Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: Central Excise rule to resale the machines to a new company :: due date for vat payment :: VAT RATES :: ARTICLES ON INPUT TAX CREDIT IN VAT :: list of goods taxed at 4% :: articles on VAT and GST in India :: TDS :: ACCOUNTING STANDARDS :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARD :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: VAT Audit :: cpt :: form 3cd :: empanelment
 
 
« VAT (Value Added Tax) »
 15% rise in collectionof VAT for Oct-Nov
 China to simplify tax scheme after switch to VAT
 Cabinet clears key proposals on VAT, regularisation of jobs
 Cases of VAT overcharging flood consumer forum
 State seeks relief from Centre
 Flat rate VAT changes for small businesses explained
 Cenvat Credit Of Additional Duties Of Customs [Cvd] On Imported Coal
 Excise Dept puts VAT refund on fast track
 Consumer fora receive 18 VAT plaints
 Appointment of Assistant VATO - F.3(14)/Fin(Rev-I)2012-13/DSVI/334
 Bio-diesel body seeks VAT relaxation

Sale of used cars is not subject to VAT under the Delhi Value Added Tax Act, 2004
January, 07th 2015

“Sale of used cars is not subject to VAT under the Delhi Value Added Tax Act, 2004”

We are sharing with you an important judgment of Hon’ble High Court, Delhi, in the case ofAnand Decors and Others vs. Commissioner of Trade and Taxes, New Delhi [2014 (12) TMI 1024 - DELHI HIGH COURT] on following issue:

Issue:

Whether the sale of used cars is subjected to VAT under the Delhi Value Added Tax Act, 2004?

Facts and background:

Anand Decors and Others (“the Appellants”) were manufacturing certain commodities and were registered dealers under the Delhi Value Added Tax Act, 2004 (“DVAT Act”). The Appellants purchased motor vehicles/ cars, paid Sales tax/ VAT but did not avail input tax credit thereon under DVAT Act. The Appellants were not dealers or traders in motor vehicles.

The Department alleged that the resale of the used motor vehicle to third parties should be added or included in the taxable turnover and thus exigible to VAT. The Appellate Tribunal, Value Added Tax, Delhi upheld the contentions of the Department and held that the sale of motor cars or other capital assets are not exempt under Section 6(3) of the DVAT Act, and should be included in the taxable or business turnover of the Appellants. Being aggrieved, the Appellants preferred an appeal before the Hon’ble High Court of Delhi.

Held:

The Hon’ble High Court of Delhi held as under:

  • Capital goods and Capital assets are distinguishable;
  • Motor Vehicles would be a capital good as defined in Section 2(f) of the DVAT Actwherein the expression used is "directly or indirectly, in the process of trade or manufacturing......" and purchase thereof would form part of the business. But input tax credit of VAT paid would not be available by virtue of Section 9(2)(b) of the DVAT Act as the motor cars purchased and sold are non-creditable goods and they are included in the seventh Schedule of the DVAT Act.
  • The following four conditions stipulated in Section 6(3) of the DVAT Act for availing exemption under DVAT are duly met in the instant case:
  1. There should be a sale of Capital goods;
  2. The said Capital goods should have been used by the dealer from the time of purchase till sale;
  3. The purpose for which the Capital goods were used should be for making sale of taxable goods or taxable goods and non-taxable goods. The Capital goods should not be exclusively used for making sale of non-taxable goods;
  4. The dealer should not have taken tax credit in respect of such capital goods underSection 9 of DVAT Act.

Hence, the Hon’ble High Court of Delhi allowed the appeal in favour of the Appellants and held that sale of used cars is not subject to VAT provided that four conditions stipulated in Section 6(3) of the DVAT Act for availing exemption under DVAT are duly met.

Hope the information will assist you in your Professional endeavors. In case of any query/ information, please do not hesitate to write back to us.

Thanks and Best Regards,

Bimal Jain

FCA, FCS, LLB, B.Com (Hons)

Delhi:

Flat No. 34B, Ground Floor, Pocket - 1,

Mayur Vihar, Phase - I,

Delhi – 110091, India

Desktel: +91-11-22757595/ 42427056

Mobile: +91 9810604563

Chandigarh:

H.No. 908, Sector 12-A,

Panchkula, Haryana – 134115

Kolkata:

Ist Floor, 10 R G Kar Road

Shyambazar, Kolkata – 700 004

Email: bimaljain@hotmail.com

Web: www.a2ztaxcorp.com

Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the authors nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon.

Readers are advised to consult the professional for understanding applicability of this newsletter in the respective scenarios. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. No part of this document should be distributed or copied (except for personal, non-commercial use) without our written permission.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Software Development Software Programming Software Engineering Custom Software Development Requirement Based Software Development Software Solutions Software Serv

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions