INDIA :TRYING TO COLLECT BACK-TAXES ON CONSUMABLES

[Anonymous]

http://www.ciol.com/Channel-News/News-Reports/VAT-hounds-TN-channel/13709122205/0/
INDIA :TRYING TO COLLECT BACK-TAXES ON TONER & INK CONSUMABLES
The
state government has asked the dealers who were billing ink cartridges
and toners under four percent VAT to pay 12.5 percent VAT for all those
products that have been sold from 2007
CHENNAI,
INDIA: The random raids conducted by VAT officials have put channel
partners in Tamil Nadu dealing with consumables in a spot.Tamil Nadu
state government has asked the dealers who were billing ink cartridges
and toners under four percent VAT to pay 12.5 percent VAT for all those
products that have been sold from 2007.Several dealers have been
affected because of this sudden notice from the VAT department, as the
dealers have been billing toners and ink cartridges at only four
percent VAT. The channel claims that their vendors and distributors had
instructed them to bill the consumables at four percent and never
informed them about the state government’s clarification of paying 12.5
percent on consumables.

A notice has been served to
Madurai-based Sunvin Computers and few other channel partners in
Chennai to pay 12.5 percent of VAT for all those ink cartridges and
toners sold from 2007 to till date.J Vincent, Proprietor, Sunvin
Computers, Madurai said, “We have been billing consumables on the basis
of four percent VAT and also getting the same from the distributors and
suddenly the commercial tax department has slapped a fine of seven lakh
and is asking us to pay12.5 percent VAT for all those products that we
sold in the past two years, which might go to several crore. Moreover,
the customers also will not accept the sudden price hike.”

Vincent
also added that there was no proper communication from the state
government and consumables carry only four percent VAT according to VAT
Act. “The state government has mentioned that all computer and
computer-related peripherals attract only four percent VAT, and printer
and consumables are computer-related peripherals due to their
dependency on computers alone. So these products attract four percent
VAT, and if at all the products attract 12.5 percent VAT, then the
vendors or the distributors need to bear the cost as they were the ones
who billed the product without clarity at four percent.”Even Uttam
Chand, CEO, Uttam Marketing, Chennai claimed that it is the vendors’
and distributors’ responsibility to pay the extra VAT specified by the
commercial taxes department. “This confusion has been there for almost
two years and we have been communicating this fact to vendors and they
in turn were saying that they will safeguard us if we face any problem.
However, nobody is coming to support us or put a stay against the
notice issued by the state government,” he said.

A major office
automation dealer, who has been served notice by the sales tax
department informed that a case has been filed challenging the notice.
“We have been billing the products at four percent from the disti and
suddenly we were served a notice by the sales tax department to pay a
difference of 8.5 percent. We have circulated the notice to the vendors
as well as the distributors and they are yet to come to us with any
reply.Meanwhile we have filed a case in the court challenging the
notice and will fight with the evidence we have,” informed the dealer
on the condition of anonymity.Confed-ITA has also taken up the issue
and written to all vendors and distributors asking for clarification.
Vinod Kumar, Treasurer, Confed-ITA, is spearheading the issue with the
vendors and distributors.”We have written to all the vendors as well as
the distributors and are waiting for their reply. This is going to be a
serious issue for all in the channel community as they have to pay a
huge amount that might lead to several crores. The vendors and the
distributors have to take up the responsibility and bail out the
channel from this crisis,” said Kumar.

On the other hand, PN
Prasad, President, Confed-ITA claimed that Manufacturers Association
for IT (MAIT) had been updated by the state government of Tamil Nadu in
2007 that the ink cartridges and toners attract a VAT of 12.5 percent.
“Despite getting the order from the state government of Tamil Nadu,
MAIT has not shared this with channels and this is a serious case of
violation. Every time vendors take the channel for a ride and this is
yet another example of that,” claimed Prasad.When contacted Vinnie
Mehta, Executive Director, MAIT said that the association communicates
any information it has to its members. “We circulate any information
through our members as our mode of communication is very limited within
our members only. In any kind of sensitive subjects like taxation, we
presume that our members take it to the right people and communicate it
with proper measures and advice to their respective channel community,”
he said.He also informed that he will look into this particular issue
and check it with the members of MAIT.

[Author]

July 14, 2009 at 11:22 AM