Chapter II INCIDENCE AND LEVY OF TAX

1. (1) Subject to the provisions of this Act, every dealer,-
   • (i) whose total turnover during the year immediately preceding the appointed day exceeded rupees five lakhs and whose taxable turnover exceeded rupees ten thousand in a year (the aforesaid amounts of total turnover and taxable turnover are hereinafter referred to as “thresholds of turnover”), or
   • (ii) who was registered under the earlier law or under the Central Act as on the appointed day, or
   • (iii) whose total turnover and taxable turnover in any year first exceed the thresholds of turnover, or
   • (iv) who is registered or liable to be registered as a dealer under this Act or under the Central Act at any time after the appointed day shall be liable to pay tax in accordance with the provisions of this Act.
2. (2) Not withstanding anything contained in this section, a casual dealer or an auctioneer shall be liable to be registered if his taxable turnover of sales exceeds ten thousand rupees and he shall be liable to pay tax in accordance with the provisions of this Act.
3. (3) The dealer shall be liable to pay tax,--
   • (a) in case of clauses
     • (i) and
     • (ii) of sub-section (1), with effect from the appointed day;
   • (b) in case of clause
     • (iii) of sub-section (1), with immediate effect when his turnover calculated from the commencement of the year first exceeds the thresholds of turnover;
   • (c) in case of clause
     • (iv) of sub-section (1), with immediate effect when he becomes so liable or the date of registration under this Act, whichever is earlier: Provided that the dealer shall not be liable to pay tax in respect of thresholds of turnover as takes place during the period prior to the relevant date of effect under this sub-section.
4. (4) Every dealer who has become liable to pay tax under this Act shall continue to be so liable until the expiry of one year during which his total turnover and taxable turnover have remained below the thresholds of turnover: Provided that any dealer whose liability to pay tax under this Act ceases or his total turnover and taxable turnover during the year remains below the thresholds of turnover, may apply for the cancellation of his certificate of registration; and on such cancellation, his liability to pay tax shall cease and such dealer shall remain liable to pay tax till his certificate of registration is cancelled.
5. (5) Every dealer whose liability to pay tax under this Act has ceased under sub-section
6. (4) or whose certificate of registration has been cancelled, shall, if his total turnover and taxable turnover calculated from the commencement of any year (including the year in which the registration has been cancelled) again exceed the thresholds of turnover, on any day within such year, be liable to pay tax with effect from the date immediately following the day on which his such turnover again exceed thresholds of turnover of sales effected by him after that date.
7. (6) Where by an order passed under this Act, 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 commencing with the date of his registration and ending with the date of such order, as if he were a dealer.

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

1. (a) in the course of inter-State trade or commerce; or
2. (b) outside the State; or
3. (c) in the course of the import of goods into or export of goods out of the territory of India, and the provisions of this Act and the rules thereunder shall be construed accordingly. Explanation.- Sections 3, 4 and 5 of the Central Act shall apply for determining whether or not a particular sale or purchase has taken place in the manner indicated in clauses (a),
4. (b) or (c).

1. (a) Subject to such conditions as it may impose, the State Government may, if it considers necessary so to do in the public interest, by notification in the Official Gazette, exempt any specified class of sales of goods by any specified dealer specified class of dealers from payment or sales of the whole or any part of the tax payable under the provisions of this Act.
2. (b) Where the State Government considers it necessary so to do in the public interest to continue tax exemption granted to the sales of goods by industrial units under sub-section

1. (2) of section 49 of the Gujarat Sales Tax Act, 1969, it may, by notification in the Official Gazette, continue such exemption with such modification, subject to such conditions and for such period, as may be prescribed.
2. (3) Every notification issued under sub-section
3. (2) shall be laid for not less than thirty days before the State Legislature as soon as possible after it is issued and shall be subject to rescission by the State Legislature or to such modifications as the State Legislature may make, during the session in which it is so laid or session immediately following. Any rescission or modification so made by the State Legislature shall be published in the Official Gazette, and shall thereupon take effect. 5A.

Taxes payable by a dealer Subject to the other provisions of this Act, every dealer, who is liable to pay tax under this Act, shall pay the tax leviable in accordance with the provisions of this Act.

1. (1) Subject to the provisions of this Act, there shall be levied a tax on the turnover of sale of Motor spirit commonly known as Petrol, High Speed Diesel, Aviation Turbine Fuel, Petroleum Crude, Natural Gas and Alcoholic Liquor for human consumption specified in Schedule III at the rate set out against each of them: Provided that the Government may levy, from importer or manufacturer or oilmarketing companies, a tax at full rate on the retail price in such manner as may be notified by the Government.
2. (2) The State Government may, by notification in the Official Gazette,-
   • (ii) add to or omit from, or otherwise amend or modify Schedule III so as to levy tax on the basis of price, weight, volume, measurement or unit, or reduce or enhance the rate of tax payable in respect of any goods specified in Schedule III and thereupon Schedule III shall be deemed to have been amended accordingly.
3. (3) Every notification issued under sub-section
4. (2) shall be laid for not less than thirty days before the State Legislature as soon as possible after it is issued and shall be subject to rescission by the State Legislature or to such modification as the State Legislature may make, during the session in which it is so laid or session immediately following. Any rescission or modification so made by the State Legislature shall be published in the Official Gazette, and shall thereupon take effect.

For the purpose of proper identification of the goods, the State Government may by rules, assign the HSN code to each of the goods specified in the Schedules and different codes may be assigned to different goods covered under the same entry in the Schedules.

1. (1) The provisions of sub-section
2. (2) shall apply where, in relation to the sales of taxable goods by any registered dealer-
   • (a) that sale has been cancelled; or
   • (b) the consideration previously agreed upon for that sale has been altered by agreement with the recipient, whether due to the offer of a discount or for any other reason; or
   • (c) the goods or part of the goods sold have been returned to the seller, and as a result of the occurrence of any one or more of the above mentioned events of such sales, the seller has-
     • (i) provided a tax invoice in relation to that sale and the amount shown therein as tax charged on that sale is incorrect in relation to the amount properly chargeable on that sale; or
     • (ii) furnished a return in relation to the period in respect of which tax on that sale is attributable, and has accounted for an incorrect amount of tax on that sale in relation to the amount properly chargeable on that sale.
3. (2) Where a seller has accounted for either in the tax invoice or in the return an incorrect amount of tax as contemplated in sub-section (1), such seller shall make an adjustment in calculating the tax payable by him in the return for the tax period during which it has become apparent that the tax is incorrect. Such adjustment shall be made in the following manner, namely:-
   • (a) if the amount of tax chargeable in relation to that sale exceeds the amount of tax actually accounted for by the seller, the amount of that excess shall be deemed to be tax charged by such seller in relation to a taxable sale attributable to the tax period in which the adjustment is to be made, and shall not be attributable to any prior tax period; or
   • (b) the amount of tax actually accounted for exceeds the amount of tax properly chargeable in relation to that sale, such seller shall reduce the amount of tax attributable to the said tax period in terms of section 7 by that excess amount of tax: Provided that the reduction in the amount of tax under clause
   • (b) shall not be made-
   • (a) where the excess tax has been borne by the purchaser of goods, or
   • (b) If the relevant event as described in sub-section
4. (1) has occurred subsequent to such period as may be prescribed, from the date of such sales made by the dealer. 9.

Deeming provision for packing material Notwithstanding anything contained in this Act , the value of goods shall be inclusive of value of packing material unless value of packing material is separately charged and tax is collected under the Gujarat Goods and Services Tax Act, 2017.

1. (a) A registered dealer who has purchased the taxable goods (hereinafter referred to as the “purchasing dealer”) shall be entitled to claim tax credit equal to the amount of,-
   • (i) tax collected from the purchasing dealer by a registered dealer from whom he has purchased such goods or the tax payable by the purchasing dealer to a registered dealer who has sold such goods to him during the tax period, or;
   • (ii) [Deleted]
   • (iii) [Deleted]
2. (b) The tax credit to be so claimed under this sub-section shall be subject to the provisions of sub-sections

1. (2) to (12); and the tax credit shall be calculated in such manner as may be prescribed.
2. (2) The registered dealer who intends to claim the tax credit shall maintain the register and the books of accounts in such manner as may be prescribed. (3)
   • (a) Subject to the provisions of this section, tax credit to be claimed under sub-section
3. (1) shall be allowed to a purchasing dealer on his purchase of taxable goods which are intended for the purpose of-
   • (i) sale or re-sale by him in the State;
   • (ii) sale in the course of inter-State trade and commerce;
   • (iii) branch transfer or consignment of taxable goods to other States (subject to the provision of sub-clause
   • (b) below);
     • (iv) sales in the course of export out of the territory of India;
     • (v) sales to export oriented units or the units in Special Economic Zones for sale in the course of export out of the territory of India;
     • (vi) use as raw material in the manufacture of taxable goods intended for
     • (i) to
     • (v) above; Provided that if purchases are used partially for the purposes specified in this sub-section, the tax credit shall be allowed proportionate to the extent they are used for the purposes specified in this sub-section.
   • (b) Notwithstanding anything contained in this section, the amount of tax credit in respect of a dealer shall be reduced by the amount of tax calculated at the rate of four per cent. on the taxable turnover of purchases with in the State.
     • (i) of taxable goods consigned or dispatched for branch transfer or to his agent outside the State, or
     • (ii) of taxable goods which are used as raw materials in the manufacture, which are dispatched outside the State in the course of branch transfer or consignment or to his agent outside the State,
     • (iii) of fuel used for the manufacture of taxable goods: Provided that where the rate of tax of the taxable goods consigned or dispatched by a dealer for branch transfer or to his agent outside the State is less than four per cent., then the amount of tax credit in respect of such dealer shall be reduced by the amount of tax calculated at the rate of tax set out in the Schedule on such goods on the taxable turnover of purchases with in the State.
4. (4) The tax credit shall not be claimed by the purchasing dealer until the tax period in which he receives from a registered dealer from whom he has purchased taxable goods, a tax invoice (in original) containing particulars as may be prescribed under sub-section
5. (1) of section 60 evidencing the amount of tax.
6. (5) Notwithstanding anything contained in this Act, tax credit shall not be allowed for purchases-
   • (a) made from any person other than a registered dealer under this Act;
   • (b) made from a dealer who is not liable to pay tax under this Act;
   • (c) [Deleted]
   • (d) made prior to the relevant date of liability to pay tax as provided in sub-section
7. (3) of section 3;
   • (dd) made prior to the date of registration;
   • (e) made in the course of inter-State trade and commerce;
   • (f) of the goods (not being taxable goods dispatched outside the state in the course of branch transfer or consignment) which are disposed of otherwise than in sale, resale or manufacture;
   • (g) of the goods exempt from whole of tax by a notification under sub-section
8. (2) of section 5;
   • (h) of the goods which are used in manufacture of the goods exempt from the whole of the tax by a notification under sub-section
9. (2) of section 5.
   • (k) of the property or goods not connected with the business of the dealer;
   • (l) of the goods which are used as fuel in generation of electrical energy meant for captive use or otherwise;
   • (ll) of petrol, high speed diesel, and petroleum crude and lignite unless such purchase is intended for resale;
   • (m) of the goods which are used as fuel in motor vehicles;
   • (mmm) of the goods for which right to use is transferred for any purpose (whether or not for a specified period), for cash, deferred payment or other valuable considerations;
   • (mmmm) made from a dealer after the name of such dealer has been published under sub-section
10. (11) of section 27 or section 97;
    • (n) of the goods which remain as unsold stock at the time of closure of business;
    • (o) where original invoice does not contain the details of tax charged separately by the selling dealer from whom purchasing dealer has purchased the goods;
    • (p) where original tax invoice or duplicate thereof dully authenticated in accordance with the rules made in this behalf is not available with purchasing dealer or there is evidence that the same has not been issued by the selling dealer from whom the goods are purported to have been purchased;
      • (II) Notwithstanding anything contained in clause
    • (d) or
    • (dd) in this sub-section and subject to such conditions and in such manner as may be prescribed, a registered dealer shall be allowed to claim tax credit for the taxable goods held in stock on the date of registration which are purchased after 1st April, 2008 and during the period of one year ending on the date of registration.
11. (6) The State Government may, by notification in the Official Gazette, specify any goods or the class of dealers that shall not be entitled to whole or partial tax credit.
12. (7) Where a registered dealer without entering into a transaction of sale, issues to another registered dealer tax invoice, retail invoice, bill or cash memorandum with the intention to defraud the Government revenue or with the intention that the Government may be defrauded of its revenue, the Commissioner may, after making such inquiry as he thinks fit and giving a reasonable opportunity of being heard, deny the benefit of tax credit, in respect of such transaction, to such registered dealers issuing or accepting such tax invoice, retail invoice, bill or cash memorandum either prospectively or retrospectively from such date as the Commissioner may, having regard to the circumstances of the case, fix. (7A) Notwithstanding anything contained in this section, in no case the the amount of tax credit on any purchase of goods shall exceed the amount of tax in respect of the same goods, actually paid, if any, under this Act or any earlier law, into Government treasury: (8)
    • (a) If the goods purchased were intended for the purposes specified under sub-section
13. (3) and are subsequently used fully or partly for purposes other than those specified under the said sub-section or are used fully or partly in the circumstances described in sub-section (5), the tax credit, if availed of, shall be reduced on account of such use, from the tax credit being claimed for the tax period during which such use has taken place; and such reduction shall be done in the manner as may be prescribed.
    • (b) Where the capital goods referred to in sub-clause
      • (vii) of clause
    • (a) of sub-section
14. (3) are not used continuously for a full period of five years in the State, the amount of tax credit shall be reduced proportionately having regard to the period falling short of the period of five years: Provided that, whene a dealer migrating to the Gujarat Goods and Services Tax Act, 2017 uses the Capital goods till completion of remaining period of limit of 5 years continuously under the Gujarat Goods and Services Tax Act,2017, the tax credit shall not be reduced for such period. (8A)
15. (1) when a dealer has availed the tax credit for tax paid on puchases of goods in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the date of coming into force of the gujarat Value Added Tax (Amendment) Act, 2017 and he opts for composition under section 10 of the Gujarat Goods and Services Tax Act, 2017, such tax credit shall stand reversed. Such amount of reversed tax credit shall be adjusted from the present balance of tax credit available. If such dealer does not have in balance the tax credit available for adjustment of reversed tax credit, he shall pay into Government treasury, a sum equal to the amount of unadjustment reversed tax credit.
16. (2) when a dealer has availed the tax credit for tax paid on puchases of capital goods on the date of coming into force of the Gujarat Value Added Tax (Amendment) Act, 2017 and he opts for composition under section 10 of the Gujarat Goods and Services Tax Act, 2017, but period of five year has not completed, such tax credit shall stand reversed. Such amount of reversed tax credit shall be adjusted from the present balance of tax credit available. If such dealer does not have in balance the tax credit available for adjustment of reversed tax credit, he shall pay into Government treasury, a sum equal to the amount of unadjusted reversed tax credit.
17. (9) The registered dealer may claim the amount of net tax credit, which shall be determined in the manner as may be prescribed.
18. (10) Where any purchaser, being a registered dealer, has been issued with a credit note or debit note in terms of section 61 or if he returns or rejects goods purchased, as a consequence of which the tax credit availed by him in any period in respect of which the purchase of goods relates, becomes either short or excess, he shall compensate such short or excess by adjusting the amount of 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, subject to such conditions as may be prescribed.
19. (11) A registered dealer shall apply fair and reasonable method to determine, for the purpose of this section, the extent to which the goods are sold, used, consumed or supplied, or intended to be sold, used, consumed or supplied. The Commissioner may, after giving the dealer an opportunity of being heard and for the reasons to be recorded in writing, reject the method adopted by the dealer and calculate the amount of tax credit as he deems fit.
20. (12) Subject to the exceptions as may be prescribed by the rules, any dealer including the Commission agent shall not be permitted to transfer his tax credit to any other dealer or as the case may be, the principal. Explanation.—For the purpose of this section the amount of tax credit on any purchase of goods shall not exceed the amount of tax actually paid or payable under this Act in respect of the same goods. 12. [Deleted] [Tax Credit For Stock on 31st March, 2003] was deleted by Guj. 26 of 2017, s.10.

The net amount of Value Added Tax for a tax period payable shall be determined after the adjustment of tax credit in the manner as may be prescribed.

14. [Deleted] [Deleted.]

14A. [Deleted] [Deleted.]

14B. [Deleted] [Deleted.]

14C. [Deleted] [Deleted.]

14D.

Burden of proof The burden of proof shall lie on a dealer who claims that he is not liable to pay tax under this Act in respect of any sale effected by him or is eligible for a tax credit under section 11 and section 12.