To Amend the Gujarat Value Added Tax Act, 2003 few days ago the Minister of Finance, Government of Gujarat, Gandhinagar has presented A BILL before the august Assembly Members. The silent features thereof is as follows:

1. If the Bill is passed without any suggestion or further amendment it shall come into effect from August 1, 2009.                                                                                                                                                                                
   
2. Section 29 refers to furnishing of periodical RETURNS – Monthly, Quarterly & Annual as the case may be, if such return is furnished late, i.e. after the prescribed date means 30 days from end of the month or quarter to which such returns relates than in addition to tax and interest, penalty instead of Rs. 100 per month is proposed to be prescribed by RULE not exceeding Rs. 10,000 per return.                                                                                                                     
   {Comment - therefore now will have to read Rule, 2006}.                                                                                             
3. In the above section the expression are used ‘The penalties specified’ the expression ‘The penalties prescribed’ are going to be substituted.                                                                                               
   {Comment - It means RULES are required to be referred now on wards}.                                                                                                
4. Section 34 refers to AUDIT ASSESSMENT, in which sub clause (7) states that in the case of evasion or avoidance of payment of tax penalty is stated to be leviable ‘EQUAL TO’ this words are going to be substituted as ‘NOT EXCEEDING’.                                                                                         
   {Comment – this would help as meaning thereby penalty is not automatic, mandatory and compulsory.}                                                                                                                                                                                                                                        
5. Section 59B refers to TDS, in which new sub sections are going to be inserted.                                                                                         
   {Comment - That person responsible to deduct tax shall obtain the TAX DEDUCTION ACCOUNT NUMBER (TDN) from the Commercial Tax Authority by making application in prescribed Form.}                                                                                                                                                                                  
6. If the person who has to under go TDN procedure fails to apply or do not hold it, penalty is proposed not exceeding Rs. 10,000.                                                                                         
   {Comment – this is new section person who offers works contract of above Rs. 1,00,00,000 has to take care}.                                                                                                                                                                                                                                        
7. Section 63 refers to AUDIT REPORT, the date to submit has been proposed NINE MONTHS from end of the year.                                                                                                  
   {Comment – at present submission of Audit report the lasts date is six months, now onwards nine months i.e. 31st December}.
   
   
8. From levy of VAT Schedule II Entry 8 – BRASS PARTS is deleted.                                                                                                                            
   
9. From levy of VAT Schedule II Entry 18 (i) – CHEMICALS OF ALL TYPES (ii) SOLVENT are deleted.    
   
   {Comment – Chemicals are also covered vide entry 42A as INDUSTRIAL INPUTS, - under the Central Excise Tariff Chapter 28 to 38 refers products of Chemicals, they are also exhaustively dealt in GVAT Act, 2003 by Government Notification Finance Department vide notifications issued (GHN-33) VAT-2006/SCH-II/(42A)(5)TH – 31.03.2006 ; (GHN-46) VAT-2006/SCH-II/(42A)(6)TH – 29.04.2006; (GHN-82) VAT-2006/SCH-II/(42A)(10)TH – 19.07.2006. Concern dealers are requested to read conjoint reading of Excise Chapter and GVAT notification referred herein before and than conclude where does their goods stands. In our reading there are some central excise heading still not covered in above notifications are i.e.: 28.24; 28.42; 28.43; 28.51; 29.36; 29.41; 39.12 etc. – Note that Entry related to DYES has not been deleted, it has remain as it is. So briefly besides deletion of entry 18 (i) most of the chemicals still remains taxable @ 4 % + 1%, however sub entry (ii) SOLVANT will be taxed at 12.5 + 2.5% as they are not covered by entry 42A, INDUSTRIAL INPUTS.
   
   Hon’ble Supreme Court in (2008) 15 VST 10 - Reckitt Benckiser (India) Ltd. Vs. Commissioner, Commercial Taxes and others held that, VAT Act is aligned with the Customs Tariff Act, 1975, which in turn was aligned with the Harmonized System of Nomenclature (HSN) and consequently each product in question had to be seen in the context of the Harmonized System of Nomenclature (HSN) Code and the judgments based thereon. Keeping the principle in mind Rules of Interpretation of the Schedules are follows:
   
   The commodities in the notifications are allotted with code numbers, which are developed by the International Customs Organization as Harmonized System of Nomenclature (HSN) and adopted by the Customs Tariff Act, 1975. However, there are certain entries in the notification for which HSN Numbers are not given. Those commodities which are given with HSN Number should be given the same meaning as given in the Customs Tariff Act, 1975. Those commodities, which are not given with HSN Number, should be interpreted, as the case may be, in common parlance or commercial parlance. While interpreting a commodity, if any inconsistency is observed between the meaning of a commodity without HSN Number and the meaning of a commodity with HSN Number, the commodity should be interpreted by including it in that entry which is having the HSN Number. HSN Numbers are allotted in the notifications either in four digits or in six digits or in eight digits. The four-digit numbers indicate the heading in the HSN classification, six-digit numbers indicate the sub-heading and the eight-digit numbers indicate the specific commodity number. While interpreting the commodities in the notifications, the following guidelines may be followed:
   
   
   
   • The commodities which are given four-digit HSN Number shall include all those commodities coming under that heading of the HSN.
   • The commodities which are given six-digit HSN Number shall include all those commodities coming under that sub-heading of the HSN.
   • The commodities which are given eight-digit HSN Number shall mean that commodity which bears that HSN Number.
   • As an exception to the above Rules, there are certain entries in the notifications, which bear the eight-digit numbers but the four digit heading numbers of such commodities are given for some other commodities mentioned elsewhere. In such cases, the four-digit heading shall include only those commodities under that heading excluding that commodity for which the eight-digit numbers are given. Similar cases are available in the case of six-digit numbers also. In such cases, the above principle shall apply mutatis mutandis.
   • Where the term 'other' is used in sub-entries or in sub-sub-entries, it should be construed by using the doctrine of ejusdem generis. (When specific words are followed by general words, the general words should be interpreted as having the meaning identical to the meaning attributed to the specific words).
   
   
10. In view of above, the confusion should not remain to ascertain the commodity besides deletion of chemical goods. So refer notifications nos. > (GHN-33) VAT-2006/SCH-II/(42A)(5)TH–31.03.2006; (GHN-46)VAT-2006/SCH-II/(42A)(6)TH–29.04.2006; (GHN-82) VAT-2006/SCH-II/(42A)(10)TH–19.07.2006.                                                                                                                                 
11. From levy of VAT Schedule II Entry 28A – DRUGS, MEDICINES & VACCINES INCLUDING BLUCK DRUG, but now excludes - food and dietary supplements including foods for special dietary uses and cosmetics and toilet preparations including tooth paste, tooth powder, hair oil, face and body lotion and cream soaps are to be excluded.
                                                                                                                   
    
12. From levy of VAT Schedule II Entry 45 – IT Products now the notification is going to be issued which only shall enjoy the 4% + 1% rate and all balance will go by higher rate, we shall have to wait till such notification is issued.                                                                                                                                                                                             
13. From levy of VAT Schedule II Entry 61 it is clarified that, battery operated vehicles, equipments of any types shall not be covered.                                                                                     
14. Schedule III refers to Motor sprit, in which it is clarified that, NATURAL GAS, LPG shall be excluded. Means not covered as MOTOR SPIRIT and they shall remain in Schedule II only.
    
    Be in touch to read that Government passes the above BILL on 28.07.2009. We will further clarify the legal position as and when we receive the latest information.