COMPOSITION SCHEME

COMPOSITION SCHEME

Steps/ Conditions

• A ply-board manufacturer, desirous of making offer of composition, shall make an application in the following form and furnish the same to the appropriate assessing authority –

Form of application I ........................................................... (name), aged ........ (Years), son of Shri ................................................ resident of ............................................... (address), town: ................., District: ....................., proprietor/partner/Karta/manager/director/ authorised signatory of business of manufacturing and selling ply-board in the name and style of M/s ............. ..........................................., situated at ..................... ............................ (address), District: ............, do hereby solemnly affirm and declare truly and correctly as under - 2. That the said business concern is registered under the Haryana Value Added Tax Act, 2003 with TIN: ........................ dated .................... / has applied for registration vide application dated ................... / application for registration is enclosed. 3. That the said business concern offers to make payment of lump sum by way of composition, subject to the provisions of the Haryana Value Added Tax Rules, 2003, which have been carefully gone through, understood and are accepted as terms and conditions of the composition. 4. Detail of presses installed at the business premises are, as under - Serial No. Size of press Number of press(es) Place                                                                                Signature of Applicant Date                                                                                 ACKNOWLEDGEMENT Received application from M/s .................................................. (Mention complete name and address with TIN, if any) Place:                                                                               Signature of assessing authority Date

• The tax paid in any quarter/month on goods purchased for use in manufacture of ply-board may be adjusted with the lump sum payable for the next quarter/month provided an account of purchase of such goods and their use in manufacture is maintained and corresponding information is furnished in the returns.

However the proportion of adjustment on account of goods other than wood and wood products for any tax period shall not exceed 12% of the total adjustment allowed for that period.

• In continuation of the above discussion, GST in India the compostion scheme also known as lump sum scheme will result in cascading effect of taxes as the input credit chain is broken.

Illustration: Out of a claim of tax paid of Rs.2,06,000/- in respect of goods used in manufacture, Rs.1,76,000 relate to wood and wood products and Rs.30,000 to other goods, the claim allowed shall be Rs.2,00,000 - Rs.1,76,000/- in respect of wood and wood products and Rs.24,000/- in respect of other goods.

• A ply-board manufacturer in whose case composition under this rule is made and is in force shall file the returns under the Central Act as if no composition is in force and shall pay tax due according to such returns after adjusting the amount of lump sum payable for the return period at the rates given in table above.
• The composition made under this rule shall have no effect on liability to pay tax under HVAT Act or the Central Sales Tax Act on resale of goods.
• A ply-board manufacturer liable to pay lump sum may make use of declarations in Form VAT-D1 or in Central form C for making purchase of goods at lower rate of tax or central sales tax, as the case may be, for use in manufacturing of goods for sale. He shall not be required to make use of declaration(s) in Form VAT- D3 for carrying goods. He shall be required to furnish quarterly returns in Form VAT-R11 within a month of the close of the quarter.
• Commissioner or an officer appointed under section 55(1) visit business premises of a ply-board manufacturer liable to pay lump sum for verification of –
  • Number and size of press;
  • Date of liability to pay tax or cessation of liability; and
  • Any other information, which the manufacturer has given to the assessing authority in relation to his business.

General principles/ conditions of this scheme

• Lump sum tax payable shall be deemed to be tax for the purpose of application of provisions relating to assessment, use of declarations and maintenance of record relating thereto, levy of interest, imposition of penalties for offences committed under the Act, and recovery.
• Once an option to pay lump sum has been exercised it shall not be withdrawn until
• the rate of lump sum is revised; or
• the rate of tax on goods which the lump sum dealer deal in are revised
• and the lump sum dealer makes an application within 15 days of the date of the publication of the notification that he does not wish to pay lump sum at the revised rate [exception under rule 49]
• A lump sum dealer shall not issue a tax invoice as defined in section 2(1)(zl).
• The input tax in respect of goods purchased by any dealer from a lump sum dealer shall be nil.
• Notwithstanding anything contained in this Chapter, the State Government may at any time withdraw the facility of making payment of lump sum in lieu of tax from anyone or more or all classes of dealers.
• No Surcharge under section 7A shall be applicable in this case.

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