Maharashtra govt clears VAT confusion

The Maharashtra Government has issued a circular in response to the
clarification sought by TAIT on the correct VAT to be applied on certain IT
goods, which got re-categorized in the Central Excise Tariff heading with the
change in the internationally accepted Harmonized System of Nomenclature (HSN).

According to the circular (#VAT-2005/Act/VD-1 issued in Mumbai) the
applicable rate of VAT for the notified IT products stays at four percent
irrespective of the change in the Central Excise Tariff heading (or the HSN
code) for these products.

The circular signed by BC Khatua, Commissioner of Sales Tax, Maharashtra
state, Mumbai, stated, “It is clarified that pending issue of the new
notification, all of the products earlier described in column three of the State
Government Notification dated Oct 17, 2005 will continue to be treated as
information techno­logy products for the purpose of the Entry C-56 irrespective
of the change in the Central Excise Tariff heading for these products. This
clarification takes effect from Jan 1, 2007.”

It may be recalled that on Jan 1, 2007, the Ministry of Finance had effected
certain changes in chapters 84 and 85 of the Central Excise Tariff to align the
Central Excise Tariff with certain commitments to the World Customs
Organization. These changes created confusion on the VAT applied by some states.
As per these changes, certain IT goods, which were attracting a VAT of four
percent, were attracting 12.5 percent VAT.

Commissioner of Sales Tax, through this circular also informed that this
circular cannot be used for legal interpretation of provisions of law, as it is
'clarificatory' in nature.