PLY-BOARD MANUFACTURERS- Complete Lump sum scheme in simplified manner.

CA. RAJAT MOHAN[1]

I           Applicability

A ply-board manufacturer may, by exercising option in the specified manner at any time, can make payment of lump sum tax on sale of ply-board manufactured by him and waste products arising therefrom.

II          Rates

However lump sum for any additional press of the same or lower size shall be computed at one-half of the full rate tabulated above.

III        Rate of Tax if Industrial unit availing the benefit of deferment of payment of tax

An industrial unit availing the benefit of deferment of payment of tax if chooses to opt for payment of lump sum, shall pay lump sum at one-half of the rate as specified in table above for the remaining period of deferment and thereafter such unit shall pay lump sum for the next at least 5 years at the full rate specified therein and if the unit is closed down in the mean time, it shall be liable to pay up the whole of the amount of benefit availed by it in 12 equal monthly installments.

IV        Conditions

(i)     A ply-board manufacturer, desirous of making offer of composition, shall make an application in the form and furnish the same to the appropriate assessing authority.

(ii)   The tax paid in any quarter/month on goods purchased for use in manufacture of ply-board may be adjusted with the lump sum payable for the next quarter/month provided, an account of purchase of such goods and their use in manufacture is maintained and corresponding information is furnished in the returns.

However, the proportion of adjustment on account of goods other than wood and wood products for any tax period shall not exceed 12% of the total adjustment allowed for that period.

(iii) The composition made under this rule shall have no effect on liability to pay tax under HVAT Act or the Central Sales Tax Act on resale of goods.

(iv) A ply-board manufacturer in whose case composition under this rule is made and is in force shall file the returns under the Central Act, as if no composition is in force and shall pay tax according to such returns after adjusting the amount of lump sum payable for the return period at the rates given in table above.

(v)   A ply-board manufacturer liable to pay lump sum may make use of declarations in Form VAT-D1 or in Central form C for making purchase of goods at lower rate of tax or central sales tax, as the case may be. He shall not be required to make use of declarations in Form VAT- D3 for carrying goods.

(vi) He shall be required to furnish quarterly returns in Form VAT-R11 within a month of the close of the quarter.

(vii)Commissioner or an officer appointed under section 55(1) can visit business premises of a ply-board manufacturer liable to pay lump sum for verification of –

(a)    Number and size of press;

(b)   Date of liability to pay tax or cessation of liability; and

(c)    Any other information, which the manufacturer has given to the assessing authority in relation to his business.

V          Judicial Rulings

Sudarshan Timber Trading Co. Yamunanagar (Maninder Singh) and others Vs State of Haryana (2007) 30 PHT 224

In the above case, it was decided that lumpsum ply board manufacturer can change their option to opt out of the scheme, basically on the 2 grounds:-

Ø      When the rate of tax of the commodity is changed, and

Ø      When the rate of tax on the commodity is revised.

M/s DLF Industries Limited, New Delhi Vs State of Haryana (1997) 10 PHT 347( P&H)

In the above case, it was decided that dealer who has purchased the goods from the manufacturers shall sell the goods so purchased directly to the consumer and not to the dealer, if he wants to avail input tax credit.

But, if he sells the same to the dealer, then he shall not be entitled to any input tax credit.

[1] B.com (H), ACA, DISA.

CA. Rajat Mohan has written 4 book on direct as well indirect taxes. He is Deputy Convener for GST Research Study Group of NIRC of ICAI. He is a regular contributor of articles on tax matters, which are published on several online portals and in the columns of reputed tax journals and magazines. He conducts seminar/workshops for professionals and students on ‘GST’ and ‘Income Tax and Service tax’ respectively.

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