KARNATAKA VALUE ADDED TAX ACT, 2003

KARNATAKA VALUE ADDED TAX ACT, 2003

Preamble - KARNATAKA VALUE ADDED TAX ACT, 2003

THE KARNATAKA VALUE ADDED TAX ACT, 2003

[Act, No. 32 of 2004]

PREAMBLE

An Act to provide for further levy of tax on the purchase or sale of goods in the State of Karnataka.

Be it enacted by the Karnataka State Legislature in Fifty-fourth year of the Republic of India, as follows:-

Section 1 - Short title, extent and commencement

(1)     This Act may be called the Value Added Tax Act 2003.

(2)     It extends to the whole of the State of Karnataka.

(3)     It shall come into force on such [1] [date] as the Government may, by notification, appoint and different dates may be appointed for different provisions of the Act.

(4)     The tax shall be levied on the sale or purchase of goods made after such date as the Government may, by notification, appoint and different dates may be appointed for different class or classes of goods.

Section 2 - Definitions

In this Act unless the context otherwise requires:-

(1)     'Agriculture'with its grammatical variations includes horticulture, the raising of crops,grass or garden produce and grazing but does not include dairy farming, poultryfarming, stock breeding and mere cutting of wood.

(2)     'Agriculturist' means aperson who cultivates land personally.

(3)     'Agriculturalproduce or horticultural produce' shall not be deemed to include tea,beedi leaves, raw cashew, timber, wood, tamarind and such produce, except coffeeas has been subject to any physical, chemical or other process for being madefit for consumption, save mere cleaning, grading, sorting or drying.

(4)     'AppellateTribunal' means the Karnataka Appellate Tribunal constituted under theKarnataka Appellate Tribunal Act, 1976 (Karnataka Act 59 of 1976).

(5)     'Assessment' means an assessment made or deemed to have been made under this Act and includesa re-assessment.

[2] [(5A) ?Body corporate? means a corporation, a company as defined under the Companies Act, 1956 (Central Act 1 of 1956) and a company incorporated outside India but does not include.-

(a)      a corporation sole;

(b)      a co-operative society registered under any law relating to co-operative societies; and

(c)      any other body corporate, not being a company as defined in the Companies Act, 1956, which the State Government may, by notification in the Official Gazette, specify in this behalf.]

[3] [(5-B) ? Branded? means any goods sold under a name or trade mark registered or pending registration or pending registration of transfer under the Trade and Merchandise Marks Act, 1958 (Central Act 43 of 1958) or the Trade Marks Act, 1999 (Central Act 47 of 1999).]

(6)     'Business'includes:-

(a)      any trade, commerce, manufacture or any adventure or concern in the nature oftrade, commerce or manufacture, whether or not such trade, commerce,manufacture, adventure or concern is carried on in furtherance of gain or profitand whether or not any gain or profit accrues therefrom; and

(b)      any transaction in connection with, or incidental or ancillary to, such trade,commerce, manufacture, adventure or concern.

[4] [(7) ?Capital goods? for the purposes of section 12 means plant, including cold storage and similar plant, machinery, goods vehicles, equipments, moulds, tools and jigs, and used in the course of business other than for sale;]

(8)?  'Commissioner'means any person appointed to be a Commissioner of Commercial Taxes underSection 3 of the Karnataka Sales Tax Act,1957 (Karnataka Act 25 of 1957).

(9)?  'Company'shall have the meaning assigned to it in the Companies Act, 1956 (Central Act 1of 1956).

(10) 'Tocultivate' with its grammatical variations and cognate expressionsmeans to carry on any agricultural operation;

(11) 'Tocultivate personally' means, to cultivate land on one's own account, -

(a)      by one's own labour, or

(b)      by the labour of one's own family, or

(c)      by servants on wages payable in cash or kind but not in crop share, or by hiredlabour under one's personal supervision or the personal supervision of anymember of one's family.

Explanations.- (1) A person who is a widow or a minor or is subject toany physical or mental disability shall be deemed to cultivate the landpersonally if it is cultivated by her or his servants or by hired labour.

(2) In the case of undivided family, the land shall be deemed to have beencultivated personally, if it is cultivated by any member of such family.

(12) 'Dealer'means any person who carries on the business of buying, selling, supplying ordistributing goods, directly or otherwise, whether for cash or for deferredpayment, or for commission, remuneration or other valuable consideration, andincludes-

(a)      an industrial, commercial or trading undertaking of the Government, the CentralGovernment, a State Government of any State other than the State of Karnataka, astatutory body, a local authority, company, a Hindu undivided family, anAliyasanthana Family, a partnership firm, a society, a club or an associationwhich carries on such business;

(b)      acasual trader, a person who has, whether as principal, agent or in any othercapacity, carries on occasional transactions of a business nature involving thebuying, selling, supply or distribution of goods in the State, whether for cashor for deferred payment, or for commission, remuneration or other valuableconsideration;

(c)      acommission agent, a broker or del credere agent or an auctioneer or any othermercantile agent by whatever name called, who carries on the business of buying,selling, supplying or distributing goods on behalf of any principal;

(d)      anon-resident dealer or an agent of a non-resident dealer, a local branch of afirm or company or association situated outside the State;

(e)      aperson who sells goods produced by him by manufacture or otherwise;

(f)       aperson engaged in the business of transfer otherwise than in pursuance of acontract of property in any goods for cash, deferred payment or other valuableconsideration;

(g)      aperson engaged in the business of transfer of property in goods (whether asgoods or in some other form) involved in the execution of a works contract;

(h)     aperson engaged in the business of delivery of goods on hire purchase or anysystem of payment by installments;

(i)       aperson engaged in the business of transfer of the right to use any goods for anypurpose (whether or not for a specified period) for cash, deferred payment orother valuable consideration;

Explanations.-

(1)     Asociety (including a cooperative society), club or firm or an association which,whether or not in the course of business, buys, sells, supplies goods ordistributes goods from or to its members for cash, or for deferred payment orfor commission, remuneration or other valuable consideration, shall be deemed tobe a dealer for the purposes of this Act.

(2)     The Central Government or a State Government or a local authority or a statutorybody which whether or not, in the course of business, buys, sells, supplies ordistributes goods, directly or otherwise, for cash or deferred payment or forcommission, remuneration or other valuable consideration shall be deemed to be adealer for the purposes of this Act.

(3)     In respect of the transfer of the right to use feature films, the person whotransfers such right to the exhibitor and from whom the exhibitor derives theright to make such use shall be deemed to be the dealer under this clause.

(4)     (a) An agriculturist who sells exclusively agricultural produce grown onland cultivated by him personally or a person who is exclusively engaged inpoultry farming and sells the products of such poultry farm shall not be deemedto be a dealer within the meaning of this clause;

(b) Where the agriculturist is a company and is selling [5] [arecanut,] pepper, cardamom, rubber,timber, wood, raw cashew or coffee grown on land cultivated by it personally,directly or otherwise, such company, shall be deemed to be a dealer in respectof turnovers relating to sales of such produce.

(13) 'Document' includes writtenor printed records of any sort, title deeds and data stored electronically inwhatever form.

[6] [(13-A) "Electronic tax register" means a secure fiscal electronic device meant to issue tax invoices or bills of sale and record the details of such sales, and includes a printer and a device to affix signature of the dealer or his agent.]

(14) 'Export'means a sale of goods taking place in the course of export of the goods out ofthe territory of India only if the sale either occasions such export or iseffected by a transfer of documents of title to the goods after the goods havecrossed the customs frontiers of India and includes the last sale of any goodspreceding the sale occasioning the export of those goods out of the territory ofIndia, if such last sale took place after, and was for the purpose of complyingwith the agreement or order for or in relation to such export.

(15) 'Goods'means all kinds of movable property (other than newspaper, actionableclaims, stocks and shares and securities) and includes livestock, all materials,commodities and articles (including goods, as goods or in some other form)involved in the execution of a works contract or those goods to be used in thefitting out, improvement or repair of movable property, and all growing crops,grass or things attached to, or forming part of the land which are agreed to besevered before sale or under the contract of sale.

(16) 'Goodsvehicle' means any kind of vehicle used for carriage of goods eithersolely or in addition to passengers (other than aeroplanes and rail coaches) andincludes push cart, animal drawn cart, tractor-trailer and the like.

(17) 'Government'means the Government of Karnataka.

(18) 'Import'means sale or purchase in the course of the import of goods into theterritory of India if the sale or purchase either occasions such import or iseffected by transfer of documents of title to the goods before the goods havecrossed the customs frontiers of India and includes procurement of goods fromoutside the State either as a result of purchase or otherwise.

(19) 'Input'means any goods including capital goods purchased by a dealer in the course ofhis business for re-sale or for use in the manufacture or processing or packingor storing of other goods or any other use in business.

(20) 'Inputtax' has the meaning assigned to it in Section 10.

(21) 'Maximumretail price' or 'MRP' shall mean the price marked on the packagein which the goods are contained.

(22) 'Outputtax' has the meaning assigned to it in Section 10.

(23) 'Placeof business' means any place where a dealer purchases or sells goodsand includes, -

(a)      any warehouse, godown or other place where a dealer stores or processes hisgoods;

(b)      any place where a dealer produces or manufactures or processes goods;

(c)      any place where a dealer keeps his accounts including documents and in a casewhere a dealer carries on business through an agent (by whatever name called),the place of business of such agent.

(24) 'Prescribedauthority' means an officer of the Commercial Taxes Department,authorised by the Government or the Commissioner to perform such functions asmay be assigned to him.

(25) 'Prevailingmarket price' shall mean the published wholesale price in force in themarket and in cases where there is no such published wholesale price, theprevailing market price of any goods.

(26) 'Published'shall mean published in any newspaper, journal or periodical or notified by amarket committee or any such authority.

(27) 'Registereddealer' means a dealer registered under this Act.

(28) 'Return'means any return [7] [including a revised return] prescribed or otherwise required to be furnished by or underthis Act.

(29) 'Sale'with all its grammatical variation and cognate expressions means every transferof the property in goods (other than by way of a mortgage, hypothecation, chargeor pledge) by one person to another in the course of trade or business for cashor for deferred payment or other valuable consideration and includes,-

(a)      atransfer otherwise than in pursuance of a contract of property in any goods forcash, deferred payment or other valuable consideration;

(b)      atransfer of property in goods (whether as goods or in some other form) involvedin the execution of a works contract;

(c)      adelivery of goods on hire purchase or any system of payment by installments;

(d)      atransfer of the right to use any goods for any purpose (whether or not for aspecified period) for cash, deferred payment or other valuable consideration.

Explanations.-

(1)     Atransfer of property involved in the sale or distribution of goods by a society(including a co-operative society), club, firm, or any association to itsmembers, for cash, or for deferred payment or other valuable consideration,whether or not in the course of business, shall be deemed to be a sale for thepurposes of this Act.

(2)     Every transaction of sale by way of or as a part of any service or in any othermanner whatsoever, of goods, being food or any other article of humanconsumption or any drink (whether or not intoxicating) where such sale orservice is for cash, deferred payment or other valuable consideration, shall bedeemed to be a sale of those goods by the person making the sale and purchase ofthose goods by the person to whom such sale is made.

(3)     Notwithstanding anything to the contrary contained in this Act or any other lawfor the time being in force, two independent sales or purchases shall, for thepurposes of this Act, be deemed to have taken place,

(a)      when the goods are transferred from a principal to his selling agent and fromthe selling agent to the purchaser, or

(b)      when the goods are transferred from the seller to a buying agent and from thebuying agent to his principal, if the agent is found in either of the casesaforesaid,-

(i) ???to have sold the goods at one rate and to have passed on the sale proceeds tohis principal at another rate, or

(ii) ???to have purchased the goods at one rate and to have passed them on to hisprincipal at another rate, or

(iii) ??not to have accounted to his principal for the entire collections or deductionsmade by him in the sales or purchases effected by him on behalf of hisprincipal, or

(iv)? ?to have acted for a fictitious or non-existent principal.

(4)     Every transfer of property in goods by the Central Government, any StateGovernment, a statutory body or a local authority for cash or for deferredpayment or other valuable consideration, whether or not in the course ofbusiness, shall be deemed to be a sale for the purposes of this Act.

(30) 'StateRepresentative' means any person appointed to be the StateRepresentative under Section 58 and includes an officer empowered by theCommissioner under that Section to perform the functions of a Staterepresentative.

(31) 'Taxablesale' means any sale of goods, which is taxable under the provisions ofthis Act.

(32) 'Taxinvoice' means a document specified under Section 29 listing goods soldwith price, quantity and other information as prescribed.

(33) 'Taxperiod' means such periods as may be prescribed.

(34) 'Taxableturnover' means the turnover on which a dealer shall be liable to paytax as determined after making such deductions from his total turnover and in such manner as may be prescribed, but shall not include the turnover of purchaseor sale in the course of interstate trade or commerce or in the course of exportof the goods out of the territory of India or in the course of import of the goods into the territory of India and the value of goods transferred ordespatched outside the State otherwise than by way of sale.

(35) 'Totalturnover' means the aggregate turnover in all goods of a dealer at allplaces of business in the State, whether or not the whole or any portion of suchturnover is liable to tax, including the turnover of purchase or sale in the course of interstate trade or commerce or in the course of export of the goods out of the territory of India or in the course of import of the goods into the territory of India and the value of goods transferred or despatched outside the State otherwise than by way of sale.

(36) 'Turnover'means the aggregate amount for which goods are sold or distributed or delivered or otherwise disposed of in any of the ways referred to in clause (29) by adealer, either directly or through another, on his own account or on account of others, whether for cash or for deferred payment or other valuable consideration, and includes the aggregate amount for which goods are purchased from a person not registered under the Act and the value of goods transferred ordespatched outside the State otherwise than by way of sale, and subject to suchconditions and restrictions as may be prescribed the amount for which goods aresold shall include any sums charged for anything done by the dealer in respect of the goods sold at the time of or before the delivery thereof.

Explanation.- The value of the goods transferred or despatched outside the State otherwise than by way of sale, shall be the amount for which the goodsare ordinarily sold by the dealer or the prevailing market price of such goodswhere the dealer has not ordinarily sell the goods.

(37) 'Workscontract' includes any agreement for carrying out for cash, deferred payment or other valuable consideration, the building, construction, manufacture, processing, fabrication, erection, installation, fitting out, improvement, modification, repair or commissioning of any movable or immovable property

(38) 'Year' means the year commencing on the first day of April.

Section 3 - Levy of tax

(1)     The tax shall be levied on every sale of goods in the State by a registered dealer or a dealer liable to be registered, in accordance with the provisions of this Act.

(2)     The tax shall also be levied, and paid by every registered dealer or a dealer liable to be registered, on the sale of taxable goods to him, for use in the course of his business, by a person who is not registered under this Act.

Section 4 - Liability to tax and rates thereof

(1)     Every dealer who is or is required to be registered as specified in Sections 22 and 24, shall be liable to pay tax, on his taxable turnover,

(a)      in respect of goods mentioned in,-

(i) ???Second Schedule, at the rate of one per cent,

[8] [(ii) Third Schedule, at the rate of [9] [five and one half per cent], and]

(iii) ??Fourth Schedule, at the rate of [10] [fourteen and one half per cent].

[11] [(b) in respect of.-

(i)?? ?declared goods as specified in Section 14 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956) at the maximum rate specified for such goods under Section 15 of the said Act;

(ii) ??cigarettes, cigars, gutkha and other manufactured tobacco at the rate of [12] [twenty percent];

(iii) ??other goods at the rate of [13] [fourteen and one half per cent].]

[14] [(c) in respect of transfer of property in goods (whether as goods or in some other form) involved in the execution of works contract specified in column (2) of the Sixth Schedule, subject to sections 14 and 15 of the Central Sales Tax Act, 1956(Central Act 74 of 1956), at the rates specified in the corresponding entries in column (3) of the said Schedule.]

[15] [Provided that the rate of tax in respect of declared goods as specified in section 14 of the Central Sales Tax Act. 1956 (Central Act 74 of 1956) shall be four per cent from Eighth day of April. 2011 to Eleventh day of April, 2011]

(2)     Where goods sold or purchased are contained in containers or are packed in any packing material liable to tax under this Act, the rate of tax applicable to taxable turnover of such containers or packing materials shall, whether the price of the containers or packing materials is charged for separately or not, be the same as the rate of tax applicable to such goods so contained or packed, and where such goods sold or purchased are exempt from tax under this Act, the containers or packing materials shall also be exempt.

(3)     The State Government may, by notification, reduce the tax payable under sub-section (1) in respect of any goods. [16] [subject to such restrictions and conditions as may be specified in the notifications.]

[17] [(3-A) Any notification issued under sub-section (3), shall be valid until it is cancelled or varied, notwithstanding that the tax payable in respect of any such goods is modified by amendment to this Act.]

[18] [(4) Notwithstanding anything contained in sub-section (1), subject to such conditions as may be prescribed, a registered dealer, if he so elects, may pay tax on the sale of goods specified in serial number 60 of the Third Schedule [19] [or any other goods], on the maximum retail price indicated on the label of the container or pack thereof [20] [or on such maximum retail price reduced by an amount equal to the tax payable.]

[21] [(5) Notwithstanding anything contained in sub-section (1), a registered dealer shall be liable to pay tax on the sale of cigarettes, cigars, gutkha and other manufactured tobacco, on the maximum retail price indicated on the label of the container or pack thereof, after reducing from such maximum retail price an amount equal to the tax payable, where the total amount payable to the dealer as the consideration for sale of such goods exceeds five hundred rupees or any other higher amount as may be notified by the Commissioner.

(6) ?Where tax in respect of his purchase of goods is collected in accordance with sub-section (5),-

(a)      a registered dealer whose sale of such goods is not liable to tax under sub-section (5), shall be eligible for refund or adjustment of any amount of tax collected on his purchase, which is in excess of the tax payable on his turnover relating to sale of such goods, and the burden of proving that the tax has been collected and paid in accordance with the said sub-section shall be on the dealer;

(b)      a person who is not a dealer liable to get registered under the Act, may claim refund of any amount paid by the selling dealer in excess of the tax payable on the consideration paid by him to such dealer in such manner and subject to such conditions as may be prescribed.]

Section 5 - Exemption of tax

[22] [(1)] Goods specified in the First Schedule and any other goods as may be specified by a notification by the State Government shall be exempt from the tax payable under this Act. [23] [subject to much restrictions and conditions as may be specified in the notifications]

[24] [(1-A) Any notification issued under sub-section (1), shall be valid until it is cancelled or varied, notwithstanding that the tax payable in respect of such goods is modified by amendment to this Act.]

[25] [(2) Notwithstanding anything contained in this Act, the Government may, in such circumstances and subject to such conditions as may be specified, by notification, and subject to such rules as may be prescribed, exempt the whole or any part of the tax payable for any period on sale of goods made to or made by a new industrial unit, in respect of which the Government has already notified exemption of tax under the provisions of the Karnataka Sales Tax Act, 1957 (Karnataka Act 25 of 1957), and such exemption on purchases or sales shall be by way of refund of tax collected on purchases or sales made by such industrial unit.]

Section 6 - Place of sale of goods

(1)     The sale or purchase of goods, other than in the course of inter-State trade or commerce or in the course of import or export, shall be deemed, for the purposes of this Act, to have taken place in the State irrespective of the place where the contract of sale or purchase is made, if the goods are within the State.-

(a)      in the case of specific or ascertained goods, at the time the contract of sale or purchase is made; and

(b)      in the case of unascertained or future goods, at the time of their appropriation to the contract of sale or purchase by the seller or by the purchaser, whether the assent of the other party is prior or subsequent to such appropriation.

(2)     Where there is a single contract of sale or purchase of goods situated at more places than one, the provisions of clause (a) shall apply as if there were separate contracts in respect of goods at each of such places.

(3)     Notwithstanding anything contained in the Sale of Goods Act, 1930 (Central Act 3 of 1930), for the purpose of this Act, the transfer of property of goods (whether as goods or in some other form) involved in the execution of a works contract shall be deemed to have taken place in the State, if the goods are within the State at the time of such transfer, irrespective of the place where the agreement for works contract is made, whether the assent of the other party is prior or subsequent to such transfer.

(4)     Notwithstanding anything contained in the Sale of Goods Act, 1930 (Central Act 3 of 1930), for the purpose of this Act, the transfer of the right to use any goods for any purpose (whether or not for a specified period) shall be deemed to have taken place in the State, if such goods are for use within the State irrespective of the place where the contract of transfer of the right to use the goods is made.

Section 7 - Time of sale of goods

(1)     Notwithstanding anything contained in the Sale of Goods Act, 1930 (Central Act 3 of 1930), for the purpose of this Act, and subject to subsection (2), the sale of goods shall be deemed to have taken place at the time of transfer of title or possession or incorporation of the goods in the course of execution of any works contract whether or not there is receipt of payment:

Provided that where a dealer issues a tax invoice in respect of such sale within fourteen days from the date of the sale, the sale shall be deemed to have taken place at the time the invoice is issued.

(2)     Where, before the time applicable in sub-section (1), the dealer selling the goods issues a tax invoice in respect of such sale or receives payment in respect of such sale, the sale shall, to the extent that it is covered by the invoice or payment, be deemed to have taken at the time the invoice is issued or the payment is received.

(3)     The Commissioner may on an application of any dealer exempt such dealer subject to such conditions as he may specify, from the time specified in sub- section (1).

Section 8 - Agents liable to pay tax

(1)     Notwithstanding anything contained in any law for the time being in force including this Act, every person who, for an agreed commission or brokerage, buys or sells on behalf of any principal who is a resident of the State shall be liable to tax under this Act at the rate or rates leviable thereunder in respect of such purchase or sale, notwithstanding that such principal is not a dealer or that the turnover of purchase or sale relating to such principal is less than the minimum specified in sub-sections (1), (2) and (3) of Section 22.

(2)     The principal shall not be liable to tax on his turnover in respect of which the agent is liable to tax under sub-section (1), and the burden of proving that the turnover has been effected through an agent liable to tax under the said sub-section, shall be on such principal.

Section 9 - Collection of tax by registered dealers, governments and statutory authorities

(1)     Every registered dealer liable to pay tax under the Act shall collect such tax at the rate or rates at which he is liable to pay tax, and the tax collected shall be accounted for under the provisions of this Act and rules made thereunder.

(2)     The Central Government, a State Government, a statutory body or a local authority shall, in respect of any taxable sale of goods effected by them, collect by way of tax any amount which a registered dealer effecting such sale would have collected by way of tax under this Act, issue a tax invoice, pay the tax so collected into the Government Treasury or any designated bank and furnish monthly returns, as specified under Section 35, to the prescribed authority.

Section 9A - Deduction of tax at source (in case of works contract)

[26] [9-A. Deduction of tax at source (in case of works contract)

(1)     Notwithstanding anything contained in this Act, the Central Government, or any State Government, or an industrial, commercial or trading undertaking of the Central Government or of any state, or any such undertaking in joint sector or any other industrial, commercial or trading undertaking or any other person or body as may be notified by the Commissioner from time to time or a local authority or a statutory body, shall deduct out of the amounts payable by them to a dealer in respect of any works contract executed for them in the State, an amount equivalent to the tax payable by such dealer under the Act.

(2)     No such deduction shall be made under sub section (1) ,if the amounts payable by them are in respect of sales of any goods , in the course of inter -state trade or commerce or , in the course of export out of the territory of India or, import into the territory of India or, outside the State.

(3)     The deduction under sub section (1) shall be made by an authority on the basis of tax payable as calculated by the deale r.

[27] [(4) (a) Where it is found that the tax payable as calculated by any dealer is less than the tax payable for the works contract executed by him by more than fifteen percent, the officer empowered by the Commissioner shall so inform the authority responsible for deduction of tax under sub- section (1).

(b) On such information, the authority responsible for deduction of tax or the dealer shall make an application to such officer for issue of a certificate, and the officer so empowered by the Commissioner shall issue the certificate within ten days from the date of receipt of the application, failing which the authority responsible for deduction of tax shall make deduction as calculated by the dealer till the issue of the certificate.

(c) After issue of certificate, such deduction shall be made out of any amounts payable subsequently to such dealer based on the certificate issued by such officer.]

(5) ??The authority making deduction under sub- section(1) , shall send every month to the prescribed authority a statement in the prescribed form containing particulars of tax deducted during the preceeding month and pay full amount of tax so deducted by it within twenty days after the close of the preceeding month in which such deductions were made and the amount so payable shall for the purposes of Section 42 be deemed to be an amount due under this Act.

[28] [Provided that among the authorities making deduction under sub-section (1), the specified class of authorities as may be notified by the Commissioner shall submit a statement in the prescribed form electronically and make payment electronically to the prescribed authority through the internet in the manner specified in the notification]

(6) ???Where default is made in complying with the provisions of sub -section (5) ,the prescribed authority may, after such enquiry as it deems fit and after giving opportunity to the concerned authority of being heard, determine to the best of its judgement, the amount of tax payable under this sub -section by such authority and the amount so determined shall be deemed to be the tax due under the Act for the purpose of Section 42.

(7) ???If default is committed in the payment of tax deducted beyond ten days after the expiry of said period specified under sub-section (5) , the authority making deductions under sub section (1) shall pay , by way of interest, a sum equal to the interest specified under sub -section (1) of Section 37 during the period in which such default is continued.

(8) ??The authority making deduction under sub -section (1) , shall furnish to the dealer from whom such deduction is made, a certificate obtained from the prescribed authority containing such particulars as may be prescribed.

(9) ??Payment by way of deduction in accordance with sub -section (5), shall be without prejudice to any other mode of recovery of tax due under this Act from the dealer executing the works contract.

(10) ?Where tax in respect of the works contract is remitted under sub -section (5), the tax payable by the dealer for any period, [29] [***] shall be reduced by the amount of tax already remitted under the said sub-section.

(11) ?The burden of proving that the tax on such works contract has already been remitted and of establishing the exact quantum of tax so remitted shall be on the dealer claiming the reduction of t ax under sub-section (10).]

Section 9B - Deduction of tax at source (in case of purchases made by Government departments and others)

[30] [9-B. Deduction of tax at source (in case of purchases made by Government departments and others).-

(1)     Notwithstanding anything contained in this Act, the Central Government, or any State Government, or an industrial, commercial or trading undertaking of the Central Government or of any State, or any such undertaking in joint sector or a local authority or a statutory body not being a registered dealer under the Act or any other person or body as may be notified by the Commissioner from time to time shall deduct tax amount, out of the amounts payable by them to a dealer, at the rate applicable, in respect of purchase of goods effected by them in the State, with effect from such date as may be notified by the Commissioner.

(2)     The authority making deduction under sub-section (1), shall send every month to the prescribed authority a statement in the prescribed form containing particulars of tax deducted during the preceding month and pay full amount of the tax so deducted by it within twenty days after the close of the preceding month in which such deductions were made and the amounts so payable shall for the purpose of Section 42 deemed to be an amount due under this Act.

Provided that the specified class of authorities as may be notified by the Commissioner shall submit a statement in the prescribed form electronically and make payment electronically to the prescribed authority through the internet in the manner specified in the notification.

(3)     Where default is made in complying with the provisions of sub-section (2), the prescribed authority may, after such enquiry as it deems fit and after giving opportunity to the concerned authority of being heard, determine to the best of its judgment, the amount of tax payable under sub-section (2) by such authority and the amount so determined shall be deemed to be the tax due under the Act for the purpose of section 42.

(4)     If default is committed in the payment of tax deducted beyond ten days after the expiry of the period specified under sub-section (2), the authority making deductions under sub-section (1) shall pay, by way of interest, a sum equal to the interest specified under sub-section (1) of section 37 during the period in which such default is continued.

(5)     The authority making deduction under sub-section (1), shall furnish to the dealer from whom such deduction is made, a certificate obtained from the prescribed authority containing such particulars as may be prescribed.

(6)     Payment by way of deduction in accordance with sub-section (2), shall be without prejudice to any other mode of recovery of tax due under this Act from the dealer selling the goods.

(7)     The burden of proving that the tax on such sale has already been remitted and of establishing the exact quantum of tax so remitted shall be on the dealer.]

Section 10 - Output tax, input tax and net tax

(1)     Output tax in relation to any registered dealer means the tax payable under this Act in respect of any taxable sale of goods made by that dealer in the course of his business, and includes tax payable by a commission agent in respect of taxable sales of goods made on behalf of such dealer subject to issue of a prescribed declaration by such agent.

(2)     Subject to input tax restrictions specified in Sections 11,12,14, [31] [17 and 18], input tax in relation to any registered dealer means the tax collected or payable under this Act on the sale to him of any goods for use in the course of his business, and includes the tax on the sale of goods to his agent who purchases such goods on his behalf subject to the manner as may be prescribed to claim input tax in such cases.

[32] [(3) Subject to input tax restriction specified in sections 11, 12, 14, 17, 18 and 19, the net tax payable by a registered dealer in respect of each tax period shall be the amount of output tax payable by him in that period less the input tax deductible by him as may be prescribed in that period and [33] [***] shall be accounted for in accordance with the provisions of this Act.]

[34] [Provided that, a registered dealer while calculating the net tax payable on or after first day of April 2015 may claim input tax relatable to goods purchased during the period immediately preceding five tax periods of such tax period, if input tax of such goods is not claimed in any of such five preceding tax periods.]

(4)? ?For the purpose of calculating the amount of net tax to be paid or refunded, no deduction for input tax shall be made unless a tax invoice, debit note or credit note, in relation to a sale, has been issued in accordance with Section 29 [35] [***] and is with the registered dealer taking the deduction at the time any return in respect of the sale is furnished, except such tax paid under sub-section (2) of Section 3.

(5) ??Subject to input tax restrictions specified in Sections 11,12, 14, 17, 18 and 19, where under sub-section (3) the input tax deductible by a dealer exceeds the output tax payable by him, the excess amount shall be adjusted or refunded together with interest, as may be prescribed.

[36] [(6) Notwithstanding anything contained in this Act, input tax deducted by a registered dealer to calculate net tax payable is provisional to a dealer who fails to furnish or furnishes incorrect and incomplete particulars for preparation of the return in the prescribed form electronically through internet in the manner specified in the notification issued by the Commissioner under first proviso to section 35 and the jurisdictional Local VAT Officer or VAT sub-officer shall assess such dealer for such tax period by disallowing input tax claimed by him and issue demand notice:

Provided that, where an assessment has been made under this sub-section and the dealer subsequently furnishes particulars for preparation of the return in the prescribed form or furnishes correct and complete particulars for preparation of the return electronically through internet in the manner specified in the notification for the tax period to which assessment relates, the jurisdictional Local VAT Officer or VAT sub-officer shall withdraw the assessment but the dealer shall be liable to penalty as applicable under sub-section (3-A) of section 72]

Section 11 - Input tax restrictions

(a)      Input tax shall not be deducted in calculating the net tax payable, in respect of:

(1)     Tax paid on purchases attributable to sale [37] [or manufacture or processing or packing or storage] of exempted goods exempted under Section 5, except when such goods are sold in the course of export out of the territory of India;

[38] [(2) tax paid on goods as specified in the Fifth Schedule subject to such conditions as may be specified, purchased and put to use for purposes other than for,

(i)?? ?resale, or

(ii) ??manufacture or any other process of other goods for sale;

(3)?? ?tax paid on purchase of goods as may be notified by the Government or Commissioner subject to such conditions as may be specified;

(4)? ?tax paid on purchase of capital goods other than those falling under clause (2) or (3) except as provided in section 12;

(5)? ?tax paid on purchase of goods, that are despatched outside the State or used as inputs in the manufacture, processing or packing of other taxable goods despatched to a place outside the State, other than as a direct result of sale or purchase in the course of inter-State trade or commerce except as provided in section 14.]

(6) ??tax paid on purchases attributable to naptha, liquified petroleum gas, furnace oil, [39] [***] superior kerosene oil, kerosene and any other petroleumproduct, when used as fuel in motor vehicles, but when used as fuel inproduction of any goods for sale in the course of export out of the territory ofIndia or taxable goods or captive power, input tax shall be deducted as providedin Section 14.

(7)? ?tax paid under sub-section (2) of Section 3 on the purchase of fuel;

(8) ??tax paid under sub-section (2) of Section 3 on the purchase of goods excludingfuel, until output tax is payable on such goods or other goods in which such goods are put to use except when the said goods are exported out of the territory of India;

(9) ??tax paid on goods purchased by a dealer who is required to be registered under the Act, but has failed to register.

(b)      Input tax shall not be deducted by an agent purchasing or selling goods on behalf of any other person other than a non-resident principal.

[40] [(c) Input tax shall not be deducted by any dealer executing a works contract.

(i)??? ?in respect of the amount paid or payable to any sub-contractor as the consideration for execution of part or whole of such works contract for him, that is claimed as deduction; and

(ii) ???in respect of the amount actually expended towards labour and other like charges not involving any transfer of property in goods in connection with the execution of works contract, that is claimed as deduction.]

[41] [(d) Notwithstanding anything contained in this Act, where any dealer has sold goods at a price lesser than the price of such goods purchased by him, the amount of input tax credit shall be restricted to the amount of output tax of such goods.]

Section 12 - Deduction of input tax in respect of capital goods

(1)     Deduction of input tax shall be allowed to the registered dealer in respect of the purchase of capital goods [42] [on or after the commencement of this Act ]for use in the business of sale of any goods in the course of export out of the territory of India and in the case of any other dealer in respect of the purchase of capital goods wholly or partly for use in the business of taxable goods.

(2)     Deduction of input tax under this Section shall be allowed only after commencement of commercial production, or sale of taxable goods or sale of any goods in the course of export out of the territory of the India by the registered dealer [43] [***]

Section 13 - Pre - registration purchases

Deduction of input tax shall be allowed to the registered dealer, subject to the restrictions of Section 11, in respect of tax charged to him by a seller on taxable sale of goods made to him for the purpose of the business within three months prior to the date of his registration provided that no input tax shall be allowed in respect of goods which have been sold or otherwise disposed of prior to the date of registration.

Section 14 - Special rebating scheme

[44] [Deduction of input tax shall be allowed on purchase of goods, specified in clauses (5) and (6) of sub-section (a) of Section 11, to the extent of the input tax charged at a rate higher than four per cent or any lower rate as may be notified by the Government.]

Section 15 - Composition of tax

(1)     Subject to such conditions and in such circumstances as may be prescribed, any dealer other than a dealer who purchases or obtains goods from outside the State or from outside the territory of India, liable to pay tax as specified in Section 4 and,

[45] [(a) whose total turnover [46] [in a year] does not exceed an amount as may be notified by the State Government which shall not exceed fifty lakh rupees, and who is not a dealer falling under clause (b) or (c) or (d) below;]

(b)? ?who is a dealer executing works contracts; or

(c) ???who is a hotelier, restaurateur, caterer; [47] [or dealer running a sweetmeat stall or an ice cream parlour] [48] [or bakery or any other class of dealers as may be notified by the Government]

(d) ??who is a mechanised crushing unit producing [49] [granite or any other metals];

may elect to pay in lieu of the net amount of tax payable by him under this Act by way of composition, an amount at such rate not exceeding five per cent on his total turnover or on the total consideration for the works contracts executed or not exceeding two lakh rupees for each crushing machine[50] [per annum as may be notified by the Governement].

[51] [(2) Notwithstanding anything contained in sub-section (1), a dealer whose nature of business is of a type falling under more than one clause of sub-section (1), shall be eligible to opt for composition under the said sub-section in respect of tax payable on his turnover relating to any or all of such types of business subject to the condition that,

(a)      such dealer maintains separate account of each type of his business;

(b)      the total turnover in a year in respect of all types of business of such dealer falling under clause (a) of sub-section (1) does not exceed the amount as may be notified under the said clause;

(c)      the amount payable by way of composition by such dealer on his total turnover or the total consideration in respect of each type of such business shall be as may be notified for such type under sub-section (1);

(d)      the total turnover of such dealer from all his types of business shall be reduced to the extent of the total turnover or total consideration in respect of each such type, for calculating the amount payable by way of composition for such type of business under sub-section (1); and

(e)      in respect of such type of business for which, he has not exercised his option or is not eligible, for composition under sub-section (1), then on the taxable turnover as determined from the balance total turnover after reduction as specified in clause (d), he shall be liable to tax as specified under section 4.]

(3) ???Any dealer eligible for composition of tax under sub-section (1) may report, to the prescribed authority, the exercise of his option and he shall pay such amount due and furnish a return in such manner as may be prescribed.

(4) ??Any dealer opting for composition of tax under [52] [under this section] shall not be permitted to claim any input tax on any purchases made by him.

?(5) Notwithstanding anything contained in sub-sections (1) [53] [***],-

(a)      a dealer executing works contracts and who purchases or obtains goods from outside the State or from outside the territory of India shall be eligible to opt for composition under sub-section (1),and if the property in such goods (whether as goods or in some other form) is transferred in any works contract executed by him, the dealer shall be liable to pay tax on the value of such goods at the rate specified in section 4, and such value shall be deducted from the total consideration of the works contracts executed on which an amount as notified is payable under sub-section (1) by way of composition in lieu of the tax payable under the Act;

(b)      in the case of a dealer executing works contracts and opting for composition of tax under sub-section (1), no tax by way of composition shall be payable on the 

[54] [amounts payable or paid] to a sub-contractor as consideration for execution of works contract whether wholly or partly and such amounts shall be deducted from the total consideration of the works contracts executed on which an amount as notified is payable under sub-section (1) by way of composition in lieu of the tax payable under the Act subject to production of proof that such sub-contractor is a registered dealer liable to tax under the Act and that such amounts are included in the return filed by such sub-contractor;

(c)      in the case of a dealer executing works contracts, after opting for composition of tax under sub-section (1), [55] [who] effects sale of any goods liable to tax under the Act other than by transfer of the property in such goods (whether as goods or in some other form) in any works contract executed by him, the dealer shall be liable to pay tax on the value of such goods at the rate specified in section 4, without any deduction for input tax on purchase of such goods made by him;

(d)      in the case of a dealer opting for composition of tax under clause (a) or (c) of sub-section (1), the turnover on which tax is leviable under sub-section (2) of section 3 shall be deducted from the total turnover on which an amount as notified is payable under sub-section (1) by way of composition in lieu of the tax payable under [56] [the Act;] .

[57] [(e) a dealer executing works contracts and opting for composition of tax under sub-section (1), shall be liable to pay tax, if any, under sub-section (2) of section 3,in addition to tax by way of composition on the total consideration for the works contracts executed;]

Section 16 - Special accounting scheme

Where a dealer liable to pay tax under Section 4 is unable to identify each individual sale, its value or the rate of tax, [58] [or is unable to issue a tax invoice as specified in section 29 for each individual sale] he may apply to the prescribed authority to pay net tax under Section 10 under a special method to be mutually agreed by such authority in such manner as may be prescribed.

Section 17 - Partial rebate

Where a registered dealer deducting input tax

(1)     makes sales of taxable goods and goods exempt under Section 5, or

(2)     in addition [59] [sales of taxable goods or] the sales referred to in clause (1), dispatches taxable goods or goods exempted under Section 5 outside the State not as a direct result of sale or purchase in the course of inter-State trade, or

(3)     puts to use the inputs purchased in any other purpose (other than sale, manufacturing, processing, packing or storing of goods), in addition to use in the course of his business, [60] [or]

[61] [(4) falls under any of the above clauses and also purchases any petroleum product for use as fuel in production of any goods or captive power,]

apportionment and attribution of input tax deductible between such sales and despatches of goods or such purpose, shall be made in accordance with Rules or by special methods to be approved by the Commissioner or any other authorised person and any input tax deducted in excess shall become repayable forthwith.

Section 18 - Deduction of tax at source in the case of canteens

[62] [ (1) Notwithstanding anything contained in this Act, a factory or other industrial concern or any other establishment, in which a canteen or cafeteria or restaurant or other similar facility is run, through a dealer, as an amenity provided for the employees of such factories or concerns or establishments, shall deduct out of any amounts payable by them to such dealer as their contribution by whatever name called, in respect of sale of articles of food and drinks to their employees, an amount at the rate of four percent of the aggregate of the sale prices received or receivable by such dealer from the employees and contribution paid or payable by such factories or concerns or establishments to such dealer.

(2)? ?No deduction shall be made under sub-section (1) if the aggregate of the sale prices received or receivable by and contribution paid or payable to such dealer in respect of sale of articles of food and drinks to the employees is less than [63] [five lakh rupees] in a year.

(3) ??The factory or other industrial concern or other establishment making deduction under sub-section (1), shall send every month to the prescribed authority a statement in the prescribed form containing particulars of tax deducted during the preceding month and pay full amount of the tax so deducted by it within twenty days after the close of the preceding month in which such deduction was made and the amount so payable shall be deemed to be the tax due under this Act for the purposes of section 42.

(4) ??If default is committed in the payment of tax deducted beyond ten days after the expiry of the period specified under sub-section (3), the factory or concern or establishment making deduction under sub-section (1) shall pay, by way of interest, a sum equal to the interest specified under sub-section (1) of section 37 during the period in which such default is continued.

(5) ??The factory or concern or establishment making deduction under sub-section (1) shall furnish to the dealer from whom such deduction is made, a certificate obtained from the prescribed authority containing such particulars as may be prescribed.

(6) ??Payment by way of deduction in accordance with sub-section (3), shall be without prejudice to any other mode of recovery of tax due under this Act from such dealer referred to in sub-section (1).

(7)? ?Where tax in respect of the dealer referred to in sub-section (1) is remitted under sub-section (3), the tax payable by the dealer for any period, shall be reduced by the amount of tax already remitted under the said sub-section.

(8) ??The burden of proving that the tax on his turnover relating to sale of articles of food and drinks has already been remitted and of establishing the exact quantum of tax so remitted shall be on the dealer claiming the reduction.]

Section 18-A - [OMITTED]

[64] [***]

Section 19 - Change or tax payment scheme after deduction of input tax

(1)     Where a registered dealer has deducted input tax on any goods and those goods are not used in the course of his business or lost or destroyed, any input tax deducted becomes repayable in the period following the date on which those goods were put to such other use.

(2)     Where such goods have been wholly or mainly used or are intended for use in sale of taxable goods or in sale of any goods in the course of export out of the territory of India prior to the change of use, [65] [input tax repayable shall be calculated] on the prevailing market value of such goods at the time of change of use.

[66] [(3) Where a registered dealer after deducting input tax on any goods used in the course of his business, opts for composition of tax under section 15, the input tax deducted on the goods held in stock on the date on which the dealer so opts shall be repayable by the dealer in the tax period following such date and the input tax so repayable shall be calculated on the market value of such goods on such date.]

Section 20 - Deduction of input tax on exports and interstate sales, and to special economic zone units and developers etc

(1)     Tax paid under this Act by any dealer on purchase of inputs in respect of

(a)      any goods sold in the course of export out of the territory of India, or

(b)      any goods taxable under the Act, sold in the course of interstate trade or commerce.

(c) [67] [****]

(d) [68] [****]

shall be deducted as provided under Section 10 [69] [subject to such conditions as may be prescribed] from output tax payable by such dealer.

[70] [(2) Tax paid under this Act on purchase of inputs by a registered dealer who is a unit located in any special economic zone established under authorization by the authorities specified by the Central Government in this behalf, shall be deducted as provided under Section 10 subject to such conditions as may be prescribed, from the output tax payable by such dealer.] .

Explanation 1.- For the purposes of this section, the expression ''special economic zone'' has the meaning assigned to it in clause (iii) to Explanation 2 to the proviso to section 3 of the Central Excise Act, 1944 (Central Act 1 of 1944).

Explanation 2.-[71] [****]

Section 21 - Reimbursement of tax

[72] [Tax collected under this Act on such class of purchases as may be prescribed, made by specialised agencies of the United Nations Organisation, Multilateral Financial Institutions and Organisations notified under the United Nations (Privileges and Immunities) Act, 1947 (Central Act 46 of 1947) and Consulates or embassies of any other country but excluding consulates or Embassies of any other country but excluding consulates or embassies as my be notified shall be reimbursed, in such manner and subject to such conditions as may be prescribed.]

[73] [Provided that reimbursement of Tax collected under this Act shall also be available in respect of personal purchases made by the Diplomats and Consulate officers of the Embassies and Consulates of the countries which are notified subject to such conditions as may be specified therein by the State Government based on reciprocal agreements entered into by the Central Government with such countries.]

Section 22 - Liability to register

(1)     [74] [***]

(2)     Every dealer who at any time has reason to believe that his taxable turnover is likely to exceed [75] [[76] [ten] lakh rupees] during any year after the year ending Thirty First day of March [77] [2015] shall be liable to be registered and report such liability forthwith or on such date as may be notified by the Government.

(3)     Every dealer whose taxable turnover exceeds [78] [[79] [eighty three thousand three hundred thirty] rupees] in any one month after the date from which the tax shall be levied, in accordance with Section 3, [80] [***] shall register forthwith.