Sales Tax Review

August 2007

TRADE CIRCULAR.

No.VAT/MMB-1005/23/Adm-3

Gentlemen / Sir / Madam,

An ordinance referred in (7) above was promulgated on 30^th June 2007.  The Ordinance has since been converted into an Act (Act No.XIX of 2007).  By virtue of this Act the Explanation IV to clause (20) of section 2 and Explanation IV to clause (25) of section 2 is deleted.  These Explanations relate to purchase price and sales price of drugs specified in Entry 29 in Schedule C.  The amendment Act came into force with effect from 1^st July 2007.  The dealers in drugs and medicines specified in entry 29 of schedule C are now required to pay tax at every stage on their actual sale price and are entitled to claim set-off of the tax paid on their purchases.

2. Rule 52 (3) is gazetted by Notification No. No.VAT-1507/CR-58/Taxation-1, dt 11.7.2007.  This rule provides for giving set-off @ 4% on maximum retail  price on the stock of medicines and drugs specified in entry 29  of schedule ‘C’ at the close of business on the 30^th June 2007.  Dealers will get this set-off only if they file a stock statement in the following format to the registering authority on or before 31^st August 2007.  However, as per request of many organisations of drug dealers the date for filing of closing stock statement is extended to 30^th September 2007.

Format

Details of goods held in stock at the close of business on 30th June 2007 as specified in sub-entry (a) of entry 29 of schedule 'C' appended to the Maharashtra Value Added Tax Act, 2002.

Sr.No.	Date of purchase	Description of goods	Actul purchase price	M.R.P. (In Rs.)
				Maximum Retail price	Tax (if any)
1	2	3	4	5	6
		Total

3. Maximum retail price shall be exclusive of taxes where taxes are charged separately in addition to the MRP and in any other case the MRP will be inclusive of sales tax.

4. Notification referred at (10) above is also issued on 3^rd July 2007.  By virtue of this notification medicine dealers are covered under voluntary composition scheme for retailers.  They can apply for composition on or before 30^th September 2007.  All the conditions of composition scheme declared by Notification No. VAT-1505/CR-105/Taxation-1 dated the 1^st June 2005 are applicable to these drug/medicine dealers also.  For example dealers whose turnover is below Rs. 50 lakh per annum are only eligible to opt for composition scheme.

5. This circular cannot be made use of 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.

6. You are requested to bring the contents of this circular to the notice of the members of your association.

Yours faithfully,
Sanjay Bhatia
Commissioner of Sales Tax,
Maharashtra, Mumbai.