Imphal, May 08: As the required Value Added Tax (VAT) had not been levied on Kerosene oil worth Rs 37,65,45,007 at the time of distributing the same by the dealers to the people under the Public Distribution System (PDS), the State Government has directed the Indian Oil Corporation (IOC) to recover and hand over the amount of the tax that should have been collected along with the accrued interest payable, disclosed an official source of IOC.

It is said that earlier the State Government did not impose VAT on Kerosene which is one of the PDS items.

However, following the issuance of a Gazette notification by the Government of Manipur on December 26, 2005, levying of VAT on Kerosene was made mandatory.

Subsequently, the Assam Oil Division (AOD) and Marketing Division of IOC at Imphal started levying VAT on Kerosene at the rate of 4 percent with effect from October, 2007 .

But the tax was levied during the intervening period of publication of the Gazette notification and October, 2007 .

As a result, the State Government has directed the IOC to return the due tax amount along with the payable interest at the rate of 24 percent per annum.

Talking to The Sangai Express in this connection, an official of the IOC disclosed that in between September 2007 and the issuance of the Gazette notification, the AOD and the Marketing Division of IOC had provided Kerosene worth Rs 37,36,45,007 to the dealers for distribution to the people of the State through their sub-dealers.

Even though the Gazette notification had been issued and the same published in newspapers, the IOC was supposed to have been informed officially by the Taxation Department or by other authorities concerned.

With no such information, IOC was oblivious of the matter and did not levy VAT on Kerosene.

For the first time, the matter related to not having levied VAT on Kerosene was brought to the notice of the IOC by the Superintendent of the Taxation Department of the State Government when one of the IOC officials had gone to the Department in connection with some tax assessment.

When the matter came to light, IOC started levying VAT on Kerosene at the rate of 4 percent since October 2007, the IOC official informed.

Now the Taxation Department has exerted pressure on the IOC to recover the tax amount that should have been collected during the intervening period.

As the Kerosene quota has already been distributed among the people without levying VAT, the official said since there is no possibility of recovering the due tax from the people again, efforts are being made to discuss the issue with the State Government.

On the other hand the Taxation Department has already set April 18 as the deadline to return the VAT amount along with the interest payable, the official further disclosed.

When contacted, an official of the Taxation Department conveyed that at the time of releasing Kerosene worth Rs 37,65,45,007 to the dealers for distribution among the people, AOD and Marketing Division of the IOC at Imphal should have levied VAT at the rate of 4 percent and collected a total amount of Rs 1,50,61,799.However, the same had not been done.

Even if it is one of the PDS items, Kerosene comes under the ambit of VAT and since the State Government had issued a Gazette notification in this regard, VAT should have been started levying from the time of publication of the notification, the Taxation official reasoned.

Out of the total due VAT amount of Rs 1,50,61,799, Rs 90,23,103 was meant to have been collected by the AOD and the remaining Rs 60,38,596 by the Marketing Division.

The Taxation Department has directed the AOD and the Marketing Division of the IOC to return their respective due VAT amount along with the payable interest calculated at the rate of 24 percent per annum.

In case of failure to comply with the directive, the Taxation Department has also made it clear that necessary penalty would be imposed.

Calculated at the rate demanded by the Taxation Department, the amount of the interest payable by the AOD and the Marketing Division on the due VAT amount are said to be Rs 48,123 and Rs 32,206 respectively.

It is said two of the officials of the Taxation Department have also been subsequently suspended from their services on alleged charge of failing to intimate in time the AOD and the Marketing Division of the IOC in connection with Gazette notification.

Meanwhile, with IOC allegedly putting the blame on the dealers for not levying VAT and delay in issuing the challans, the dealers have not been able to lift their respective Kerosene quota for the current month.

The dealers explained that they did not levy VAT as the Government failed to intimate the IOC in time.

Otherwise, there would not have been any problem in IOC levying the tax from the dealers and the dealers in turn from their sub-dealers who would ultimately collect the tax from the people.

Asking to collect the due VAT amount from the people now is asking for the impossible, they contended.

Comment