India: Chhattisgarh High Court orders Uniform Tax

The High Court bench in Chhattisgarh has ordered uniform VAT/CST to be applicable on all State based Steel mills.

Updated at 19.05 hrs

A manufacturer based in the state said, “Today, Chhattisgarh High Court bench gave its verdict on the plea of large scale manufacturers challenging two different tax on the same commodity and making it uniform.”

A copy of the judgment has not been received yet. Therefore, it is still unclear as to what taxes will be applicable to  Chhattisgarh based Steel units i.e. whether 4% or 3% VAT; 1% or  2% CST.

In the CG Budget 2014-15 announced in February last year, differential VAT rates were applied based on size of the company. Post which, the units falling under small scale (capital less than INR 1 crore) and medium scale (capital less than INR 10 crore) category continue to charge 3% VAT. However, large scale (capital more than INR 10 crore but less than INR 100 crore) units charge 4% VAT. Similarly, 2% CST is applicable for large scale units. Whereas, small & medium scale plants charge by 1% CST.

Industry sources believe that a uniform VAT of 3% will be applicable on all sizes of steel industry and 1% CST. They also confirmed the judgment is likely to have a retrospective effect.

There are approx 8 large steelmakers in Raipur and 3 in Raigarh, who are charging 4% VAT and 2% CST since 1 Apr’14. While, the rest are paying 3% VAT and 1% CST.

 Large Scale Steel Plants paying 5% VAT & 2% CST