Punjab Government has notified reducedrate of tax on Iron and steel goods as defined u/s 14 (iv) of Central Sales TaxAct, 1961 from 4.5% to 2.5% except on Non-CENVAT paid scrap.


Non-CENVAT paid scrap has been made taxable at the rate of 1% only. This change has been made effective from 25.01.2014.

The additional tax i.e surcharge of 10% u/s 8-B of Punjab VAT Act, 2005 will be chargeable extra in addition to the above reduced rate of tax. Thus effective rate oftax after adding surcharge @ 10% on iron and steel goods except Non-CENVAT paid scrap, will be 2.75% and on Non-CENVAT paid scrap it will be 1.1%.
However the term “Non CENVAT paid iron and steel scrap” has not been explained in thenotification. CENVAT means Central VAT. It should be noted that CENVAT is never paid but credit of duty paid is considered as CENVAT. In such case what is the meaning of this term is not clear from the notification.

However in the absence of any such explanation it should mean that if CENVAT credit is taken onIron and Steel scrap then the rate of tax would be 2.75% and in case CENVAT credit on scrap is not taken then the rate of tax would be 1.1%. This change has been made w.e.f 25.01.2014.