Vat: resolve inter-state transactions

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: rates on the products should be uniform. Three, CST should be made zero without delay.

We would appreciate if our following concerns could be addressed. 1)Section 145A (Finance {No.2} Act 1998 w.e.f.1.4.1999) mandates that for the purpose of computing profit and taxable income of any manufacturing concern, the value of closing stocks/inventory should be adjusted to include the amount of excise duty applicable. Income Tax is being levied on excise duty, and worse, on deemed excise duty on goods still to be sold. Even if the modvatable excise duty on inputs is considered, the deemed excise duty on the remaining amount of value addition due to processing and manufacturing costs is not set-off until products are sold, duty collected from the customer and then paid as per the statutory rules. Excise duty, in our perception is only a statutory levy, passed on to the government. No income tax should be charged on this, as it is not the assessee’s income.

2) The commerce minister recently stated that the proceeds of sale of DEPB licences do not form part of the taxable income and that CBDT/concerned departments would issue a formal circular. We have not found any formal statement, so far. We hope this will hold good with retrospective effect.

—NC Vaish, Kanpur Metal Products

Both the issues raised by you are under active consideration of relevant Excise and Income Tax authorities. Final clarification is expected soon.

Do I need to get registered in the service tax department, as I am planning to start my own placement training and consultancy and do not have preceding year record? Do I get registered next year after seeing the performance this year?

—RK Dhanvada, Hyderabad

If you think that the value of your services are likely to exceed the stipulated threshold of Rs 4 lakh in one year, it is better to get yourself registered from the start. First, you could charge the service tax from the customer from day one. Second, you could also claim set-off of the service tax you would have paid on other services, which you would have used as inputs while providing the service such as on telephone, internet etc. In case you fail to envisage that in the beginning, you are liable to pay service tax on the entire amount (4 lakh+) of services even if you have not collected it from the consumers.