Municipal water exempted
While withdrawing the large number of exemptions, the Government in the recent budget threw away a few babies with the bath water. The exemption available to food preparations and waters, not cleared in sealed containers, falling under tariff item 2106 90 99 and 2201 90 90 respectively was one such case. When I told friends that the idly dosa budget is exactly that as idly and dosa in hotels were liable to excise duty, they were thinking it was a joke. I added that even the water that comes through the Municipal pipeline was liable to be taxed. Fortunately, the government took notice and issued a notification exempting these, on 4th May 2006.
DDT 357 - 08- 05- 2006 pointed out that even the exemption would cause some trouble from the period 1.3.2006 to 3.5.2006. DDT wrote,
So from 1.3.2006 any water sold was liable to excise duty and all the civic bodies in the country supplying water to the citizens were liable to pay excise duty. It is really surprising why the shrewd excise men did not pounce upon Municipal Corporations to pay duty. Obviously the government realized the lapse and now a notification is issued exempting waters not cleared in sealed containers. But this notification is dated 4.5.2006, which means and proves that such water was taxable till that date. Will a retrospective exemption be given or will the department collect the duty from civic corporations till 3rd May 2006?
A similar exemption is now given to “Food preparations not cleared in sealed containers” which would mean that all hotels were liable to pay excise duty on all food items served by them. They are still liable for the months of March and April.
DDT is happy to report that the Government has reacted and rectified the lapse in a little over a month after we had pointed it out. But this is the minimum time required for a notification to be conceived and delivered. Now a Section
11C Notification is issued to the effect that no duty is required to be paid for the period commencing on and from the 1st day of March, 2006 and ending with 3rd May, 2006.
DDT is grateful to the government for this correction which has saved mountains of paper and avoided a large number of pending cases.
NOTIFICATION NO. ,, Dated : June 19, 2006