Chapter II INCIDENCE, LEVY AND CALCULATION OF TAX

1. (1) Save as otherwise provided in this Act, every dealer shall be liable to pay tax on every sale or purchase of goods, in the State at the rates specified in the Schedules.
2. (2) Every dealer who is registered or liable to be registered for TOT and who has not opted for registration as VAT dealer and whose taxable turnover in a period of 12 consecutive months exceeds Rs. 3 lakhs (rupees three lakhs) but does not exceed Rs. 20 lakhs (rupees twenty lakhs), shall pay turnover tax at the rate of one and half (1.5%) per cent on the taxable turnover in the manner prescribed.
3. (3) Every VAT dealer shall pay tax on every sale of goods taxable under this Act on the sale price at the rates specified in the Schedules III, IV and V, subject to the provisions of section 13.
4. (4) Every VAT dealer who in the course of his business purchases any taxable goods from a person or a dealer not registered as a VAT dealer shall be liable to pay tax on the purchase price of such goods, if after such purchase, the goods are, –
   • (i) used as inputs for goods which are exempt from tax under this Act; or
   • (ii) used as inputs for goods, which are disposed of otherwise than by way of sale in the State or dispatched outside the State otherwise than by way of sale in the course of inter-State trade and commerce or export out of the territory of India; or
   • (iii) disposed of otherwise than by way of consumption or by way of sale either within the State or in the course of inter state trade or commerce and such tax shall be levied at the same rate at which tax would have been otherwise levied on the sale of such goods within the State on the date of such purchase.
5. (5) Every dealer shall pay tax on the sale price of goods at the special rates and at the point of levy specified in Schedule VI.
6. (6) Every casual trader who sells goods within the State shall pay tax on the sale price of such goods at the rates specified in the respective Schedules.
7. (7) Subject to such conditions as may be prescribed, a dealer executing works contract may opt to pay tax by way of composition, a tax at the rate of twelve and half percent (12.5%) on such portion of the value of the consideration received or receivable as may be prescribed.

Nothing contained in this Act shall be deemed to impose or authorise the imposition of a tax on the sale or purchase of any goods, where such sale or purchase takes place, -

1. (a) outside the State; or
2. (b) in the course of the import of the goods into, or export of the goods out of the territory of India; or
3. (c) in the course of inter-State trade or commerce.

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 such containers or packing material 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.

The goods listed in Schedule I to this Act shall be exempted from tax under this Act.

The following shall be zero-rated sales for the purpose of this Act and shall be eligible for input tax credit,--

1. (1) Sale of goods in the course of inter-State trade and commerce falling within the scope of section 3 of the Central Sales Tax Act, 1956.
2. (2) Sale of goods falling within the scope of sub sections
3. (1) or
4. (3) of Section 5 of the Central Sales Tax Act, 1956.

Every dealer, who is liable to pay tax on the sale of goods specified in Schedule VI shall not be eligible for input tax credit.

1. (1) Any dealer who is not registered or does not opt to be registered as VAT dealer shall not be entitled to claim input tax credit for any purchases, and shall not be eligible to issue a tax invoice.
2. (2) Any dealer who is registered as a VAT dealer shall not be liable to Turnover Tax from the effective date of such registration.

1. (1) Subject to sub-section (2), the VAT payable on a sale liable to VAT shall be calculated by applying the rate of tax specified in the Schedules, on the sale price of goods.
2. (2) Where the sale price of goods is inclusive of VAT, the amount of VAT shall be determined in accordance with the formula prescribed.

The VAT payable by a VAT dealer or VAT credit or refund due to a VAT dealer for a tax period shall be calculated in accordance with the formula prescribed.

1. (1) Subject to the conditions if any, prescribed, an input tax credit shall be allowed to the VAT dealer for the tax charged in respect of all purchases of taxable goods, made by that dealer during the tax period, if such goods are for use in the business of the VAT dealer. No input tax credit shall be allowed in respect of the tax paid on the purchase of goods specified in Schedule VI.
2. (2) Subject to the conditions if any, prescribed, input tax credit shall be allowed to a VAT dealer on registering as VAT dealer if any input tax is paid or payable in respect of all purchases of taxable goods, made prior to his registration for VAT where such goods are for use in the business as VAT dealer, provided the goods are in stock on the date of registration and such purchase occurred not more than three months prior to the effective date of registration.
3. (3) A VAT dealer shall be entitled to claim input tax credit.-
   • (a) under sub-section (1), on the date the goods are received by him, provided he is in possession of a tax invoice;
   • (b) under sub-section (2), on the date of registration, provided he is in possession of documentary evidence therefor.
4. (4) A VAT dealer shall not be entitled to input tax credit in respect of the purchases of such taxable goods as may be notified from time to time.
5. (5) No input tax credit shall be allowed on the following:-
   • (a) transfer of goods on consignment basis or to branches of the VAT dealer outside the state otherwise than by way of sale;
   • (b) service or skill component in a works contract;
   • (c) transfer of a business as a whole;
   • (d) sales of exempted goods except when such goods are sold in the course of export or exported outside the territory of India.
6. (6) Where goods purchased by a VAT dealer are partly for his business use and partly for other than his business use, the amount of the input tax credit shall be limited to the extent of input tax that relates to the goods used in his business.
7. (7) A Turnover Tax dealer or a casual trader shall not be entitled to claim input tax credit.

A VAT dealer making a sale liable to tax to another VAT dealer shall issue at the time of sale, a tax invoice in such form as may be prescribed.

1. (1) The Government may, if it is necessary so to do in the public interest and subject to such conditions as it may impose, by a Notification, provide for grant of refund of tax paid to any person, on the purchases effected by him and specified in the said Notification.
2. (2) Any Notification under sub section
3. (1) may be issued so as to be retrospective to any day not earlier than the appointed day and such Notification shall take effect from the date of its publication in the Gazette or such other earlier or later date as may be mentioned therein.
4. (3) An application for refunds shall be made in duplicate to the Commissioner within a period of six months from the date of purchase and it shall be accompanied by the purchase invoice in original.

1. (1) The burden of proving that any sale or purchase effected by a dealer is not liable to tax or is liable to be taxed at a reduced rate or eligible for input tax credit shall lie on the dealer.
2. (2) Where a dealer issues or produces a false bill, voucher, declaration, certificate or other document with a view to support or make any claim that a transaction of sale or purchase effected by him or any other dealer, is not liable to tax or liable to be taxed at a reduced rate, or eligible for input tax credit is guilty of an offence under section 72 of this Act.