point of tax has been levied on goods which could have been used as raw material for any industry, otherwise it could have resulted in tax cascading.
The special rates of tax @14.5% and 22.5% have been notified for such goods on which tax will be payable at first stage. It should be noted that surcharge @ 10% u/s 8-B will be seperately leviable on such goods, thus making the rate of tax from 14.5% to 15.95% and from 22.5% to 24.75%.
The said amendments will be applicable w.e.f 01-January-2014
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