15 January, 2014

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Haryana VAT :- Levy of Surcharge u/s 7A on Composition Dealers (Circular)

Circular No. Memo 41/ST-1 dated 14.1.2014.
By CA Ankit Gulgulia (Jain). Reach him at

Haryana State Government has recently clarified that additional surcharge i.e. at the rate of 5% shall be applicable to all the composition dealers registered under Haryana Sales tax except the retailer dealer under composition scheme pursuant to Rule 52.
Section 7A was inserted in the Haryana Value Added Tax Act, 2003 (here-in-after referred to as the Act) effective from 2.4.2010 levying an additional tax in the nature of surcharge at 5% of the tax payable by a dealer registered under the Act. A retailer in lump sum composition scheme under Rule 52 of the Haryana Value Added Tax Rules, 2003 (here-in-after referred to as the Rules) has been specially excluded from the provision of this surcharge by section 7A of the Act.

It has now come to the notice of the department that there is some confusion among the lump sum composition dealers whether the surcharge is to be levied, collected and paid by them or not. The assessing authorities may also not be clear about this levy on lump sum composition dealers under the Act.
It is brought to your notice that there is no ambiguity in regard to the levy of surcharge on lump sum composition dealers. Also this issue has recently been decided by the Hon'ble Haryana Tax Tribunal in favour of the State in STA No.485 of 2012-13 in the case of M/s.Mahashiv Promoters (P) Limiited, Rohtak V/s State of Haryana (a copy is enclosed for ready reference).
Therefore, in the light of the above, it is quite clear that surcharge is to be levied and collected from the lump sum composition dealers availing lump sum schemes under different Rules except the lump sum paying retailers covered under the rule 52 of the Rules. All the assessing authorities working under your administrative control should be informed to implement the above provisions of law strictly.
Circular No. 41/St-1    Dated:-14.1.2014

(Refer the Complete Circular and Case Judgement Below)

About the Author:
CA Ankit Gulgulia
Author is Practicing Chartered Accountant in New Delhi/NCR and specialising in Indirect Taxes, Corporate Laws and Transfer Pricing. He can be reached at ankitgulgulia@gmail.com  +91-9811653975
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