Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: form 3cd :: cpt :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARDS :: VAT Audit :: articles on VAT and GST in India :: TDS :: due date for vat payment :: VAT RATES :: list of goods taxed at 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARD :: empanelment :: Central Excise rule to resale the machines to a new company :: ARTICLES ON INPUT TAX CREDIT IN VAT
VAT (Value Added Tax) »
 Haryana govt exempts solar equipment from VAT
 AP to push for same benefits under GST for VAT exempted goods
 Andhra Pradesh to push for same benefits under GST for VAT exempted goods
 Petrol prices set to rise in Goa with increase in VAT
 Payment systems to remain open on all days from March 25, 2017 to April 1, 2017
 Delhi cuts VAT on ATF to 1% for regional flights; other states to announce the same soon a
 Shops cannot charge VAT on discounted items: Consumer forum
 Delhiites have to pay lowest taxes as AAP govt announces cuts on VAT on various items
 Tamil Nadu minister justifies VAT hike on fuel
 State Government urged to withdraw hike in VAT on petrol, diese
 High VAT may encourage illegal trading

Procurement agencies told to pay VAT on sale of paddy by products
December, 11th 2014

The state excise department has served notices to the district drawing and disbursing officers of all five grain procurement agencies in Punjab and the Food Corporation of India (FCI) to pay value-added tax (VAT), since 2011-12, on the amount generated by the sale of byproducts of paddy by rice shelling mill owners.

The liability of each state procurement agency — Punsup (Punjab State Civil Supplies Corporation Limited), Pungrain (Punjab Grains Procurement Corporation Ltd), Punjab State Warehousing Cor poration ( PSWC ) , Punjab Markfed and Punjab Agro Industries Corporation Limited (PAIC) — and the FCI, on this count could run into crores of rupees, as estimates suggest that every kharif season, rice millers in the state sell byproducts of paddy — rice bran, rice husk and small broken rice (Kinki) — valued at around ` 800 crore in the open market.

In case VAT is paid, the agencies also become liable to pay income tax. In fact, the income tax department has also served notices on the agencies.

On its part, the state government and the FCI are in a catch22 situation as the profit earned by rice shelling mill (which shells rice on the behalf of the state procurement agencies) owners by selling the byproducts is part of the milling charges allowed by the Centre.

Since 2003, the Centre has frozen these milling charges at Rs. 15 per quintal on the condition that the profits generated by the rice shelling mills owners would be retained by them and this would be considered part of the milling charges.

The agencies and the FCI have not been able to decide on whether to pay up or file an appeal with the department or move court.

Punjab excise and taxation commissioner Anurag Verma said, “The procurement agencies can take up the issue with me and their requests will be examined. The notices were sent to streamline the VAT collection system. The department will not collect any unauthorised tax.”

The state government is unable to decide on the matter, as one of its departments (excise and taxation) has served notices on the subsidiaries of the other department (food and civil supplies).

The managing directors of the procurement agencies have sought an opinion from the food and civil
supplies department, but are yet to receive any response.


After procuring paddy from farmers, the state procurement agencies hand it to rice shellers, who after shelling the paddy return rice to these agencies. This rice is then handed over to the FCI for distribution, transport and storage. The excise and taxation department has argued that since rice millers work on the behalf of the procurement agencies, the latter is liable to pay VAT.

“We only take rice from rice shellers. If VAT is recoverable from us, then income tax is also chargeable. So far, the government has been unable to decide on the matter,” said a top officer in the food and civil supplies department.

He added that before the excise department started using coercive methods for recovery, the issue had to be settled.

On their part, cash-strapped procurement agencies claim to have no money to pay the VAT and the income tax.

They also want to avoid paying up as once it is paid, the levying of tax would become standard practice.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Privacy Policy

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions