The Hindu Business Line : Auto LPG under VAT in Bengal

West Bengal Commercial Taxes Department officials have clarified that auto LPG will come under VAT and not be treated as in the same category as motor spirit.

Participating in an interactive session with State commercial taxes department officials here on Tuesday, many dealers/resellers of Indian Oil engaged in the business of retailing petroleum products wanted to know why auto LPG cannot be denoted as motor spirit (for the purpose of VAT), as both were used as fuel to power the engine.

Citing the spirit of the law as it now exists, the officials made it clear that as of now, auto LPG was not being categorised as motor spirit.

Country liquor, lottery tickets and foreign liquor now continue to be taxed under the West Bengal Sales Tax Act 1994, as per the prescribed rates.

As per Schedule IV (Part B) of the West Bengal Sales Tax Act, 1994, motor spirits with varying degrees of flashing points attracted tax at rates varying between 17 per cent and 25 per cent, which was much higher than the highest VAT rate of 12.5 per cent.

According to Mr Bachhawat, Commissioner of Commercial Taxes, West Bengal, if auto LPG were to come under the category of motor spirit, it would attract a much higher tax rate which may not be acceptable. In the case of LPG, in the State, the tax rate under VAT now is 12.5 per cent against the earlier effective rate under sales tax of 17 per cent.

In the case of lubricants too, the rate under VAT has come down to 12.5 per cent against the ST rate of 17.25 per cent. Responding to queries from the IOC dealers on SKO (kerosene), the officials said the commodity supplied through the PDS would attract VAT of 4 per cent, but when sold outside PDS will attract 12.5 per cent.

Mr Goutam Datta, GM, Taxation, from Indian Oil, explaining the implications of VAT on the oil industry, said petrol diesel, ATF, LDO and AV Gas have been kept outside the purview of the VAT Act, and will remain under the WBST Act. But SKO, LPG and Lube are under the WB VAT Act, and accordingly all LPG Distributors are now required to register themselves under the VAT Act.

Mr Datta also clarified that since input tax credit was available on transitional stock, that is, sales tax-paid goods as on April 1, 2005, all dealers/distributors need to be informed about the formalities to be followed for availing themselves of input tax credit on opening stock.

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