Tax share of service recipient

As per the PC Rules, the rules do not apply to packaged commodities that are meant for sale to industrial/institutional consumers. Institutional consumer has been defined to mean the institutional consumer like transportation, airways, railways, hotels, hospitals or any other service institutions which buys packaged commodities directly from the manufacturer for use by that institution. Industrial consumer has been defined to mean the industrial consumers who buy packaged commodities directly from the manufacturer for use by that industry.

The sale of bulk quantities of your product, not intended for sale in retail but for industrial buyers, should be outside the purview of the LM Act & Packaged Commodities Rules and therefore, would not attract MRP-based valuation. The goods manufactured and meant for industrial use needs to be cleared from the factory by you on payment of excise duty on the transaction value without abatement.

VAT not paid by vendor

We are a Delhi-based company manufacturing plastic toys. We locally procure certain goods like screws and wires from one of our vendors located in New Delhi upon payment of appropriate VAT against the tax invoice raised by the local vendors. We have been utilising the VAT paid on inputs to offset our VAT output liability. However, recently, we have been asked by the VAT department to reverse the input tax credit availed of, since the local vendor has not been depositing VAT with the department for the last three years. Please advise whether we need to reverse the input tax credit so availed of

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