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Delhi VAT - Act
June, 21st 2006

 

 

1.  Short title, extent and commencement.- 

(1) This Act may be called the Delhi Value Added Tax Act, 2004.

(2)  It extends to the whole of the National Capital Territory of Delhi.

(3)  It shall come into force on such date as the Government may, by notification in the official Gazette, appoint:

Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.

 

2.  Definitions.- 

(1)  In this Act, unless the context otherwise requires, -

(a)  accountant means

(i)      a chartered accountant within the meaning of the Chartered Accountants Act, 1949 (Act 38 of 1949);

(ii)     a person who by virtue of the provisions of sub-section (2) of section 226 of the Companies Act, 1956 (1 of 1956), is entitled to be appointed to act as an auditor of companies registered; or

(iii)    a person referred to in section 619 of the Companies Act, 1956 (1 of 1956);

(b)  adequate proof means such documents, testimony or other evidence as may be prescribed;

(c)  Appellate Tribunal means the Appellate Tribunal constituted under section 73 of this Act;

(d)  business includes -

(i)      the provision of any services, but excluding the services provided by an employee;

(ii)     any trade, commerce or manufacture;

(iii)    any adventure or concern in the nature of trade, commerce or manufacture;

(iv)    any transaction in connection with, or incidental or ancillary to, such trade, commerce, manufacture, adventure or concern; and

(v)     any occasional transaction in the nature of such service, trade, commerce, manufacture, adventure or concern whether or not there is volume, frequency, continuity or regularity of such transaction;

whether or not such service, trade, commerce, manufacture, adventure or concern is carried on with a motive to make gain or profit and whether or not any gain or profit accrues from such service, trade, commerce, manufacture, adventure or concern;

Explanation.-  For the purpose of this clause

(i)      any transaction of sale or purchase of capital assets pertaining to such service, trade, commerce, manufacture, adventure or concern shall be deemed to be business;

(ii)     purchase of any goods, the price of which is debited to the business and sale of any goods, the proceeds of which are credited to the business shall be deemed to be business;

(e)  business premises means -

(i)      the address of a dealer, registered with the Commissioner; and

(ii)     any building or place used by a person for the conduct of his business, except for those parts of the building or place used principally as a residence;

(f)  capital goods means plant, machinery and equipment used in the process of trade or manufacturing;

(g)  casual trader means a person who, whether as principal, agent or in any other capacity undertakes occasional transactions in the nature of business involving buying, selling, supply or distribution of goods or conducting any exhibition-cum-sale in Delhi whether for cash, deferred payment, commission, remuneration or other valuable consideration;

(h)  Commissioner means the Commissioner of Value Added Tax appointed under sub-section (1) of section 66 of this Act;

(i)   in the course of includes activities done for the purposes of, in connection with, or incidental to and activities done as part of the preparation for the activity and in the termination of, the activity;

(j)   dealer means any person who carries on business in Delhi and includes

(i)      any person who, for the purposes of or in connection with or incidental to or in the course of his business buys, sells, goods directly or otherwise, whether for cash or for deferred payment or for commission, remuneration or other valuable consideration;

(ii)     any department of the Central Government or a State Government, a local authority, Panchayat, Municipality, Development Authority, Cantonment Board and each autonomous or statutory body or an industrial, commercial, banking, insurance or trading undertaking whether or not of the Central Government or any of the State Governments or of a local authority, if it buys, sells, supplies or distributes goods;

(iii)    a factor, commission agent, broker, del credere agent, or any other mercantile agent by whatever name called, who carries on the business of buying, selling, supplying or distributing goods on behalf of any principal, whether disclosed or not;

(iv)        an agent of a non-resident (where such non-resident is a dealer under any other sub-clause of this definition);

(v)     a local branch of a firm or company or association of persons, outside Delhi where such firm, company, association of persons is a dealer under any other sub-clause of this definition;

(vi)    a club, association, society, trust, or cooperative society, whether incorporated or unincorporated, which buys goods from or sells goods to its members for price, fee or subscription, whether or not in the course of business;

(vii)   an auctioneer, who sells or auctions goods belonging to any principal, whether disclosed or not and whether the offer of the intending purchaser is accepted by him or by the principal or a nominee of the principal;

(viii)   a casual trader; or

(ix)    any person who, for the purposes of or in connection with or incidental to or in the course of his business disposes of any goods as unclaimed or confiscated, or unserviceable or scrap, surplus, old, obsolete or as discarded material or waste products by way of sale;

(k)  Delhi means the National Capital Territory of Delhi;

(l)   fair market value means the value at which goods of like kind and quality are sold or would be sold in the same quantities between unrelated parties in the open market in Delhi;

(m) goods means every kind of moveable property (other than newspapers, actionable claims, stocks, shares and securities) and includes -

(i)      livestock, all materials, commodities, grass or things attached to or forming part of the earth which are agreed to be severed before sale or under a contract of sale; and

(ii)     property in goods (whether as goods or in some other form) involved in the execution of a works contract, lease or hire-purchase or those to be used in the fitting out, improvement or repair of movable property;

(n)  goods vehicle means a motor vehicle, vessel, boat, animal and any other form of conveyance used for carrying goods;

(o)  Government means the Lieutenant Governor of the National Capital Territory of Delhi appointed by the President under article 239 and designated as such under article 239AA of the Constitution;

(p)  import of goods into Delhi means taking, receiving, bringing, carrying, transporting, or causing to bring or receive goods into Delhi from any place outside Delhi;

Explanation.-  In the case of goods arriving in Delhi from a foreign country through Customs, the import of the goods in Delhi occurs at the place where the goods are cleared by Customs for home consumption;

(q)  importer means -

a person who brings his own goods into Delhi; or

(ii)     a person on whose behalf another person brings goods into Delhi; or

(iii)    in the case of a sale occurring in the circumstances referred to in sub-section 2 of section 6 of the Central Sales Tax Act, 1956 (74 of 1956), the person in Delhi to whom the goods are delivered;

(r)     input tax in relation to the purchase of goods, means the proportion of the price paid by the buyer for the goods which represents tax for which the selling dealer is liable under this Act;

(ra) manufacture with its grammatical variations and cognate expressions, means producing, making, extracting, altering, ornamenting, finishing or otherwise processing, treating or adapting any goods, but does not include any such process or mode of manufacture as may be prescribed.

(s)  net tax means the amount calculated for a tax period under section 11 of this Act;

(t)   non-creditable goods means the goods listed in the Seventh Schedule;

(v)  non-resident means a person who has no fixed place of business or  residence in Delhi;

(w) notified means notified by the Commissioner in the official Gazette;

(x)  official Gazette means the Delhi Gazette;

(y)  prescribed means prescribed by rules made under this Act;

(z)  registered dealer means a dealer registered under this Act;

(za)            a person is related to another person (referred to in this definition as a dealer) if the person -

(i)      is a relative of the dealer;

(ii)     is a partnership of which the dealer is a partner;

(iii)    is a company in which the dealer (either alone or in conjunction with another person who is, or persons who are, related to the dealer under another sub-clause of this clause) directly or indirectly holds forty per cent or more of outstanding voting stock or shares;

(iv)    is a person who (either alone or in conjunction with another person who is, or other persons who are, related to the person under another sub-clause of this clause) directly or indirectly owns forty per cent or more of outstanding voting stock or shares of the dealer;

(v)     is a company in which forty per cent or more of outstanding voting stock is held directly or indirectly by a person (either alone or in conjunction with another person who is, or other persons who are, related to the person under another sub-clause of this clause) who also holds forty per cent or more of the outstanding voting stock or shares of the dealer; or

(vi)    is controlled by the dealer, a person whom the dealer controls, or is a person who is controlled by the same person who controls the dealer;

(zb)            relative means a relative as defined in clause 41 of section 2 of the Companies Act, 1956 (1of 1956);

(zc)            sale with its grammatical variations and cognate expression means any transfer of property in goods by one person to another for cash or for deferred payment or for other valuable consideration (not including a grant or subvention payment made by one government agency or department, whether of the central government or of any state government, to another) and includes-

(i)      a transfer of goods on hire purchase or other system of payment by installments, but does not include a mortgage or hypothecation of or a charge or pledge on goods;

(ii)     supply of goods by a society (including a co-operative society), club, firm, or any association to its members for cash or for deferred payment or for commission, remuneration or other valuable consideration, whether or not in the course of business;

(iii)    transfer of property in goods by an auctioneer referred to in sub-clause (vii) of clause (j) of this section, or sale of goods in the course of any other activity in the nature of banking, insurance who in the course of their main activity also sell goods repossessed or re-claimed;

(iv)    transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration;

(v)     transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract;

(vi)    transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration;

(vii)       supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service is for cash, deferred payment or other valuable consideration;

(viii)     every disposal of goods referred to in sub-clause (ix) of clause (j) of this section

and the words sell, buy and purchase wherever appearing with all their grammatical variations and cognate expressions, shall be construed accordingly;

(zd)            sale price means the amount paid or payable as valuable consideration for any sale, including-

(i)            the amount of tax, if any, for which the dealer is liable under section 3 of this Act;

(ii)          in relation to the delivery of goods on hire purchase or any system of payment by installments, the amount of valuable consideration payable to a person for such delivery including hire charges, interest and other charges incidental to such transaction;

(iii)         in relation to transfer of the right to use any goods for any purpose (whether or not for a specified period) the valuable consideration or hiring charges received or receivable for such transfer;

(iv)        any sum charged for anything done by the dealer in respect of goods at the time of , or before, the delivery thereof;

(v)          amount of duties levied or leviable on the goods under the Central Excise Act, 1944 (1 of 1944) or the Customs Act, 1962 (52 of 1962), or the Punjab Excise Act, 1914 (1 of 1914) as extended to the National Capital Territory of Delhi whether such duties are payable by the seller or any other person; and

(vi)        amount received or receivable by the seller by way of deposit (whether refundable or not) which has been received or is receivable whether by way of separate agreement or not, in connection with, or incidental to or ancillary to the sale of goods;

(vii)       in relation to works contract means the amount of valuable consideration paid or payable to a dealer for the execution of the works contract;

less -

(a)          any sum allowed as discount which goes to reduce the sale price according to the practice, normally, prevailing in trade;

(b)          the cost of freight or delivery or the cost of installation in cases where such cost is separately charged;

and the words purchase price with all their grammatical variations and cognate expressions, shall be construed accordingly;

Explanation.- A dealers sale price always includes the tax payable by it on making the sale, if any;

(ze)            Schedule means a Schedule appended to this Act;

(zf) tax means tax payable under this Act;

(zg)            taxable quantum means the amount defined in sub-section (2) of section 18  of this Act;

(zh)            tax invoice means the document defined in section 50  of this Act;

(zi) tax period means the period prescribed in the rules made under this Act;

(zj) tax fraction means the fraction calculated in accordance with formula,

r / (r + 100)

where r is the percentage rate of tax applicable to the sale under this Act;

(zk)            transporter means any person who, for the purposes of or in connection with or incidental to or in the course of his business transports or causes to transport goods, and includes any person whose business consists of or includes operating a railway, shipping company, air cargo terminal, inland container depot, container freight station, courier service or airline;

(zl) turnover of purchases means the aggregate of the amounts of purchase price paid or payable by a person in any tax period, including any input tax;

(zm)turnover means the aggregate of the amounts of sale price received or receivable by the person in any tax period, reduced by any tax for which the person is liable under section 3 of this Act;

(zn)            value of goods means the fair market value of the goods at that time including insurance charges, excise duties, countervailing duties, tax paid or payable under the Central Sales Tax Act, 1956 (74 of 1956) in respect of the sale, transport charges, freight charges and all other charges incidental to the transaction of the goods;

(zo)            works contract includes any agreement for carrying out for cash or for deferred payment or for valuable consideration, the building construction, manufacture, processing, fabrication, erection, installation, fitting out, improvement, repair or commissioning of any moveable or immovable property;

(zp) year means the financial year from the first day of April to the last day of March;

(2)  Unless otherwise specified in this Act-

(a)    words importing the masculine gender shall include the feminine gender;

(b)    words in singular shall include their plural and vice versa;

(c)    expressions referring to writing shall include printing, typing, lithography, photography and other methods of representing or reproducing words in a visible form; and

(d)    with reference to a person who is unable to sign his name, the words signature shall include his thumb impression or other mark duly attested to signify his signature.


 

 

 

3.  Imposition of tax

(1)  Subject to other provisions of this Act, every dealer who is

(a)     registered under this Act; or

(b)     required to be registered under this Act;

shall be liable to pay tax calculated in accordance with this Act, at the time and in the manner provided in this Act.

(2)  Every dealer shall be liable to pay tax at the rates specified in section 4 of this Act on every sale of goods effected by him 

(a)     while he is a registered dealer under this Act; or

(b)     on and from the day on which he was required to be registered under this Act.

Explanation.-  For the purpose of clause (b) above, the liability to pay tax shall be on the sales effected after he exceeds the taxable quantum.

(3)  The amount of tax payable under this Act by a dealer, is the dealers net tax for the tax period calculated under section 11 of this Act.

(4)  The net tax of a dealer shall be paid within twenty eight days of the conclusion of the dealers tax period.

Explanation.-  The net tax of a dealer (which is the dealers tax reduced by tax credits and with adjustments) shall be paid at the same time as prescribed for furnishing a return, but the obligation to pay arises by virtue of this provision and is not dependent on furnishing a return, nor on the issue of a notice of assessment to the dealer.

(5)  Tax shall be paid in the manner specified in section 36  of this Act.

(6)  Every dealer who has become liable to pay tax under this Act on the sale of goods shall continue to be so liable unless his taxable turnover during the preceding twelve months (and such further period as may be prescribed) has remained below the taxable quantum and on the expiry of the twelve months or such further period his liability to pay tax shall cease:

Provided that any dealer whose liability to pay tax under this Act ceases for any other reason may apply earlier for the cancellation of his registration, and on such cancellation, his liability to pay tax shall cease:

Provided further that a dealer shall remain liable to pay tax until the date on which his registration is cancelled.

(7)  Every dealer whose liability to pay tax under this Act has ceased or whose registration has been cancelled, shall, if his turnover calculated from the commencement of any year, including the year in which the registration has been cancelled, again exceeds the taxable quantum on any day within such year be liable to pay such tax on and from the date on which his turnover again exceeds the taxable quantum, on all sales effected by him on and after that day.

(8)  Where it is found that any person registered as a dealer ought not to have been so registered, then notwithstanding anything contained in this Act, such person shall be liable to pay tax for the period during which he was registered.

(9)  If any person who transports goods or holds goods in custody for delivery to or on behalf of any person, on being required by the Commissioner so to do, fails

(a)     to furnish any information in his possession in respect of the goods; or

(b)     fails to permit inspection thereof;

then, without prejudice to any other action which may be taken against such person, a presumption may be raised that the goods in respect of which he has failed to furnish information or permit inspection, are owned by him and are held by him for sale in Delhi and the provisions of this Act shall apply accordingly.

 

4.  Rates of tax.

(1)  The rates of tax payable on the taxable turnover of a dealer shall be-

(a)     in respect of goods specified in the Second Schedule, at the rate of one paisa in the rupee;

(b)     in respect of goods specified in the Third Schedule, at the rate of four paise in the rupee;

(c)     in respect of goods specified in the Fourth Schedule, at the rate of twenty paise in the rupee;

(d)     in respect of the goods involved in the execution of the works contract, at the rate of twelve and a half paise in the rupee ; and

(e)     in the case of any other goods, at the rate of twelve and a half paise in the rupee :

Provided that the rate of tax on packing materials or containers shall be the same as the rate at which the goods sold are chargeable to tax.

(2)  The Government may, if it deems necessary, reduce the rates of tax as specified in sub-section (1), by a notification to that effect in the official Gazette.

 

5.  Taxable turnover.

(1)  For the purposes of this Act, taxable turnover means that part of dealers turnover arising during the tax period which remains after deducting therefrom -

(a)     the turnover of sales not subject to tax under section 7 of this Act; and

(b)     the turnover of sales of goods declared exempt under section 6 of this Act.

(2)  In the case of turnover arising from the execution of a works contract, the amount included in taxable turnover is the total consideration paid or payable to the dealer under the contract excluding the charges towards labour, services and other like charges, subject to such conditions as may be prescribed :

Provided that where the amount of charges towards labour, services and other like charges is not ascertainable from the books of accounts of the dealer, the amount of such charges shall be calculated at the prescribed percentages.

 

6.  Sale exempt from tax.

(1)  The sale of goods listed in the First Schedule shall be exempt from tax subject to the conditions and exceptions set out therein.

(2)  The dealers or class of dealers specified in the Fifth Schedule shall be exempt from payment of tax on all sales of goods effected by them subject to such conditions as may be prescribed.

(3)  Where a dealer sells capital goods which he has used since the time of purchase exclusively for purposes other than making non-taxed sale of goods, and has not claimed a tax credit in respect of such capital goods under section 9 of this Act, the sale of such capital goods shall be exempt from tax.

 

7.  Certain sales not liable to tax.

Nothing contained in this Act or the rules made thereunder shall be deemed to impose or authorise the imposition of tax on any sale of goods when such sale takes place -

(a)     in the course of inter-state trade or commerce; or

(b)     outside Delhi; or

(c)     in the course of import of the goods into or export of the goods out of, the territory of India.

Explanation . -  Sections 3, 4 and 5 of the Central Sales Tax Act, 1956 (74 of 1956) shall apply for determining whether or not a particular sale takes place in the manner indicated in clause (a), clause (b) or clause (c) of this section.

 

8.  Adjustments to tax.

(1)  Subject to such conditions as may be prescribed, this section shall apply where, in relation to the sale of goods by any dealer

(a)  that sale has been cancelled;

(b)  the nature of that sale has been fundamentally varied or altered;

(c)  the previously agreed consideration for that sale has been altered by agreement with the recipient, whether due to the offer of a discount or for any other reason;

(d)  the goods or part of the goods sold have been returned to the dealer; or

(e)  the whole or part of the price owed by the buyer for the purchase of the goods has been written-off by the dealer as a bad debt;

and the dealer has

(i)      provided a tax invoice in relation to that sale and the amount shown therein as tax charged on that sale is not the tax properly chargeable on that sale; or

(ii)     furnished a return in relation to a tax period in respect of which tax on that sale is attributable, and has accounted for an amount of tax on that sale that is not the amount properly chargeable on that sale.

(2)  Where a dealer has accounted for an incorrect amount of tax as contemplated in sub-section (1), that dealer shall make an adjustment in calculating the tax payable by that dealer in the return for the tax period during which it has become apparent that the tax is incorrect, and if

(a)     the tax payable in relation to that sale exceeds the tax actually accounted for by the dealer, the amount of that excess shall be deemed to arise in the tax period in which the adjustment is made, and shall not be attributable to any prior tax period; or

(b)     the tax actually accounted for exceeds the tax payable in relation to the sale, the amount of that deficiency shall be subtracted from the tax payable by the dealer in the tax period in which the adjustment is made, and shall not be attributable to any prior tax period.

(3)  Where a dealer sells goods that have been used in part for making -

(a)     sales that are subject to tax under this Act or sales that are not liable to tax under section 7  of this Act; and

(b)     partly for other purposes,

the amount of tax on the sale of the goods shall be the greater of -

(i)      A (A x B / C); or

(ii)     A B;

where

A =   the tax for which the dealer would be liable in respect of the sale apart from this section;

B =    the amount by which the tax credit of the dealer in respect of the goods was reduced under sub-section (4) of section 9  of this Act;

C =    the amount of the tax credit before reduction under sub-section (4) of section 9  of this Act.

 

9.  Tax credit. 

(1)  Subject to sub-section (2)  of this section and such conditions, restrictions and limitations as may be prescribed, a dealer who is registered or is required to be registered under this Act shall be entitled to a tax credit in respect of the turnover of purchases occurring during the tax period where the purchase arises in the course of his activities as a dealer and the goods are to be used by him directly or indirectly for the purpose of making

(a)     sales which are liable to tax under section 3 of this Act; or

(b)     sales which are not liable to tax under section 7 of this Act.

Explanation.-  Sales which are not liable to tax under section 7 of this Act involve exports from Delhi whether to other States or Union territories or to foreign countries.

(2)  No tax credit shall be allowed

(a)     in the case of the purchase of goods for goods purchased from a person who is not a registered dealer;

(b)     for the purchase of non-creditable goods;

(c)     for the purchase of goods which are to be incorporated into the structure of a building owned or occupied by the person;

Explanation.- This sub-section does not prevent a tax credit arising for goods and building materials that are purchased either for the purpose of re-sale in an unmodified form, or for the performance of a works contract on a building owned or occupied by another;

(d)     for goods purchased from a dealer who has elected to pay tax under section 16  of this Act;

(e)          for goods purchased from a casual trader ;

(f)     to the dealers or class of dealers specified in the Fifth Schedule.

(3)  The amount of the tax credit to which a dealer is entitled in respect of the purchase of goods shall be the amount of input tax arising in the tax period reduced in the manner described in sub-sections (4) and (6) of this section.

(4)  Where a dealer has purchased goods and the goods are to be used partly for the purpose of making the sales referred to in sub-section (1) of this section and partly for other purposes, the amount of the tax credit shall be reduced proportionately.

(5)  The method used by a dealer to determine the extent to which the goods are used in the manner specified in sub-section (4)  of this section, shall be fair and reasonable in the circumstances:

Provided that the Commissioner may -

(a)     after giving reasons in writing, reject the method adopted by the dealer and calculate the amount of tax credit; and

(b)     prescribe methods for calculating the amount of tax credit or the amount of any adjustment or reduction of a tax credit in certain instances.

Explanation.-  A person may object in the manner referred to in section 74 of this Act to a decision of the Commissioner to reject a method of calculating a tax credit.

(6)  Notwithstanding anything contained to the contrary in sub-section (1), where

(a)     a dealer has purchased goods (other than capital goods) for which a tax credit arises under sub-section (1)  of this section;

(b)     the goods or goods manufactured out of such goods are to be exported from Delhi by way of transfer to a 

(i)      non-resident consignment agent; or

(ii)     non-resident branch of the dealer; and

(c)     the transfer will not be by way of a sale made in Delhi;

the amount of the tax credit shall be reduced by the prescribed percentage.

(7)  For the removal of doubt, no tax credit shall be allowed for -

(a)     the purchase of goods from an unregistered dealer;

(b)     the purchase of goods which are used exclusively for the manufacture, processing or packing of goods specified in the First Schedule.

(8)  The tax credit may be claimed by a dealer only if he holds a tax invoice at the time the prescribed return for the tax period is furnished.

(9)(a)Notwithstanding anything contained to the contrary in sub-sections (1) and (3) and subject to sub-section (2), tax credit in respect of capital goods shall be allowed as follows

(i)            1/3rd of the input tax on such capital goods, in the same tax period, in which tax credits arises

(ii)          Balance 2/3rd of such input tax in equal proportions in two immediately successive financial years

Provided that, where the dealer sells such capital goods, the dealer shall be allowed as tax credit, the balance amount of the input tax, if any, in respect of such capital goods as has not been earlier availed as tax credit.  Such tax credit shall be allowed in the tax period in which such capital goods are sold and only after adjusting the output tax payable by him.

Provided further that, where the dealer exports from Delhi such capital goods otherwise than by way of sale, the dealer shall be allowed as tax credit, the balance amount of the input tax, if any, in respect of such capital goods as has not been availed earlier as tax credit, in the tax period in which the such capital goods are transferred and as reduced by the prescribed percentage of the purchase price of such capital goods.

Provided further that, no tax credit in respect of capital goods shall be allowed if such capital goods are  used exclusively for the purpose of making sale of exempted goods.

Provided further that no tax credit in respect of capital goods shall be allowed on that part of the value of such capital goods which represents the amount of input tax on such capital goods, which the dealer claims as depreciation under section 32 of the Income Tax Act, 1961 (43 of 1961).

(b)  If any capital goods in respect of which tax credit is allowed under sub-section (9)(a) is transferred to any other person otherwise than by way of sale at the fair market value before the expiry of a period of 5 years from the date of purchase, the tax credit claimed in respect of such purchase shall be reduced in the tax period during which such transfer takes place.

 

10.  Adjustment to tax credit.

(1)  Where any purchaser has been issued with a credit note or debit note in terms of section 51  of this Act or if he returns or rejects goods purchased, as a consequence of which the tax credit claimed by him in any tax period in respect of which the purchase of goods relates, becomes short or excess, he shall compensate such short or excess by adjusting the amount of the tax credit allowed to him in respect of the tax period in which the credit note or debit note has been issued or goods are returned.

(2)  If goods which have been purchased were -

(a)     intended to be used for the purposes specified under sub-section (1) of section 9 of this Act and are subsequently used, fully or partly, for purposes other than those specified under the said sub-section; or

(b)     intended for purposes other than those specified under sub-section (1) of said section 9  of this Act, and are subsequently used, fully or partly, for the purposes specified in the said sub-section;

the tax credit claimed in respect of such purchase shall be reduced or increased ,as the case may be, for the tax period during which the said utilization otherwise has taken place.

(3)  Where

(a)     goods were purchased by a dealer;

(b)     the dealer claimed a tax credit in respect of the goods, and did not reduce the tax credit by the prescribed percentage; and

(c)     the goods are exported from Delhi, other than by way of a sale, to a branch of the registered dealer or to a consignment agent;

the dealer shall reduce the amount of tax credit originally claimed by the prescribed proportion.

(4)  If goods which have been purchased by a dealer were

(a)     intended to be used for the purposes specified under sub-section (1) of section 9 of this Act; and

(b)     are subsequently incorporated into the structure of a building owned or occupied by the person;

the tax credit claimed in respect of such purchase shall be reduced in the tax period during which such incorporation takes place.

 

11.  Net tax

(1)  The net tax payable by a dealer for a tax period shall be determined by the formula:

Net Tax = O I C

where

O =   the amount of tax payable by the person at the rates stipulated in section 4  of this Act in respect of the taxable turnover arising in the tax period, adjusted to take into account any adjustments to the tax payable required by section 8  of this Act.

I =     the amount of the tax credit arising in the tax period to which the person is entitled under section 9  of this Act, adjusted to take into account any adjustments to the tax credit required by section 10  of this Act.

C =    the amount, if any, brought forward from the previous tax period under sub-section (2)  of this section.

(2)  Where the net tax of a dealer calculated under sub-section (1) of this section amounts to a negative value, the dealer shall-

(a)     adjust the said amount in the same tax period against the tax payable by him under the Central Sales Tax Act, 1956 (74 of 1956), if any; and

(b)     be entitled to claim a refund of any surplus amount and the Commissioner shall deal with the refund claim in the manner described in section 38 and section 39  of this Act.

Explanation.-  The dealer may elect to adjust the refund as a tax credit in the next tax period.

 

12. Time at which turnover, turnover of purchases and adjustments arise.

(1) Subject to sub-sections (2), (3) and (4)  of this section, the amount of the turnover and the turnover of purchases of a dealer which arises during any tax period shall be the amount recorded in the accounts of the dealer where those accounts are regularly and systematically prepared and maintained, give a true and fair view of his dealings, and are employed by the dealer in determining the turnover of the dealers business for commercial or income tax purposes.

(2)  The Commissioner may by notification

(a)  permit certain classes of dealer to record turnover based on amounts paid or received; and

(b)  require certain classes of dealer to record turnover based on amounts payable or receivable.

(3)  Where a dealer wishes to change the method of determining the turnover and turnover of purchases, he may only make the change with the consent of the Commissioner and on such terms and conditions as the Commissioner may impose.

(4)  The Government  may prescribe the time at which a dealer shall treat the  

(a)     turnover;

(b)     turnover of purchases; and

(c)     adjustment of tax or adjustment to a tax credit;

as arising for a class of transactions.


 

 

 

13. Priority

Where a provision in this Chapter is inconsistent with a provision in Chapter II, the provision in this Chapter shall, to the extent of the inconsistency, prevail.

 

14. Treatment of stock brought forward during transition.

(1)  Within a period of four months of the commencement of this Act, all registered dealers wishing to claim the credit referred to in sub-section (2)  of this section, shall furnish to the Commissioner a statement of their trading stock, raw materials and packaging materials for trading stock (in this section referred to as opening stock) which

(a)     is held in Delhi on the date of the commencement of this Act;

(b)     was purchased by the dealer after the first day of April 2004;

in such form as may be prescribed.

(2)  If

(a)     the dealer has furnished the statement referred to in sub-section (1) of this section;

(b)     the opening stock has borne tax under the Delhi Sales Tax Act, 1975 (43 of 1975) at the point specified by the Government under section 5 of the said Act; and

(c)     the opening stock has been purchased by the dealer from a registered dealer for such purposes as are specified in sub-section (1) of section 9  of this Act;

the amount of tax borne under the Delhi Sales Tax Act, 1975 (43 of 1975) on such opening stock, determined in such manner and subject to such conditions and restrictions and up to the extent as may be prescribed, shall be credited to the registered dealer as a tax credit under section 9  of this Act:

Provided that no tax credit under this section shall be allowed unless the dealer has in his possession, invoices issued by a dealer registered under the Delhi Sales Tax Act, 1975 (43 of 1975) in respect of the purchases of the said goods:

Provided further that the dealer shall claim the entire amount of credit to which he is entitled in a single statement, which accompanies a return furnished under this Act.

(3)  For the avoidance of doubt, no tax credit under sub-section (2) of this section can be claimed -

(a)     for finished goods manufactured out of tax paid raw material or capital goods;

(b)     for any goods that were taxable at last point under the Delhi Sales Tax Act, 1975 (43 of 1975) held at the time of the commencement of this Act;

(c)     in a statement furnished more than four months after the commencement of this Act; or

(d)     for opening stock which is held outside Delhi.

(4)  Every dealer wishing to claim a tax credit in excess of one lakh rupees on opening stock shall furnish with the statement a certificate signed by an accountant in the prescribed form certifying that the net credit claim made is true and correct.

(5)  Deleted

(6)  Deleted

 

15. Second-hand goods.

(1)  This section applies where

(a)     a registered dealer sells second-hand goods;

(b)     the registered dealer has purchased goods from a resident seller who was not registered under this Act;

(c)     the goods were purchased either as trading stock for re-sale in an unmodified form, or as raw materials for incorporation or division into trading stock;

(d)     the registered dealer will be liable to tax under section 3  of this Act on the sale of the goods or the goods into which they were incorporated, as the case may be; and

(e)     the registered dealer has adequate proof of the amount paid for the goods.

(2)  In the circumstances mentioned in sub-section (1)  of this section, the registered dealer  shall be entitled to a tax credit for the purposes of section 9  of this Act of the least of

(a)     the input tax borne by the resident seller when he purchased the goods;

(b)     the tax fraction of the original cost of the goods to the resident seller;

(c)     the tax fraction of the fair market value of the goods at the time of their purchase by the registered dealer; or

(d)     the tax fraction of the consideration paid by the registered dealer for the goods.

(3)  Where the amount paid by the registered dealer for the goods exceeds two thousand rupees, the tax credit shall be allowed in the tax period when the goods are sold by the registered dealer or the goods into which they have been incorporated are sold by the registered dealer.

 

16. Composition scheme for specified dealers. 

(1)  Notwithstanding anything contained to the contrary in this Act, every dealer whose

(a)     turnover in the year preceding the commencement of this Act; or

(b)     turnover in the current year,

exceeds the taxable quantum under this Act, but does not exceed fifty lakh rupees or such other amount as may be specified by the Government by notification in the official Gazette, shall have an option to pay tax under this section:

Provided that this section shall not apply to dealers procuring goods from any place outside Delhi or selling or supplying goods to any place outside Delhi at any time during the year in which he opts to pay tax under this section or if he is registered in Delhi under the Central Sales Tax Act, 1956 (74 of 1956).

(2)  At the time of making application for registration under section 19, of this Act, the dealer covered under sub-section (1)  of this section shall be required to specify if he intends to pay tax under this section:

Provided that once the dealer elects to pay tax under this section, the option may be reversed only after the end of the year for which the option is made, by application to the Commissioner within such time and in such manner as may be prescribed:

Provided further that where a dealer elects to reverse his option to pay tax under this section, he shall be eligible to claim credit of the tax paid under this Act on the trading stock, raw material and packaging material held by him in Delhi on the date when such reversal takes effect subject to the conditions contained in section 20  of this Act in so far as they are applicable.

(3)  In case a person who elects to pay tax under this section -

(a)     who is registered under the Delhi Sales Tax Act, 1975 (43 of 1975) or the Delhi Sales Tax on Works Contract Act, 1999 (Delhi Act 9 of 1999) or Delhi Sales Tax on Right to Use Goods Act, 2002 (13 of 2002), at the time of the commencement of this Act; and

(b)     whose turnover in the year preceding the commencement of this Act exceeds the taxable quantum under this Act but does not exceed fifty lakh rupees or such other amount as may be specified by the Government by notification in the official Gazette,

he shall be required to specify the election to pay tax under this section within such time and in such manner as may be prescribed.

(4)  Where a dealer elects to pay tax under this section, the dealers net tax shall be the amount determined at the rate of one paisa in the rupee of the turnover of the dealer.

(5)  A dealer who elects to pay tax under this section shall -

(a)     not purchase goods from a person who is not registered under this Act ;

(b)     not compute his net tax under section 11 of this Act;

(c)     not be allowed to claim credit under section 9, section 14 and section 15  of this Act;

(d)     not be entitled to issue tax invoice;

(e)     not be allowed to collect any amount by way of tax under this Act; and

(f)     continue to retain tax invoices and retail invoices for all of his purchases as required under section 48  of this Act.

(6)  In case a person -

(a)  who is registered under the Delhi Sales Tax Act, 1975 (43 of 1975) or the Delhi Sales Tax on Works Contract Act, 1999 (Delhi Act 9 of 1999) or Delhi Sales Tax on Right to Use Goods Act, 2002 (13 of 2002), at the time of the commencement of this Act;

(b)  whose turnover in the year preceding the commencement of this Act exceeds the taxable quantum under this Act but does not exceed fifty lakh rupees or such other amount as may be specified by the Government by notification in the official Gazette; and

(c)  who has opted to pay tax under this section in terms of sub-section (3)  of this section;

he shall be required to pay tax on the trading stock, raw material, packaging material (in this sub-section referred to as opening stock) and finished goods held on the date of the commencement of this Act at the rates specified in section 4  of this Act on the fair market value of such opening stock and finished goods where such opening stock and finished goods have not borne tax under the Delhi Sales Tax Act, 1975 (43 of 1975).

(7)  The tax due under sub-section (6) of this section shall be paid at any time before the person specifies his intention to pay tax under this section.

(8)  The proof of payment of tax referred to in sub-section (6) of this section  along with a statement of opening stock and finished goods in such form as may be prescribed shall be furnished to the Commissioner at the time the person specifies his intention to pay tax under this section.

(9)  Subject to the other provisions of this section, where a registered dealer pays tax at the rates specified in section 4 of this Act, he may choose to pay tax under this section only from the beginning of the following year:

Provided that such registered dealer shall be required to pay tax at the rates specified in section 4 of this Act on the trading stock, raw material, packaging material and finished goods held by him on the first day of the said following year.

(10)If the taxable turnover of a dealer who elected to pay tax under this section exceeds rupees fifty lakhs or such other amount as may be specified by the Government by notification in the Official Gazette, he shall be liable to pay tax under section 3 of this Act on and from the day his taxable turnover exceeds rupees fifty lakh or such other amount as may be specified by the Government by notification in the Official Gazette and shall be entitled to claim credit of the input tax paid under this Act on trading stock, raw material and packaging material held by him in Delhi on such day

Provided that such dealer has intimated the Commissioner within seven days of his becoming liable to pay tax under section 3 of this Act in the prescribed form and has furnished such other information to the Commissioner as may be prescribed.

(11)The Commissioner may notify a dealer or a class of dealers who shall not be entitled to opt for payment of tax under this section.

 16A(1) Notwithstanding anything contained to the contrary in this Act, a casual trader shall

(a)     at least three days before commencing business in Delhi, inform the Commissioner of such particulars of his business in such form and manner as may be prescribed ;

(b)          deposit security in cash or in the form of bank draft as may be fixed by the Commissioner which shall not exceed estimated liability to pay tax for seven days or such lesser period for which the casual trader is conducting the business in Delhi;

(c)          pay tax daily on the sales made during the previous day ;

(d)          furnish to the Commissioner immediately after conclusion of his business in Delhi a return in the prescribed form and manner ; and

(e)          not issue any tax invoice

(2)    The Commissioner shall, after verification of information furnished to him under clause (a) of sub section (1) and after getting security under clause (b) of the sub-section shall register the casual trader.

(3)    Upon registration of casual trader the Commissioner may issue required forms to him for use as the declaration referred to in sub section (2) of section 61 of this Act for bringing goods for sale in Delhi and for taking the unsold goods out of Delhi.  The casual trader shall render complete account of the used forms and surrender the unused forms alongwith the return referred to the clause (d) of subsection (1).

(4)    The Commissioner shall, after examination of the return furnished by the casual trader under clause (d) of sub-section (1), the forms referred to in sub-section (3) and the accounts maintained by him including the retail invoices issued, assess him to tax within 5 days and shall serve upon him a notice of assessment and after adjusting any tax and any other dues payable under this Act, refund the balance amount of security to him in case security is deposited in the form of cash deposit.

(5)    The casual dealer shall pay immediately the amount mentioned in the notice of assessment.

(6)    On being satisfied that the amount due has been paid the Commissioner shall release the security or balance security as the case may be.

(7)    Notwithstanding anything contained in this Act the taxable quantum in respect of a casual trader shall be nil.

 

17. Transactions between related parties

If

(a)     a registered dealer sells or gives goods to a related person;

(b)     the terms or conditions of the transaction have been influenced by the relationship; and

(c)     the related person had purchased the goods, the related person would not be entitled to a tax credit for the purchase, or the amount of the tax credit would be reduced under sub-section (3) of section 9 of this Act;

the transaction shall be deemed to be a sale made by the registered dealer and the sale price of the goods shall be deemed to be their fair market value.


 

 

 

18. Mandatory and voluntary registration.

(1)  Every dealer is required to apply for registration under this Act if -

(a)  the dealers turnover in the year preceding the commencement of this Act exceeded the taxable quantum; or

(b)  the dealers turnover in the current year exceeds the taxable quantum; or

(c)  the dealer is liable to pay tax, or is registered or required to be registered under Central Sales Tax Act, 1956 (74 of 1956):Provided that a dealer dealing exclusively in goods mentioned in the First Schedule shall not be required to register.

Explanation.-  For the purposes of this section, in case of dealers involved in execution of works contracts, the taxable quantum shall be calculated with reference to the total contract amount received.

(2)    For the purposes of this Act, taxable quantum of a dealer shall be five lakh rupees, or such other amount as may be specified by the Government by notification in the official Gazette:

Provided that a dealer who imports for sale any goods into Delhi, the taxable quantum shall be Nil or such other amount as may be specified by the Government by notification in the official Gazette.

(3)  The taxable quantum of a dealer shall not include turnover from-

(a)     sales of capital assets;

(b)     sales made in the course of winding up the dealers activities; and

(c)     sales made as part of the permanent diminution of the dealers activities.

(4)  Any person who is not required by sub-section (1) of this section to be registered but who -

(a)     is a dealer; or

(b)     intends from a particular date to undertake activities which would make him a dealer,

may apply for registration.

 

19. Registration.

(1)  An application for registration shall be made in the prescribed form, within such time,, containing such particulars and information and accompanied by such fee, security and other documents as may be prescribed.

Explanation.-  The Commissioner may, by order to be published in the official Gazette, specify certain classes of persons who may not be required to furnish a security.

(2)  Where

(a)     an applicant furnishes a security in the prescribed form and for the prescribed amount, and

(b)     all other forms and evidence required by and prescribed under this Act are complete and in order,

the Commissioner shall register the applicant.

(3)  Where the Commissioner has not registered the person within fifteen days from the date on which the application is made, the Commissioner shall, after conducting such inquiries as he deems fit, either

 
 
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