Disallowances of Set off
This query is : Resolved
14 May 2008
We are a trading company,
we have purchased silver plated items (Puja Thalis) from M/s. A & Co,
The dealer has charged VAT @ 4% to us,
We in turn have sold this goods by charging 4% VAT and 10% CST (full rate of tax)
We have claimed set off for VAT paid on purchases.
STO has not only disallowed the set off ( as they have included these items in schedule E and the dealer M/s. A should have charged VAT @ 12.50% and not 4%) but has asked us to pay 12.5% on our sale.
Is the STO justified ?
we have purchased silver plated items (Puja Thalis) from M/s. A & Co,
The dealer has charged VAT @ 4% to us,
We in turn have sold this goods by charging 4% VAT and 10% CST (full rate of tax)
We have claimed set off for VAT paid on purchases.
STO has not only disallowed the set off ( as they have included these items in schedule E and the dealer M/s. A should have charged VAT @ 12.50% and not 4%) but has asked us to pay 12.5% on our sale.
Is the STO justified ?
Amit Sharma
(Expert)
14 May 2008
Dear Meghana,
STO is perfectly correct , the vendor would have sold it @ 4% but on -order for it to be @4% it should be pure , in your case it is silver plated which does not make it 100% pure.
STO has put your item under Schedule E as silver plated goods used for puja does not fall into any other class of schedule hence 12.5% VAT.
Hope your doubt is clear now.
STO is perfectly correct , the vendor would have sold it @ 4% but on -order for it to be @4% it should be pure , in your case it is silver plated which does not make it 100% pure.
STO has put your item under Schedule E as silver plated goods used for puja does not fall into any other class of schedule hence 12.5% VAT.
Hope your doubt is clear now.
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