TAX RATES & CALCULATION OF TAXES

TAX RATES & CALCULATION OF TAXES

1. TAX RATES: SALE TO GOVERNMENT OR REGISTERED DEALER IN SPECIFIED CIRCUMSTANCES

The tax payable by a dealer on his taxable turnover so far as such turnover relates to goods sold to the:

• Government; or
• Goods of the description as specified[1] sold to a VAT dealer or other prescribed registered dealer,

shall be calculated -

• if the goods are of the description contained in Schedule D, at the rate mentioned against such goods;
• If the goods are not of the description contained in Schedule D then at 4% or such lower rate applicable on sale of such goods had it been a sale falling under section 7(1)(a)[2].

[1] The goods sold to an authorised dealer:

• are goods of the class or classes specified in the certificate of registration of the authorised dealer purchasing the goods as being intended, subject to any rules made by the State Government in this behalf, for use by him -
• in the manufacture of goods for sale;
• in the telecommunications network;
• in mining; or
• in the generation or distribution of electricity or any other form of power;
• are goods of the class or classes specified in the certificate of registration of the authorised dealer who is covered under the notification issued under the second proviso to clause (b) of sub-section (2), purchasing the goods as being intended for use by him for the purposes specified in the said notification;
• are containers or other materials used for the packing of any goods or classes of goods specified in the certificate of registration referred to in clause (a) or clause (b).

[2] The tax payable by a dealer on his taxable turnover in so far as such turnover or any part thereof relates to, -

(a) the sales of goods not falling within sub-section (2), -

• in the case of goods specified in Schedule A, shall be calculated at the rates specified therein;
• in the case of declared goods except those specified in Schedule B, shall be calculated at four per cent or such other rate not exceeding the ceiling specified in clause (a) of section 15 of the Central Act as the State Government may, by notification in the Official Gazette, direct;
• in the case of goods specified in Schedule C, shall be calculated at four per cent or such other rate not exceeding ten percent as the State Government may, by notification in the Official Gazette, direct;
• in the case of other goods, shall be calculated at ten percent or such other rate not exceeding fifteen per cent, as the State Government may, by notification in the Official Gazette, direct:

Provided that where any goods are sold in containers or packed in any packing materials, the rate of tax applicable to such containers or packing materials shall, whether the price of the containers or packing materials is charged separately or not, be the same as those applicable to the goods contained or packed therein; and where such goods are exempt from tax, the sale of the containers or packing materials shall also be exempt from tax;

[1] The goods sold to an authorised dealer:

• are goods of the class or classes specified in the certificate of registration of the authorised dealer purchasing the goods as being intended, subject to any rules made by the State Government in this behalf, for use by him -
• in the manufacture of goods for sale;
• in the telecommunications network;
• in mining; or
• in the generation or distribution of electricity or any other form of power;
• are goods of the class or classes specified in the certificate of registration of the authorised dealer who is covered under the notification issued under the second proviso to clause (b) of sub-section (2), purchasing the goods as being intended for use by him for the purposes specified in the said notification;
• are containers or other materials used for the packing of any goods or classes of goods specified in the certificate of registration referred to in clause (a) or clause (b).

[1] The tax payable by a dealer on his taxable turnover in so far as such turnover or any part thereof relates to, -

(a) the sales of goods not falling within sub-section (2), -

• in the case of goods specified in Schedule A, shall be calculated at the rates specified therein;
• in the case of declared goods except those specified in Schedule B, shall be calculated at four per cent or such other rate not exceeding the ceiling specified in clause (a) of section 15 of the Central Act as the State Government may, by notification in the Official Gazette, direct;
• in the case of goods specified in Schedule C, shall be calculated at four per cent or such other rate not exceeding ten percent as the State Government may, by notification in the Official Gazette, direct;
• in the case of other goods, shall be calculated at ten percent or such other rate not exceeding fifteen per cent, as the State Government may, by notification in the Official Gazette, direct:

Provided that where any goods are sold in containers or packed in any packing materials, the rate of tax applicable to such containers or packing materials shall, whether the price of the containers or packing materials is charged separately or not, be the same as those applicable to the goods contained or packed therein; and where such goods are exempt from tax, the sale of the containers or packing materials shall also be exempt from tax;

1.1 Conditions for preferential rate to authorised dealer

The goods sold to an authorised dealer:

• are goods of the class or classes specified in the certificate of registration of the authorised dealer purchasing the goods as being intended, subject to any rules made by the State Government in this behalf, for use by him -
• in the manufacture of goods for sale;
• in the telecommunications network;
• in mining; or
• in the generation or distribution of electricity or any other form of power;
• are goods of the class or classes specified in the certificate of registration of the authorised dealer who is covered under the notification issued under the second proviso to clause (b) of sub-section (2), purchasing the goods as being intended for use by him for the purposes specified in the said notification;
• are containers or other materials used for the packing of any goods or classes of goods specified in the certificate of registration referred to in clause (a) or clause (b).

The goods referred to in section 7(4)(a) which an authorised dealer may purchase, shall be goods intended for use by him,:
(i) as raw materials, processing materials, packing materials, machinery, plant, equipment, cables, dies, tools, stores, spare parts, accessories, fuels or lubricants, in the manufacture of goods for sale;

(ii) as machinery, plant, equipment, cables, tools, stores, spare parts, accessories, fuels or lubricants, in the generation of electricity or any other form of power where such power is used in the manufacture of goods by him for sale;

(iii) as machinery, plant, equipment, cables, tools, stores, spare parts, accessories, fuel or lubricants, in the generation and distribution or distribution of electricity or any other form of power;

(iv) as machinery, equipment, cables, tools, stores, spare parts, accessories, in the telecommunications network; or (v) as machinery, equipment, tools, stores, spare parts, in mining.
Failure to comply with these conditions

If an authorised dealer after purchasing any goods for any of the purposes specified in section7(4)(a) or section7(4)(b) or section7(4)(c) fails, without reasonable excuse, to make use of the goods for any such purpose, the assessing authority may, after giving him a reasonable opportunity of being heard, by order in writing, impose upon him by way of penalty a sum not exceeding one-and-a-half times the tax which would have been levied additionally under section 7(1)(a), if the sale made to him had been a sale falling within that clause. However that no penalty shall be imposed where an authorised dealer voluntarily pays the tax which would have been levied additionally, as referred to in the foregoing provision, with the return for the period when he failed to make use of the goods purchased for the specified purposes.

Taxing authority competent to impose penalty shall serve on assessee a notice in Form VAT-N3 specifying the offence and calling upon him to show cause by such date, ordinarily not less than 10 days after the date of service of the notice, as may be fixed in that behalf, why a penalty should not be imposed upon him and shall decide the case after considering objections filed or submissions made, if any, before him.

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