Sir/Madam/Gentlemen,

A multi point sales tax on iron & steel covered by the Schedule entry B-6 was introduced with effect from 1st October 2002 by amending section 7 of the Bombay Sales Tax Act, 1959.

2. The State Government has now decided to withdraw the said multipoint Sales Tax levy with effect from 1st May 2003 by replacing it with the previous single point levy. For this purpose, the State Government has issued a notification under section 41 of the Bombay Sales Tax Act, 1959.
    

3. By virtue of the above notification w.e.f. 1-5-2003, the dealers dealing in iron & steel are eligible to claim the following deductions.

   1. Resales of goods on the purchase of which the dealer is liable to pay purchase tax under section 14 of the Bombay Sales Tax Act, 1959.

   2. Resales of goods purchased from a Registered dealer otherwise than on declarations u/s. 11 or 12 of the Bombay Sales Tax Act, 1959, subject to fulfillment of the requirements of section 12A of the said Act.

   3. Resales of goods purchased from a dealer liable to pay tax under section 4 of the Bombay Sales Tax Act, 1959 subject to production of a certificate under section 12A of the said Act.

   In other words the situation that prevailed upto the 30th September 2002 is restored by virtue of the new notification.
    

4. The above concession is subject to fulfillment of the following conditions:

   1. The claimant dealer should not, in respect of periods commencing on or after the 1st May 2003, claim set-off under Rule 42M or reduction in sale price under Rule 46C.

   2. Should not collect tax on his sales.

   3. If has collected or paid tax in full, then no exemption shall be granted.

   4. If has collected or paid tax in part, then the exemption shall be restricted to unrecovered or unpaid tax.
       

   5. Where the dealers are liable to file monthly returns, the return for the month of May 2003 may be filed by claiming benefit under this notification. For this purpose, the claimant dealer if he has collected tax separately, may have to return the same to the purchaser and otherwise comply with the restrictions explained in the previous paragraph.
       

   6. The notification grants retrospective benefit which is available with effect from the 1st May 2003. It is likely that in respect of the period starting on the 1st May 2003 some dealers might have collected sales tax on their resales or will have claimed reduction in sale price under rule 46C or will have claimed set-off under rule 42M. It could prove cumbersome to recast the past transactions by issuing credit notes for tax or price difference etc. It is therefore decided, on administrative grounds, that in respect of the period starting on the 1st May 2003 and ending on the 30th June 2003 where a Registered dealer has treated himself as a VAT dealer, he will be assessed accordingly by allowing deduction under Rule 46C, set-off under rule 42M and by not forfeiting the tax collected on resales. The concession is subject to the registered dealer complying with the requirements of rule 46C or 42M and paying due tax. Such benefit may be claimed on the entire turnover or on part of the turnover, at the dealer's choice.
       

   7. A dealer claiming benefit under the previous paragraph will not be eligible to claim set-off under rule 42M in respect of goods which remain in stock on the 30th June 2003. Any other dealer will not be eligible to claim set-off in respect of goods which are in stock on the 30th April 2003.
       

   8. This circular cannot be made use for legal interpretation of provisions of law, as it is clarificatory in nature. If any member of the trade has any doubt, he may refer the matter to this office for further clarification.
       

   9. You are requested to bring the contents of this circular to the notice of members of your Association.

      Sd/-
      ( Madhusudan Salvi )
      Addl. Commissioner of Sales Tax,
      Maharashtra State, Mumbai.