Vidhi Codex

section 6

Levy of purchase tax under certain circumstances

The 1[Karnataka] Sales Tax Act, 1957
Tax195767 sections6 chapters
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Chapter III Chapter III

Statutory text

Subject to the provisions of sub-section (5) of section 5, every dealer who in the course of his business purchases any taxable goods in circumstances in which no tax under section 5 is leviable on the sale price of such goods and, (i) either consumes such goods in the manufacture of other goods for sale or otherwise 2[or consumes otherwise,] or disposes of such goods in any manner other than by way of sale in the State, or (ii) despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce, shall be liable to pay tax on the purchase price of such goods at the same rate at which it would have been leviable on the sale price of such goods under section 5: Provided that this section shall not apply,— 3[(i) in respect of sale or purchase of goods specified in the Fourth Schedule,— (a) which are taxable at the point of purchase; and (b) which have already been subjected to tax under sub-section (4) of section 5.] (ii) in respect of sale or purchase of goods specified in the Second Schedule which have already been subject to tax under clause (a) of sub-section (3) of section 5.] 1[Provided further that no tax shall be payable under this section on the purchase of sowing seeds] 1. Substituted by Act 9 of 1970 w.e.f. 1.4.1970. 2. Inserted by Act 8 of 1989 w.e.f. 8.9.1988. 3. Substituted by Act 78 of 1976 w.e.f. 7.12.1976. 1. Inserted by Act 7 of 2003 w.e.f. 1.4.1999. Sales Tax [1957: KAR. ACT 25 1[x x x] 1. Clauses (iia), (iii), (iv), (v) and proviso inserted and omitted by Acts 6 of 1995, 27 of 1985 and 14 of 1987 w.e.f. different dates. 1. Inserted by Act 8 of 1989 w.e.f. 1.4.1970. 1[Explanation.— For the purpose of this section "consumes such goods in the manufacture" shall include goods consumed for ancillary purposes in or for such manufacture.] 1[6-A. Burden of proof.- (1) For purposes of assessment of tax under this Act, the burden of proving that any transaction or any turnover of a dealer is not liable to tax shall lie on such dealer. (2) Notwithstanding anything contained in this Act or in any other law, a dealer in any of the goods liable to tax in respect of the first sale or first purchase in the State shall be deemed to be the first seller or first purchaser, as the case may be, of such goods and shall be liable to pay tax accordingly on his turnover of sales or purchases, relating to such goods, unless he proves that the sale or purchase, as the case may be, of such goods had already been subjected to tax under this Act.] 1[Provided that where goods liable to tax are iron and steel mentioned in serial number 2 of the Fourth Schedule, oil seeds mentioned in serial number 5 of the Fourth Schedule, bauxite, chromite, iron, manganese and other ores mentioned in serial number 1 of Third Schedule or hydrogenated oils and cooking medium mentioned in serial number 1 of Part `E' of Second Schedule, 2[or any other goods liable to tax as may be notified by the Commissioner] every dealer in such goods shall furnish a declaration duly filled and signed by the registered dealer from whom such goods are purchased containing the prescribed particulars in a prescribed form obtained from the assessing authority to prove that the sale or purchase, as the case may be, of such goods had already been subjected to tax and the seller of such goods shall issue the declaration to the buying dealer;] 1[Provided further that, in respect of any assessments other than an assessment already completed, for the years ending Thirty First day of March, 1996 and Thirty First day of March 1997, the buying dealer may prove, in the prescribed manner, that the goods purchased have already been subjected to tax notwithstanding his failure to furnish the declaration specified.] 1. Deemed always been Inserted by Act 5 of 2002 w.e.f. 1.10.1957. 1[(3) Where a dealer knowingly 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 be taxed, 2[or liable to tax at a lower rate] the assessing authority shall, on detecting such issue or production, direct the dealer issuing or producing such document to pay as penalty,— (i) in the case of first such detection, three times the tax due in respect of such transaction; and 1957: KAR. ACT 25] Sales Tax (ii) in the case of second or subsequent detection, five times the tax due in respect of such transaction: Provided that before issuing any direction for the payment of the penalty under this section, the assessing authority shall give to the dealer an opportunity of making representation against the levy of such penalty.] 1[Provided further that no penalty shall be levied under this Section after a period of eight years from the close of the year to which the transaction relates] 1[6-B. Levy of resale tax.- Every registered dealer and every dealer who is liable to get himself registered under sub-Sections (1) and (2) of Section 10 whose total turnover in a year is not less than the turnovers specified in the said sub-Sections, shall be liable to pay tax at the rate of one and half per cent of such portion of the total turnover which is not liable 1. Inserted by Act 9 of 1964 w.e.f. 1.10.1957. 1. Inserted by Act 6 of 1995 w.e.f. 1.4.1995. 2. Inserted by Act 15 of 1996 w.e.f. 5.9.1996. 1. Inserted by Act 23 of 1983 w.e.f. 18.11.1983. 2. Inserted by Act 18 of 1994 w.e.f. 18.11.1983. 1. Inserted by Act 26 of 2004 w.e.f. 1.8.2004. to tax under Sections 5, 5-A, 5-B, 5-C or 6. Provided that no tax under this sub-Section shall be payable on that part of such turnover which relates to,- (i) sale or purchase of goods specified in the Fifth Schedule; (ii) sale or purchase of goods in the course of interstate trade or commerce; (iii) sale or purchase of goods in the course of export out of the territory of India or sale or purchase in the course of import into the territory of India; (iv) all amounts collected by way of tax under the provisions of this Act or the Central Sales Tax Act, 1956 (Central Act 74 of 1956); (v) all amounts falling under the head `Freight`, when specified and charged for by the dealer separately without including such amounts in the price of the goods sold; (vi) all amounts allowed as discount, provided that such discount is allowed in accordance with the regular practice of the dealer or is in accordance with the terms of a contract or agreement entered into a particular case and provided also that the accounts show that the purchaser has paid only the sum originally charged less discount; (vii) (a) all amounts allowed to purchasers in respect of goods returned by them to the dealer when the goods are taxable on sales provided that the goods were returned within a period of six months from the date of delivery of the goods and the accounts show the date on which the goods were returned and the date on which and the amount for which refund was made; (b) all amounts received from the sellers in respect of goods returned to them by the dealer, when the goods are taxable on the purchase value provided that the goods were returned within a period of six months from the date of delivery of the goods and the accounts Sales Tax [1957: KAR. ACT 25 show the date on which the goods were returned and the date on which and the amount for which refund was received; (viii) such amounts towards labour charges and other like charges not involving any transfer of property in goods, actually incurred in connection with the execution of works contract, or calculated at the rates prescribed; (ix) all amounts realized by a dealer by the sale of his business as a whole; (x) the total amount paid or payable by the dealer as a consideration for the purchase of any of the goods in respect of which tax is leviable at the point of sale; (xi) the total amount paid or payable to the dealer as a consideration for the sale of any of the goods in respect of which tax is leviable at the point of purchase; Provided further that, save as otherwise provided in this sub- Section, no other deduction shall be made from the total turnover of a dealer for the purposes of this Section. (2) The provisions of this Act and the rules made thereunder shall, so far as may be, apply in relation to the assessment, collection or refund of the resale tax, as they apply in relation to the assessment, collection or refund of tax under the other provisions of this Act.] again substituted by Act, 5 of 2002 w.e.f. 1.4.2002. 1[6BB. x x x] 1[6-C. Levy of additional tax.- Every registered dealer and every dealer who is liable to get himself registered under sub-sections (1) and (2) of section 10 whose total turnover in a year is not less than the turnovers specified in the said sub-sections, shall be liable to pay tax at the rate of one per cent of such portion of the total turnover which is liable to tax under 1. Inserted by Act 16 of 1975 w.e.f. 1.4.1975 and Substituted by Act, 13 of 1982 w.e.f. 29.3.1981 and 1. Inserted by Act 18 of 1994 w.e.f. 1.4.1994 and omitted by Act 1 of 1996 w.e.f. 13.10.1995. section 5, 5-B, 5-C or 6. Provided that no tax under this section shall be payable on that part of such turnover which relates to,- (i) sale or purchase of goods specified in the Fifth Schedule; (ii) sale or purchase of goods in the course of interstate trade or commerce; (iii) sale or purchase of goods in the course of export out of the territory of India or sale or purchase in the course of import into the territory of India; (iv) all amounts collected by way of tax under the provisions of this Act or the Central Sales Tax Act, 1956 (Central Act 74 of 1956); (v) all amounts falling under the head ‘Freight‘, when specified and charged for by the dealer separately without including such amounts in the price of the goods sold; 1957: KAR. ACT 25] Sales Tax (vi) all amounts allowed as discount, provided that such discount is allowed in accordance with the regular practice of the dealer or is in accordance with the terms of a contract or agreement entered into a particular case and provided also that the accounts show that the purchaser has paid only the sum originally charged less discount; (vii) (a) all amounts allowed to purchaser in respect of goods returned by them to the dealer when the goods are taxable on sales provided that the goods were returned within a period of six months from the date of delivery of the goods and the accounts show the date on which the goods were returned and the date on which and the amount for which refund was made; (b)all amounts received from the sellers in respect of goods returned to them by the dealer, when the goods are taxable on the purchase value provided that the goods were returned within a period of six months from the date of delivery of the goods and the accounts show the date on which the goods were returned and the date on which and the amount for which refund was received; (viii) such amounts towards labour charges and other like charges not involving any transfer of property in goods, actually incurred in connection with the execution of works contract, or calculated at the rates prescribed; (ix) all amounts realized by a dealer by the sale of his business as a whole; (x) the total amount paid or payable by the dealer as a consideration for the purchase of any of the goods in respect of which tax is leviable at the point of sale; (xi) the total amount paid or payable to the dealer as a consideration for the sale of any of the goods in respect of which tax is leviable at the point of purchase; Provided further that, save as otherwise provided in this section, no other deduction shall be made from the total turnover of a dealer for the purposes of this Section. (2) The provisions of this Act and the rules made thereunder shall, so far as may be, apply in relation to the assessment, collection or refund of the additional tax, as they apply in relation to the assessment, collection or refund of tax under the other provisions of this Act.] of 2003 w.e.f. 1.6.2003. 1[6-D. Levy of road cess.- (1) In addition to the tax payable under 1. Inserted by Act 13 of 1994 and omitted by Act 7 of 1997 w.e.f. 1.4.1997 and again Inserted by Act 30 section 5 or 5-A or 5-B or 5-C or 6, there shall be levied and collected by way of cess for the purpose of establishing a Road Maintenance Fund, a tax on sale or purchase effected by any dealer, at the rate of ten per cent of tax payable under the said sections: Sales Tax [1957: KAR. ACT 25 Provided that no tax shall be payable under this section on sale or purchase in respect of which no tax is payable under section 5 or 5-A or 5-B or 5-C or 6. (2) Nothing contained in this section shall apply to the goods specified in the Fourth Schedule. (3) The provision of this Act and the rules made thereunder, shall so far as may be apply in relation to the levy, assessment, collection or refund of the cess, as they apply in relation to the levy, assessment, collection or refund of tax under the other provisions of this Act. 6-E. Levy of infrastructure cess.- (1) In addition to the tax payable under section 5 or 5-A or 5-B or 5-C or 6, there shall be levied and collected by way of cess for the purpose of various infrastructure projects across the State, equity investment in Bangalore Mass Rapid Transit Limited and establishing a Mukhya Manthri Grameena Rasthe Abhivruddhi Nidhi in the proportion of 57:28:15 respectively, a tax, on sale or purchase effected by any dealer, at the rate of five per cent of tax payable under the said sections: Provided that no tax shall be payable under this section on sale or purchase in respect of which no tax is payable under section 5 or 5-A or 5-B or 5-C or 6. (2) Nothing contained in this section shall apply to the goods specified in the Fourth Schedule. (3) The provision of this Act and the rules made thereunder, shall so far as may be apply in relation to the levy, assessment, collection or refund of the cess, as they apply in relation to the levy, assessment, collection or refund of tax under other provisions of this Act.] 1. Sections 6-D and 6-E Inserted by Act 2 of 2004 w.e.f. 1.2.2004 .

  1. (i) either consumes such goods in the manufacture of other goods for sale or otherwise 2[or consumes otherwise,] or disposes of such goods in any manner other than by way of sale in the State, or
  2. (ii) despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce, shall be liable to pay tax on the purchase price of such goods at the same rate at which it would have been leviable on the sale price of such goods under section 5: Provided that this section shall not apply,— 3[(i) in respect of sale or purchase of goods specified in the Fourth Schedule,—
  1. (a) which are taxable at the point of purchase; and
  2. (b) which have already been subjected to tax under sub-section (4) of section 5.]
    • (ii) in respect of sale or purchase of goods specified in the Second Schedule which have already been subject to tax under clause (a) of sub-section (3) of section 5.] 1[Provided further that no tax shall be payable under this section on the purchase of sowing seeds]

1 Substituted by Act 9 of 1970 w.e.f. 1.4.1970.

2 Inserted by Act 8 of 1989 w.e.f. 8.9.1988.

3 Substituted by Act 78 of 1976 w.e.f. 7.12.1976.

1 Inserted by Act 7 of 2003 w.e.f. 1.4.1999.

Sales Tax [1957: KAR. ACT 25

1[x x x] 1. Clauses (iia), (iii), (iv), (v) and proviso inserted and omitted by Acts 6 of 1995, 27 of 1985 and 14 of 1987 w.e.f. different dates.

1 Inserted by Act 8 of 1989 w.e.f. 1.4.1970.

1[Explanation.— For the purpose of this section "consumes such goods in the manufacture" shall include goods consumed for ancillary purposes in or for such manufacture.]

1[6-A. Burden of proof.- (1) For purposes of assessment of tax under this Act, the burden of proving that any transaction or any turnover of a dealer is not liable to tax shall lie on such dealer.

  1. (2) Notwithstanding anything contained in this Act or in any other law, a dealer in any of the goods liable to tax in respect of the first sale or first purchase in the State shall be deemed to be the first seller or first purchaser, as the case may be, of such goods and shall be liable to pay tax accordingly on his turnover of sales or purchases, relating to such goods, unless he proves that the sale or purchase, as the case may be, of such goods had already been subjected to tax under this Act.] 1[Provided that where goods liable to tax are iron and steel mentioned in serial number 2 of the Fourth Schedule, oil seeds mentioned in serial number 5 of the Fourth Schedule, bauxite, chromite, iron, manganese and other ores mentioned in serial number 1 of Third Schedule or hydrogenated oils and cooking medium mentioned in serial number 1 of Part `E' of Second Schedule, 2[or any other goods liable to tax as may be notified by the Commissioner] every dealer in such goods shall furnish a declaration duly filled and signed by the registered dealer from whom such goods are purchased containing the prescribed particulars in a prescribed form obtained from the assessing authority to prove that the sale or purchase, as the case may be, of such goods had already been subjected to tax and the seller of such goods shall issue the declaration to the buying dealer;] 1[Provided further that, in respect of any assessments other than an assessment already completed, for the years ending Thirty First day of March, 1996 and Thirty First day of March 1997, the buying dealer may prove, in the prescribed manner, that the goods purchased have already been subjected to tax notwithstanding his failure to furnish the declaration specified.] 1. Deemed always been Inserted by Act 5 of 2002 w.e.f. 1.10.1957. 1[(3) Where a dealer knowingly 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 be taxed, 2[or liable to tax at a lower rate] the assessing authority shall, on detecting such issue or production, direct the dealer issuing or producing such document to pay as penalty,—
    • (i) in the case of first such detection, three times the tax due in respect of such transaction; and 1957: KAR. ACT 25] Sales Tax
    • (ii) in the case of second or subsequent detection, five times the tax due in respect of such transaction: Provided that before issuing any direction for the payment of the penalty under this section, the assessing authority shall give to the dealer an opportunity of making representation against the levy of such penalty.] 1[Provided further that no penalty shall be levied under this Section after a period of eight years from the close of the year to which the transaction relates] 1[6-B. Levy of resale tax.- Every registered dealer and every dealer who is liable to get himself registered under sub-Sections (1) and (2) of Section 10 whose total turnover in a year is not less than the turnovers specified in the said sub-Sections, shall be liable to pay tax at the rate of one and half per cent of such portion of the total turnover which is not liable

1 Inserted by Act 9 of 1964 w.e.f. 1.10.1957.

1 Inserted by Act 6 of 1995 w.e.f. 1.4.1995.

2 Inserted by Act 15 of 1996 w.e.f. 5.9.1996.

1 Inserted by Act 23 of 1983 w.e.f. 18.11.1983.

2 Inserted by Act 18 of 1994 w.e.f. 18.11.1983.

1 Inserted by Act 26 of 2004 w.e.f. 1.8.2004.

to tax under Sections 5, 5-A, 5-B, 5-C or 6.

Provided that no tax under this sub-Section shall be payable on that part of such turnover which relates to,-

  1. (i) sale or purchase of goods specified in the Fifth Schedule;
  2. (ii) sale or purchase of goods in the course of interstate trade or commerce;
  3. (iii) sale or purchase of goods in the course of export out of the territory of India or sale or purchase in the course of import into the territory of India;
  4. (iv) all amounts collected by way of tax under the provisions of this Act or the Central Sales Tax Act, 1956 (Central Act 74 of 1956);
  5. (v) all amounts falling under the head `Freight`, when specified and charged for by the dealer separately without including such amounts in the price of the goods sold;
  6. (vi) all amounts allowed as discount, provided that such discount is allowed in accordance with the regular practice of the dealer or is in accordance with the terms of a contract or agreement entered into a particular case and provided also that the accounts show that the purchaser has paid only the sum originally charged less discount;
  7. (vii) (a) all amounts allowed to purchasers in respect of goods returned by them to the dealer when the goods are taxable on sales provided that the goods were returned within a period of six months from the date of delivery of the goods and the accounts show the date on which the goods were returned and the date on which and the amount for which refund was made;
  1. (b) all amounts received from the sellers in respect of goods returned to them by the dealer, when the goods are taxable on the purchase value provided that the goods were returned within a period of six months from the date of delivery of the goods and the accounts

Sales Tax [1957: KAR. ACT 25 show the date on which the goods were returned and the date on which and the amount for which refund was received;

  1. (viii) such amounts towards labour charges and other like charges not involving any transfer of property in goods, actually incurred in connection with the execution of works contract, or calculated at the rates prescribed;
  2. (ix) all amounts realized by a dealer by the sale of his business as a whole;
  3. (x) the total amount paid or payable by the dealer as a consideration for the purchase of any of the goods in respect of which tax is leviable at the point of sale;
  4. (xi) the total amount paid or payable to the dealer as a consideration for the sale of any of the goods in respect of which tax is leviable at the point of purchase; Provided further that, save as otherwise provided in this sub- Section, no other deduction shall be made from the total turnover of a dealer for the purposes of this Section.
  1. (2) The provisions of this Act and the rules made thereunder shall, so far as may be, apply in relation to the assessment, collection or refund of the resale tax, as they apply in relation to the assessment, collection or refund of tax under the other provisions of this Act.] again substituted by Act, 5 of 2002 w.e.f. 1.4.2002. 1[6BB. x x x] 1[6-C. Levy of additional tax.- Every registered dealer and every dealer who is liable to get himself registered under sub-sections (1) and (2) of section 10 whose total turnover in a year is not less than the turnovers specified in the said sub-sections, shall be liable to pay tax at the rate of one per cent of such portion of the total turnover which is liable to tax under

1 Inserted by Act 16 of 1975 w.e.f. 1.4.1975 and Substituted by Act, 13 of 1982 w.e.f. 29.3.1981 and

1 Inserted by Act 18 of 1994 w.e.f. 1.4.1994 and omitted by Act 1 of 1996 w.e.f. 13.10.1995.

such turnover which relates to,-

  1. (i) sale or purchase of goods specified in the Fifth Schedule;
  2. (ii) sale or purchase of goods in the course of interstate trade or commerce;
  3. (iii) sale or purchase of goods in the course of export out of the territory of India or sale or purchase in the course of import into the territory of India;
  4. (iv) all amounts collected by way of tax under the provisions of this Act or the Central Sales Tax Act, 1956 (Central Act 74 of 1956);
  5. (v) all amounts falling under the head ‘Freight‘, when specified and charged for by the dealer separately without including such amounts in the price of the goods sold; 1957: KAR. ACT 25] Sales Tax
  6. (vi) all amounts allowed as discount, provided that such discount is allowed in accordance with the regular practice of the dealer or is in accordance with the terms of a contract or agreement entered into a particular case and provided also that the accounts show that the purchaser has paid only the sum originally charged less discount;
  7. (vii) (a) all amounts allowed to purchaser in respect of goods returned by them to the dealer when the goods are taxable on sales provided that the goods were returned within a period of six months from the date of delivery of the goods and the accounts show the date on which the goods were returned and the date on which and the amount for which refund was made; (b)all amounts received from the sellers in respect of goods returned to them by the dealer, when the goods are taxable on the purchase value provided that the goods were returned within a period of six months from the date of delivery of the goods and the accounts show the date on which the goods were returned and the date on which and the amount for which refund was received;
  8. (viii) such amounts towards labour charges and other like charges not involving any transfer of property in goods, actually incurred in connection with the execution of works contract, or calculated at the rates prescribed;
  9. (ix) all amounts realized by a dealer by the sale of his business as a whole;
  10. (x) the total amount paid or payable by the dealer as a consideration for the purchase of any of the goods in respect of which tax is leviable at the point of sale;
  11. (xi) the total amount paid or payable to the dealer as a consideration for the sale of any of the goods in respect of which tax is leviable at the point of purchase;

Provided further that, save as otherwise provided in this section, no other deduction shall be made from the total turnover of a dealer for the purposes of this Section.

  1. (2) The provisions of this Act and the rules made thereunder shall, so far as may be, apply in relation to the assessment, collection or refund of the additional tax, as they apply in relation to the assessment, collection or refund of tax under the other provisions of this Act.] of 2003 w.e.f. 1.6.2003. 1[6-D. Levy of road cess.- (1) In addition to the tax payable under

1 Inserted by Act 13 of 1994 and omitted by Act 7 of 1997 w.e.f. 1.4.1997 and again Inserted by Act 30

section 5 or 5-A or 5-B or 5-C or 6, there shall be levied and collected by way of cess for the purpose of establishing a Road Maintenance Fund, a tax on sale or purchase effected by any dealer, at the rate of ten per cent of tax payable under the said sections:

Sales Tax [1957: KAR. ACT 25

Provided that no tax shall be payable under this section on sale or purchase in respect of which no tax is payable under section 5 or 5-A or 5-B or 5-C or 6.

  1. (2) Nothing contained in this section shall apply to the goods specified in the Fourth Schedule.
  2. (3) The provision of this Act and the rules made thereunder, shall so far as may be apply in relation to the levy, assessment, collection or refund of the cess, as they apply in relation to the levy, assessment, collection or refund of tax under the other provisions of this Act.

6-E. Levy of infrastructure cess.- (1) In addition to the tax payable under section 5 or 5-A or 5-B or 5-C or 6, there shall be levied and collected by way of cess for the purpose of various infrastructure projects across the State, equity investment in Bangalore Mass Rapid Transit Limited and establishing a Mukhya Manthri Grameena Rasthe

Abhivruddhi Nidhi in the proportion of 57:28:15 respectively, a tax, on sale or purchase effected by any dealer, at the rate of five per cent of tax payable under the said sections: Provided that no tax shall be payable under this section on sale or purchase in respect of which no tax is payable under section 5 or 5-A or 5-B or 5-C or 6.

  1. (2) Nothing contained in this section shall apply to the goods specified in the Fourth Schedule.
  2. (3) The provision of this Act and the rules made thereunder, shall so far as may be apply in relation to the levy, assessment, collection or refund of the cess, as they apply in relation to the levy, assessment, collection or

refund of tax under other provisions of this Act.]

1. Sections 6-D and 6-E Inserted by Act 2 of 2004 w.e.f. 1.2.2004 .

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