Chapter II Chapter II

The incidence and levy of tax

Amendment of section 11.- In section 11 of the principal Act, in sub-section (c), for the words “who is claiming deduction on any amount ”, the words “in respect of the amount claimed as

deduction” shall be and shall always be deemed to have been substituted ;

Liability to tax and rates thereof.-

1. (1) Every dealer who is or is required to be registered as specified in Sections 22 and 24, shall be liable to pay tax, on his taxable turnover,
   • (a) in respect of goods mentioned in,-
     • (i) Second Schedule, at the rate of one per cent,
     • (ii) Third Schedule, at the rate of four per cent, and
     • (iii) Fourth Schedule, at the rate of twenty per cent.
   • (b) in respect of other goods, at the rate of twenty five per cent.
2. (2) 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 taxable turnover of such containers or packing materials 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.
3. (3) The State Government may, by notification, reduce the tax payable under sub- section
4. (1) in respect of any goods.

Amendment of section 23.- In section 23 of the principal Act, after the words “complete

particulars”, the words and figures “and such dealer on becoming liable to register under section 22

shall on the date he becomes so liable, be eligible for deduction of input tax as specified under section 13 subject to the conditions specified in section 11” shall be inserted;

Amendment of section 27.- In section 27 of the principal Act, in sub-section (1), the following shall be inserted, namely:-

“ Provided that in the case of a deceased individual, on application by his legal heirs for transfer of registration and subject to such conditions as may be prescribed, the prescribed authority may instead of cancellation permit transfer of his certificate of registration to the legal heirs.” ;

Amendment of section 31.- In section 31of the principal Act,-

1. (1) after sub-section (2), the following sub-sections shall be inserted, namely:- “(2-A) The Commissioner may require every registered dealer belonging to a class of dealers as may be notified by him to install and use an electronic tax register of such type and description and secured in such manner as may be prescribed, for the purpose of accessing information regarding any matter or transaction which may affect the tax liability of such dealer. (2-B ) Notwithstanding anything contained in sub-sections
2. (1) to
3. (3) of section 29, every registered dealer falling under sub-section (2-A), shall issue tax invoices or bills of sale, through the electronic tax register, irrespective of the value of the goods sold and such dealer shall be allowed to recover the cost of the electronic tax register, in the manner and subject to such conditions as may be prescribed”;
4. (2) in sub-section (4), for the words “taxable turnover”, the words “total turnover” shall be substituted.

Amendment of section 63-A.- In section 63-A of the principal Act, in sub-section (1), for the words “cancelling the assessment or directing a fresh assessment”, the words “cancelling the assessment and directing a fresh assessment” shall be substituted.

Collection of tax by registered dealers, Governments and statutory authorities.-

1. (1) Every registered dealer liable to pay tax under the Act shall collect such tax at the rate or rates at which he is liable to pay tax, and the tax collected shall be accounted for under the provisions of this Act and rules made thereunder.
2. (2) The Central Government, a State Government, a statutory body or a local authority shall, in respect of any taxable sale of goods effected by them, collect by way of tax any amount which a registered dealer effecting such sale would have collected by way of tax under this Act, issue a tax invoice, pay the tax so collected into the Government Treasury or any designated bank and furnish monthly returns, as specified under Section 35, to the prescribed authority.

Output tax, input tax and net tax.-

1. (1) Output tax in relation to any registered dealer means the tax payable under this Act in respect of any taxable sale of goods made by that dealer in the course of his business, and includes tax payable by a commission agent in respect of taxable sales of goods made on behalf of such dealer subject to issue of a prescribed declaration by such agent.
2. (2) Subject to input tax restrictions specified in Sections 11,12,14, 17, 18 and 19, input tax in relation to any registered dealer means the tax collected or payable under this Act on the sale to him of any goods for use in the course of his business, and includes the tax on the sale of goods to his agent who purchases such goods on his behalf subject to the manner as may be prescribed to claim input tax in such cases.
3. (3) Subject to input tax restrictions specified in Sections 11, 12, 14, 17, 18 and 19, the net tax payable by a registered dealer in respect of each tax period shall be the amount of output tax payable by him in that period less the input tax deductible by him as may be prescribed in that period and shall be accounted for in accordance with the provisions of Chapter V.
4. (4) For the purpose of calculating the amount of net tax to be paid or refunded, no deduction for input tax shall be made unless a tax invoice, debit note or credit note, in relation to a sale, has been issued in accordance with Section 29 or Section 30 and is with the registered dealer taking the deduction at the time any return in respect of the sale is furnished, except such tax paid under sub-section
5. (2) of Section 3.
6. (5) Subject to input tax restrictions specified in Sections 11,12, 14, 17, 18 and 19, where under sub-section
7. (3) the input tax deductible by a dealer exceeds the output tax payable by him, the excess amount shall be adjusted or refunded together with interest, as may be prescribed.

Amendment of First Schedule.- In the First Schedule to the principal Act, in the entries relating to serial number 5, in item (ii), for the words “de-oiled cake and wheat bran”, the words “wheat bran and de-oiled cake but excluding soya bean de-oiled cake” shall be substituted.

Deduction of input tax in respect of Capital goods.-

1. (1) Deduction of input tax shall be allowed to the registered dealer in respect of the purchase of capital goods for use in the business of sale of any goods in the course of export out of the territory of India and in the case of any other dealer in respect of the purchase of capital goods wholly or partly for use in the business of taxable goods.
2. (2) Deduction of input tax under this Section shall be allowed only after commencement of commercial production, or sale of taxable goods or sale of any goods in the course of export out of the territory of the India by the registered dealer and shall be apportioned over a specified period, as may be prescribed.

Pre-registration purchases.- Deduction of input tax shall be allowed to the registered dealer, subject to the restrictions of Section 11, in respect of tax charged to him by a seller on taxable sale of goods made to him for the purpose of the business within three months prior to the date of his registration provided that no input tax shall be allowed in respect of goods which have been sold or otherwise disposed of prior to the date of registration.

Special rebating scheme.- Deduction of input tax shall be allowed on the difference between the rate of input tax charged at a rate higher than four per cent and the rate specified in

Composition of tax Composition of tax.-

1. (1) Subject to such conditions and in such circumstances as may be prescribed, any dealer other than a dealer who purchases or obtains goods from outside the State or from outside the territory of India, liable to pay tax as specified in Section 4 and,
   • (a) whose total turnover in a period of four consecutive quarters does not exceed fifteen lakh rupees; or
   • (b) who is a dealer executing works contracts; or
   • (c) who is a hotelier, restaurateur, caterer; or
   • (d) who is a mechanised crushing unit producing granite metals; may elect to pay in lieu of the net amount of tax payable by him under this Act by way of composition, an amount at such rate not exceeding five per cent on his total turnover or on the total consideration for the works contracts executed or not exceeding two lakh rupees for each crushing machine per annum as may be prescribed.
2. (2) For the purposes of sub-section
3. (1) a quarter shall mean any period ending on final day of the months of March, June, September and December.
4. (3) Any dealer eligible for composition of tax under sub-section
5. (1) may report, to the prescribed authority, the exercise of his option and he shall pay such amount due and furnish a return in such manner as may be prescribed.
6. (4) Any dealer opting for composition of tax under sub-section
7. (1) shall not be permitted to claim any input tax on any purchases made by him.

Special accounting scheme.- Where a dealer liable to pay tax under Section 4 is unable to identify each individual sale, its value or the rate of tax, he may apply to the prescribed authority to pay net tax under Section 10 under a special method to be mutually agreed by such authority in such manner as may be prescribed.

Partial rebate.- Where a registered dealer deducting input tax.-

1. (1) makes sales of taxable goods and goods exempt under Section 5, or
2. (2) in addition to the sales referred to in clause (1), despatches taxable goods or goods exempted under Section 5 outside the State not as a direct result of sale or purchase in the course of inter-State trade, or
3. (3) puts to use the inputs purchased in any other purpose (other than sale, manufacturing, processing, packing or storing of goods), in addition to use in the course of his business, apportionment and attribution of input tax deductible between such sales and despatches of goods or such purpose, shall be made in accordance with Rules or by special methods to be approved by the Commissioner or any other authorised person and any input tax deducted in excess shall become repayable forthwith.

Transitional provisions.- Transitional provisions covering relief on Sales Tax on stock in hand for manufacture and resale at the date of commencement of this Act shall be as prescribed.

Change in use after deduction of input tax.-

1. (1) Where a registered dealer has deducted input tax on any goods and those goods are not used in the course of his business or lost or destroyed, any input tax deducted becomes repayable in the period following the date on which those goods were put to such other use.
2. (2) Where such goods have been wholly or mainly used or are intended for use in sale of taxable goods or in sale of any goods in the course of export out of the territory of India prior to the change of use, tax shall be calculated on the prevailing market value of such goods at the time of change of use.

Deduction of input tax on exports and interstate sales, etc..-

1. (1) Tax paid under this Act by any dealer on purchase of inputs in respect of,-
   • (a) any goods sold in the course of export out of the territory of India, or
   • (b) any goods taxable under the Act, sold in the course of interstate trade or commerce, or
   • (c) any goods sold to a dealer who is a unit located in any special economic zone established under authorisation by the authorities specified by the Central Government in this behalf, or
   • (d) any goods sold to a dealer who is an Export Oriented Unit, shall be deducted as provided under Section 10, from output tax payable by such dealer.
2. (2) Goods sold by a registered dealer to any other registered dealer who is a unit located in any special economic zone established under authorisation by the authorities specified by the Central Government in this behalf or who is an Export Oriented Unit, shall be exempt from the tax payable under this Act. Explanation 1.- For the purposes of this section, the expression ''special economic zone'' has the meaning assigned to it in clause
   • (iii) to Explanation 2 to the proviso to section 3 of the Central Excise Act, 1944 (Central Act 1 of 1944). Explanation 2.- For the purpose of this section, "Export Oriented Unit" means a unit certified as such by the Central Government.

Reimbursement of tax.- Tax collected under this Act on purchases made by specialised agencies of the United Nations Organisation and Consulates or Embassies of any other country located in the State shall be reimbursed in such manner and subject to such conditions as may be prescribed.