VAT on DEPB
Exporters selling DEPB scrips may be in for a shock. They may have to pay either a 4% or a 12.5% VAT on the DEPB licenses. Sale of intangible goods like copyright, patent and REP licenses attract a 4% VAT where as items not mentioned in any schedule will attract 12.5% VAT. So it is possible that on sale of DEPB licenses 12.5% VAT may be demanded. The Haryana Tax Tribunal had in 2003 held that DEPB is a sort of money which can be used by the dealer himself or anybody else to discharge the Customs duty liability. As money is not goods, DEPB is not covered by the definition of goods. But the Supreme Court had in the case of Vikas Sales Corporation held that “when there is no restriction on the purchase and the sale of DEPB freely and it has a value unrelated to the goods, there is no scope of their being treated as actionable claim. DEPB for all practical purposes represent merchandise and is treated and dealt with as such in the commercial world.” The Delhi High Court had held that DEPB is goods and upheld the right of the state of Delhi to tax this.