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Sales Tax Review |
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November 2006 |
Important Trade Circulars
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No.VAT/ROT/1006/116/Adm-3
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Trade Cir- 35 T of 2006 |
Mumbai Dt : 13-11-2006. |
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Taxation of Medicine under the Maharashtra Value
Added Tax Act, 2002 (Mah. IX of 2005) – Special Provisions regarding
taxation of Medicines.
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Ref: |
1) No.VAT-2005/Act/VD-1 Mumbai dated 1-4-2005
Trade Cir.No.1T of 2005.
2) No.VAT-2005/Act/VD-1 Mumbai dated 19-5-2005
Trade Cir.No.7T of 2005.
3) No.VAT-2005/Act/VD-1 Mumbai dated 20-9-2005
Trade Cir.No.28T of 2005.
4) Maharashtra ordinance No.VI of 2006 dated
20-6-2006.
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Gentlemen/ Sir/ Madam,
The existing definition of ‘purchase price’ contained in
clause (20) of section 2 of Maharashtra Value Added Tax Act, 2002 ( Mah. IX of
2005) has been amended with effect from 1st April 2005 by Mah. Ordinance No.VI
of 2006 dated 20.6.2006. By this amendment, a new Explanation, namely
Explanation IV is added to the definition. The Explanation reads as follows:
"Explanation IV: The amount of valuable consideration
paid or payable by a dealer for the purpose of drugs specified in entry 29 of
schedule C shall be maximum retail price printed on the package containing the
drugs.".
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The present circular is being issued in continuation of the
aforesaid circulars and is issued in response to the queries and suggestions
received from the Trade.
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Set-off in respect of branch transfers: Set-off in
respect of inter-State branch/ consignment transfer will be available as per
Trade Circular No. 28T of 2005 dated 20th September 2005, i.e., by reduction
of 4% on the actual purchase price of the dealer making inter state
consignments.
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Set-off in respect of inter-State sales or export:
The dealer who makes inter-State sales or exports out of India of medicines
can claim set-off on their corresponding purchases as per para 4E (i) of the
Trade circular 7T of 2005 dated 19th May 2005, i.e., on the tax paid on the
MRP’s by the manufacturer or the importer.
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Some other clarifications are as follows:
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Although the definition of ‘purchase price’ is amended on
20th June 2006 with retrospective effect from 1st April 2005, there is no
necessity to file revised returns for the period 1st April 2005 to 20th June
2006.
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The dealers who are claiming set-off in respect of
medicines on account of inter-State sales or branch transfers may continue
to do so. The instructions regarding claim of set-off as given in Trade
Circular No. 7T of 2005 dt. 19th May 2005 and 28T of 2005 dt. 20th September
2005 will continue to be applicable.
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The wholesalers, distributors, stockists,
semi-wholesalers and retailers should not show the turnover of sales and
purchases of medicines in their periodic returns. Only those dealers in
medicines who are liable to pay tax on their sales of medicines (e.g.
manufacturers and importers) need to show the turnover relating to medicines
in their periodic returns.
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This circular cannot be made use of for legal
interpretation of the 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.
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You are requested to bring the contents of this circular to
the notice of the members of your association.
Yours faithfully,
(B. C. Khatua)
Commissioner of Sales Tax,
Maharashtra State, Mumbai.
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