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B.Com 1st Sem. Subject- M.P. VAT & Central Sales Tax
UNIT-I
VALUE ADDED TAX
Meaning of VAT: The value added tax has been levied on the value added by the dealer. The value
added means the selling price of goods (excluding the amount of tax) less the cost of goods sold.
VAT allows set off for taxes paid on preceding purchase.
Vat allows credit for tax already paid on its purchase of business inputs which is called as input tax
rebate. VAT is a multiple point tax imposed by state govt. on sale of goods but not on manufacturing of
goods.
MP VAT – In the state of Madhya Pradesh VAT has been partially applied since 1st May 1997. There was
no separate act for implementation of VAT. M.P. commercial tax was applied at that time. From 1 st April
2006 M.P. govt. Adopted VAT in place of M.P. Commercial Tax act & this act is known as “M.P. Vat act
2002”.
Main feature of MP VAT
(i) Mp VAT is applicable in the state of MP on sale of goods
(ii) All the registered dealers are liable to pay Vat under M.P. VAT act.
(iii) Threshold limit for registration :- Rs. 5.00 lacks
(iv) Declared goods will liable for vat @5%
(v) The element of VAT is to be shown separately on the invoice.
(vi) The CST will be discontinued in phased manner.
(vii) The audit is compulsory if turnover exceeds Rs. 40 lakhs
(viii) Interest on late payment - 1% per month
(ix) Time barring for assessment will be one calendar year
(x) Tax liability will be subject to self assessment except in case of a dealer having a turnover
more than 40 lakhs who is to submit the audited statement.
(xi) Input tax rebate will be allowed for tax paid on goods purchased by dealer.
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B.Com 1st Sem. Subject- M.P. VAT & Central Sales Tax
(xii) Quarterly return is to be submitted by dealers within 30 days from the completion of
quarter inform no. 10
DEFINITIONS
Business - Sec. 2 (D)
Business is basis of VAT. Any activity which is in a nature of trade, commerce manufacture whether it is
performed with a motive to make profit or not will be called as business. In this activity volume,
frequency, continuity or regularity is immaterial. Business may be established and run by a person firm
society, company or any other form of organization
Any activity/transaction of sale or purchase of goods in connection with or incidental or ancillary to the
trade, commerce, manufacture, adventure or concern will be treated as business.
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B.Com 1st Sem. Subject- M.P. VAT & Central Sales Tax
(ii) A transfer of property in goods whether as goods or in some other form, involved in the execution
of a works contract;
(iii) A delivery of goods on hire purchase or any system of payment by installments;
(iv) A supply of goods by any unincorporated association or body of persons to a member thereof for
cash, deferred payment or other valuable consideration;
(v) A supply, by way of or as part of any service or in any other manner whatsoever, of goods being
food or any other article for human consumption or any drink (whether or not intoxicating) where such
supply or service is for cash, deferred payment or other valuable consideration;
(vi) A transfer of the right to use any goods for any purpose (whether or not for a specified period) for
cash, deferred payment or other valuable consideration;
IMPORT (SEC. 2 - N)
Import means the bringing or causing to be brought of goods in. State of Madhya Pradesh from any
place outside the State;
MANUFACTURE (SEC. 2 - P)
Manufacture includes any activity that brings out a change in an article or articles as a result of some
process, treatment, labour and results in transformations into a new and different article so understood
in commercial parlance having a distinct name, character and use, but does not include such activity of
manufacture as may be notified.
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B.Com 1st Sem. Subject- M.P. VAT & Central Sales Tax
YEAR (SEC B - A)
Year means the twelve months ending on the 31st day of March.
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B.Com 1st Sem. Subject- M.P. VAT & Central Sales Tax
UNIT-II
REGISTRATION OF DEALERS
(a) Compulsory registration
(b) Voluntary registration
Compulsory Registration
- Every dealer whose turnover during 12 months immediately preceeding the commencement of this
Act exceeds Rs. 5 Lakhs shall get registered within 30 days of commencement. of this Act, else if his
turnover in a year first exceeds Rs. 5 Lakhs he has to get himself registered. W.e.f. from 1st April the
dealer who is not importing goods to the state, limit shall be Rs. 10 Lakhs.
Registration Certificate
- Two certified copies of certificate for every additional place of business is to be issued.
- The certificate is to be displayed at each Place Of Business.
- If lost, destroyed, defaced or becomes unintelligible, duplicate can be issued on an application
with a fees of Rs. 50.
- Certificate can be amended on an application
- If Registering Authority is not satisfied about the correctness of the application for amendment he can
reject it within 30 days of the application & intimate to the dealer within 7 days of rejection else the
dealer is entitled to have amended certificate.
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B.Com 1st Sem. Subject- M.P. VAT & Central Sales Tax
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B.Com 1st Sem. Subject- M.P. VAT & Central Sales Tax
17. A. All kind of footwear/chappals and straps thereof when manufactured in State of Madhya
Pradesh and sale price (maximum retail price printed on the label) of which does not exceed Rs.
Two 250/- per pair.
18. Fresh milk and pasteurized milk.
19. Fresh plants, samplings and fresh flowers.
20. Fresh vegetables and fresh fruits include potato, onion and sugarcane
21 Garlic, Sighada and ginger excluding dried ginger.
22 All kinds of bangles excluding those made of ivory or precious metals
23 Human blood and human blood plasma.
24 Indigenous handmade musical instruments, hand made paper, hand made soap, Dantamajan.
25 Kumkum, bindi, alta, sindur, kajal, mehandi, bichhia, mangalsutra, rakhi and ornaments of
kathir, german silver or aluminum.
23. (a) Lac and Shellac
26 Meat, fish, prawn and other aquatic products, eggs, livestock, animal hairs and
fish/prawn/shrimp seeds.
27 National Flag, Niwars
28 Organic manure including dung (Gober) and products of dung and bio-fertilizer.
29 Cartridge paper, non-judicial and judicial stamps of all types used for payment of stamp duty or
court fees, postal items and philatelic stamps
30 Raw wool (except branded wool)
31 Semen including frozen semen
32 Cocoons of all types including silk worm laying and raw silk
33 Slate, Slate pencils and chalks sticks
34 Tender green coconut
35 Toddy, Neera and arak
36 All types of bread
37 Salt
38 Water other than –
(i) Aerated, mineral, distilled, medicinal, ionic, battery, demineralised water and
(ii) Water sold in sealed container
39 All certified and truthfully treated seeds, other than methi, dahia and the seeds
40 Papad, badi, hand made and umbranded
41 Sirali, Bageshi, barro, date leaves, baskets , tattas, fans, curtains, mattings and other goods
made thereof, handmade sooma and germa, handmade barathi of lether, utensils and decorative
articles made only of bamboo and fibrous plants like sabai/shisal.
42 Bamboo matting.
43 Muddas made of sarkanda, phool buhari jhadoo
44 Leaf plates and cups – pressed or stitched
45 Poha, murmura and lai
46 Husk of oil seeds, grains and pulses and bran of cereals
47 Handicrafts, incense sticks (agarbatti, Dhoopkadi, Dhooppatty, Hawan Samagri, Lobhan, Gugal.)
48 Flour, atta, maida, suji, besan, rawa, daliya and chuni
49 Country liquor and foreign liquor
50 Fabrics, Towel, (Sale price upto Rs. 100), Gamcha, Bhaddar, Quit cover, Bed cover, handkerchief
and unbranded pillow covers
51 Sugar khandsari, gur, jiggery and edible variety of rab gur
52 Omitted
53 Yagyopavit or janeu
54 Kite
55 Sabai grass and it’s rope
56 Canteen stores
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B.Com 1st Sem. Subject- M.P. VAT & Central Sales Tax
57 Animal shoe-nails
58 Basket made of bamboo
59 Camphor
60 Cooked dalia
61 Cow urine and its products
62 Edible gum
63 Ghamela, tasla and tagadi rnade of iron and steel.
64 Hand made candles
65 Hath ka kada (retail price of which does not exceed Rupees Five hundred)
66 Kerosense lantern, kerosene lamp, kerosene chimney and parts thereof.
67 Kirpan
68 Misri, batasha
69 Prasad,/roistered/fried grams
70 Prasad, bhog or mahabhog given by religious institutions.
71 Religious pctirues not for use as calendar
72 Sattu, murmura (ready to eat food) and panjiri
73 Renewable energy devices or equipments, including their parts.
74 Sprinklers and equipments used in drip irrigation (other than pipe and motor)
75 Tatpatti
76 Umbrella and parts thereof
77 Unbranded broomsticks
78 Good sold by the Madhya Pradesh State Electricity Board or any one of the companies.
79 Atta chakki
80 Bagasee
81 Feeding bottles and nipples
82 Kerosense wick stove and
83 Raw potato chips, sewai and finger (made by small industries)
84 Sabudana
85 Wet dates
86 Isabgol
87 Products of Research and Training Institutes.
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B.Com 1st Sem. Subject- M.P. VAT & Central Sales Tax
Part – IV 13% Tax Rate applicable on goods which comes under part IV.
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B.Com 1st Sem. Subject- M.P. VAT & Central Sales Tax
UNIT-III
INPUT TAX REBATE & INVENTORY REBATE
A registered dealer is eligible to get input tax rebate in respect of tax paid on purchases from registered
dealers.
Under M.P. VAT act, input tax rebate (ITR) shall be available for full amount of tax paid on purchase of
raw material, packing material incidental goods, consumable stores & plant & machinery.
MAIN PROVISIONS & RULES REGARDING (ITR) Input Tax Rebate)
1. Eligible dealer for input tax Rebate- ITR shall be available only to a registered dealer. It shall
not be available to an unregistered dealer & dealer who have opened for composition.
2. Goods entitled for ITR- ITR shall be available in the following cases-
Goods purchased for resale, packing material, plant machinery etc.
3. ITR shall not be available in the following cases-
Free sample or gifts. Tax paid goods, like petrol, diesel, purchase from composition dealer
purchase from unregistered dealer etc.
4. ITR in respect of plant & machinery - Plant & machinery, equipments & parts thereof shall
also be eligible for input tax rebate
5. ITR in case of sale through commission agent- ITR shall also be available in respect of such
transfer of goods to commission agent.
6. ITR in case of manufacture of goods for others on job basic- ITR shall be available even in
case of job processing/ manufacturing, because there is no condition for sale by the
manufacturer himself.
7. Availability of ITR- ITR shall be available immediately on purchase of goods & one need not to
wait till disposal of said goods.
8. How and when to claim ITR- In case of a dealer liable to pay quarterly tax, the ITR is to be
claimed and adjusted against the tax payable for each quarter.
In case a dealer is liable to pay monthly tax, the amount of ITR . Calculated for each month and
should be adjusted against the tax pc that month.
If ITR in respect of any month/quarter is not adjusted in the quarter due to any reason, it can
be adjusted against the tax payable next month/quarter.
In case of goods purchased in one financial year, but received in the next financial year, ITR
should be claimed in the financial year in which such purchases are recorded
9. How to calculate the ITR- ITR need not be calculated on one basis. Rather it will be calculated
on total sales & total purchase basis.
10. Carry forward/ refund of ITR- Except in case of ITR pertaining to export of goods or
pertaining and machinery, refund of ITR shall not be allowed in the same year.
The amount of ITR shall be adjusted towards the tax payable dealer under this Act or under
CST Act. But, there is no provision for adjustment of ITR against the entry tax payable by the
dealer.
Any unadjusted ITR shall be carried forward to the next year. The ITR dealer remains
unadjusted even after 2 years from the close of the relevant financial year shall be granted by
way of refund.
COMPOSITION OF TAX
To provide a relief to small dealers and works contractors. Section 11 and 11A prescribes schemes for
composition of tax. Composition of tax means paying tax on total turnover at lump sum rates specified
in Sections 11 and 11A instead of paying tax as per Sections 9 and 10 of this Act.
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B.Com 1st Sem. Subject- M.P. VAT & Central Sales Tax
1. Composition scheme for all registered dealers having a turnover upto Rs. 1 Crore
2. Composition scheme for works contractors irrespective of turnover.
It means that a manufacture dealer can purchase goods stated in Part I and Part II of Second Schedule
even from a dealer who is not registered under this Act.
Dealer should not make purchases from a place outside the State of Madhya Pradesh.
1. Condition for bill, cash memo or invoice
Stating that he has opted for composition under Section 11. The statement as per Rule 8(5) shall
be recorded by affixing a rubber stamp, which reads as follows:
“Goods sold by a dealer opting for composition of tax under 11”.
2. Cannot make purchases but can make sales in course of inter-state trade or commerce
3. No input tax rebate on purchases.
4. Payment of input tax rebate already claimed or adjusted towards tax payable to paid along with
tax payable by him.
5. Not to collect tax from customers
A composition dealer is prohibited from collecting any amount by way of lump sum of or tax. Such
dealers are also prohibited from showing separately in bill or invoice
Rate of tax
Other than goods specified in Part III of said Schedule at following rates of tax:
1. Other than Part III goods (Trading Turnover)
½ % of turnover of resale of goods purchased
4. Shall not exceed the rate mentioned in corresponding entry in column (3) of Schedule II.
5. Form 4-
A dealer opting composition shall intimate his option by submitting Form 4 to the Commercial Tax
Officer Within one month of the commencement of the year.
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B.Com 1st Sem. Subject- M.P. VAT & Central Sales Tax
A dealer who obtains registration during an year can submit the option for composition within 30
days from the date of registration for the part of the year wherein registration in granted.
Return
A dealer opting composition shall submit quarterly return in Form 5 long with copy of challan as proof
of payment. The due date for furnishing the return to the appropriate Commercial Tax Officer is within
30 days from expiry of the quarter.
(ON THE BASIS OF ABOVE, WE COMPUTE THE TAXABLE TURNOVER AS PER RETURN FORM 5. &NET VAT PAYABLE
UNDER COMPOSITION OF VAT)
Gross Turnover
Less - Deduction –
Tax-Free Goods
Tax paid goods
Turnover of goods specified in Part II of Schedule II
Net Taxable Turnover
Net Taxable Turnover * ½% = Net Tax Payable by Composition Dealer
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B.Com 1st Sem. Subject- M.P. VAT & Central Sales Tax
Within 30 days from commencement of the execution of works contract or contracts. It simply means
that the works contractor need not make application for opting composition till he commences
execution of works contract.
1. Works contractors commencing execution of more than one contract at different dates
Sub-section (1) of Section 11A requires the contractor to intimate the composition option
within 30 days from commencement and not from the date of award of the contract. Therefore,
whenever a contractor starts execution, he shall intimate his option within 30 days of starting
execution.
Is linked to date of commencing execution and not to any turnover limit
2. Choice to opt composition for one or more works contract
It can be inferred from Section 11A that a dealer engaged in execution of works contract has the
option to choose composition for any contract or for which such dealer opts for.
Section 18 - Section 18 deals with returns. These provisions shall not apply for a works contractor
opting composition.
Section 20 - Section 20 deals with the manner of assessment of tax of a registered dealer. These
provisions shall not apply for a works contractor opting composition.
Section 20A - Provisions of self-assessment as contained in Section 20A shall not apply for a works
contractor opting composition.
Section 39 - Provisions as to the accounts as contained in Section 39 shall not apply to a works
contractor opting composition.
Section 40 - Provisions as to issuing bills, invoices and cash memorandum as contained in Section 40
shall not apply for a works contractor opting composition.
Restrictions and conditions for lump sum payment of tax by a works contractor.
1. Contractor must be registered under MP VAT Act, 2002
2. Non to avail or claim input tax rebate
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B.Com 1st Sem. Subject- M.P. VAT & Central Sales Tax
Work contractor shall make an application within 30 days from the date of commencement of
execution of works contract.
3. Delay in filing composition application
Composition application made within the time limit cannot be rejected and the applicant dealer
shall be deemed to have been granted the composition approval. However, the CTO concerned
may reject the composition application if it is filed late that is beyond the prescribed time. The
dealer has the right to explain the sufficient cause for delay and if the CTO is satisfied, he may
condone the delay and grant approval for composition.
4. Option if composition application is rejected
If the composition application is rejected, the applicant contractor has the right to file an appeal
as per the provisions of Section 46 of the MP VAT Act, 2002.
5. Grant of composition permission
The Commercial Tax Officer shall on receipt of composition option application in Form 4A shall
verify the correctness and on being so satisfied by an order in writing grant composition
permission.
Rate of tax
Sr. No. Types of contract Rate of
lump sum
1 Civil works like construction of building, bridges, roads, dams, barrages, 2%
canals, diversions excluding:
(i) Supply and installation of air conditioners, air coolers or air conditioning
equipments.
(ii) Supply and fitting of electrical goods, supply and fitting of electrical
equipments.
(iii) Fabrication, supply and installation of elevators, lifts and escalators.
2 Supply and installation of : 10%
(i) Air conditioners, air coolers or air conditioning equipments including
deep freezers, cold storage plants and humidification plants.
(ii) Weighing machines and weigh bridges.
(iii) Elevators (lifts) and escalators.
3 All other contracts not specified in Sl. Nos. 1 and 2 above. 4%
3. Can collect tax - There is no restriction under the provisions of the Act or rules made there
under from collecting tax. Therefore, a composition works contractor can collect tax/lump sum
and also disclose it in the bill/invoice.
4. Sub-contractor not barred from opting composition
Sub Contractor not to pay tax if contractor opts for composition
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B.Com 1st Sem. Subject- M.P. VAT & Central Sales Tax
(i) Quarterly Return:- Every registered dealer has to file quarterly return in form 10 within 30 days
from the end of the quarter.
(ii) Annual Return:- After the permission of Commissioner, the application for permission has to be
made in form 13 within 30 days of commencement of year annual return is to be filed within 90 days of
expiry of the year & the order shall be passed before the expiry of the first quarter of the year.
ASSESSMENT OF TAX
The assessment should be completed within one calendar year from the end of the period for
which assessment has to be made. The period can be extended by the State Government.
The assessment can be made at any business premises or any other place.
If it is the case of refund, the dealer can make an application for assessment & then assessment
shall be completed within 3 months from the date of receipt of application. If not completed
within the said period then they will be entitled to the refund according to their return
submitted.
TYPES OF ASSESSMENT
1. Self Assessment:
He has to file all the returns/revised returns.
Pay tax and interests as for the return.
Has filed returns within prescribed time.
Out of the dealers who are deemed to be self-assessed, few shall be selected for regular assessment.
2. Scrutiny Assessment:-
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B.Com 1st Sem. Subject- M.P. VAT & Central Sales Tax
The Commissioner shall serve a notice on a registered dealer, selected out of self assessed dealers,
After hearing the dealer or his agent & examining the evidences produced, he shall assess or
reassess his tax.
3. Best Judgment Assessment:
If the dealer has not furnished returns or knowingly furnishes incomplete returns or has not
maintained proper accounts then the best judgment assessment can be done by the concern after
issuing a notice to the dealer.
4. Re-assessment
If the dealer has been under assessed or escaped assessment or assessed at lower rate or availed
wrong deduction or input rebate then the Commissioner, within 5 calendar years from the date of
order of assessment or reassessment may assess or reassess to tax. The assessment shall be made
within one calendar year from commencement of the proceeding.
METHOD OF PAYMENT
Dealer shall pay any amount due from him under the Act directly to the Government treasury or to any
branch of SBI or SB Indore in cash/cheque/DD.
If the dealer is the Government or their departments, then payment can be made through book entries
& intimation are send to CTO with in 30 days.
- The payment shall be made by challan in Form 26.
- The TDS shall be deposited in form 27.
- Out of 5 copies 2 are returned to the dealer, 3rd is send to CTO, 4th is forwarded to treasury office
5th is retained by the bank.
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B.Com 1st Sem. Subject- M.P. VAT & Central Sales Tax
If a dealer has been given a facility of installment payment, and he has properly complied with the
order granting him such facility, the Commissioner, may if he feels interest is undue hardship remit
portion of interest on tax or penalty or the penalty to be recovered.
Where tax or other dues is not paid within the time allowed in the notice of demand or order but is paid
within a period not exceeding one year then State Government may remit the penalty payable in
respect of the said amount.
In case of default, the outstanding sum shall be recoverable as arrear of land revenue according to the
provision of MP land revenue code 1959.
REFUNDS U/S 37
Refund of excess payment- where an order directing refund of any amount has been made by a
competent authority then at the option of the dealer the same shall be refunded to him in cash
through refund payment order in form 52, after adjustment of such excess towards the amount of
Tax due in respect of any other year from him. If the refund payment order exceeds Rs. 5000 such
shall be crossed & made ‘A/c payee”.
If the CTO is satisfied that due to error by the dealer, the amount credited into Government treasury
cannot be accounted for the purpose, the same shall be refunded or at the option of the dealer,
adjusted towards dues of any other year from him.
The authority empowered to grant refund, is required to apply the refundable amount towards
recovery of tax, penalty, interest or any other amt. Refund Adjustment Order in Form 40 has to be
passed for the same.
If the refund is not made or applied for recovery/ adjustment within 90 days from the date of order,
interest @ 1% p.m. is to be paid to the dealer for the period beyond 90 days.
If the dealer desires payment of refund by adjustment against any amount subsequently payable by
him, Refund Adjustment Order is passed by him. Refund Adjustment Order is passed by the
assessing authority in Form 53. The order is made in 3 copies, one issued to the dealer, second
marked as for treasury only & third is retained by the assessing authority.
In support of any claim for payment of tax payable according to any return by adjustment, a copy of
the refund by adjustment, a copy of the refund adjustment order to such return shall be attached.
Order sanctioning interest on delayed refund- when refund order is passed under rule 48 the
authority issuing such order shall simultaneously pass order for interest payment for the period of
delay in payment of refund & the same shall be communicated to the dealer.
Interest payment order – in Form 41
Assessment Procedure
The assessment of every registered dealer shall be made separately for every year. The following points
are important in this regard –
1) Under VAT Act the limitation for completing the assessment has been reduced from 2 calendar
years to 1 calendar year from the end of the period for which assessment has to be made.
2) If the assessments for any year cannot be completed within the prescribed period, the State Govt.
can by notification, for reason to be recorded in writing, extend the period for competing such
assessments.
3) If the assessment is not made within the prescribed period or within extended period, the dealers
who have filed the returns shall be deemed to have been assessed, and in case of dealers who have
not furnished any return returns the assessment shall become time barred.
4) Under VAT Act it is not necessary that the assessment should be in the office of the assessing
authority. It may be at the business premises of the assessee or at any other place.
Types of Assessment –
1) Self Assessment (Sec.-20)
2) Scrutiny Assessment
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B.Com 1st Sem. Subject- M.P. VAT & Central Sales Tax
Tax Audit –
The commissioner or an agency authorized by him shall, on previous intimation to the dealer,
undertake tax audit of the records, stocks in trade and the related documents of the dealer. Dealers for
tax audit shall selected by him in the manner as he may deem it.
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B.Com 1st Sem. Subject- M.P. VAT & Central Sales Tax
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B.Com 1st Sem. Subject- M.P. VAT & Central Sales Tax
UNIT-IV
CENTRAL SALES TAX
INTRODUCTION
Central Sales Tax is applicable on sales of goods from one state to another. This tax is imposed
by the Central Govt., but it is collected by the states and the amount collected is also used by state govt.
For example sale of goods from a Regd. Dealer of M.P. to a dealer of Bihar is inter-state sale, therefore
Central Sales Tax Act is applicable. Though it is a central tax but the tax on such inter state sale will be
collected and retained by M.P. Govt.
The central sales tax Act, 1956 is a fiscal legislation, which imposes a levy of tax on sale of goods –
(a) In the course of inter state trade and commerce, or
(b) Outside the State, or (c) In the course of import into or export from India.
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B.Com 1st Sem. Subject- Business Law
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B.Com 1st Sem. Subject- Business Law
Items covered under goods. It includes animals, objects such as livestock animals and birds in
captivity as these are movable property. Goods include uprooted trees, second hand goods, rejected
goods, worn out goods, etc.
Computer software which is available off the shelf. However, customized software prepared on
the basis of the requirement of a particular customer stands on a different footing.
Standing trees are not goods and not taxable but standing timber will be taxable under CST if
timber is identified, contract is unconditional and timber is in a deliverable state. In such case, it is
movable property and thus goods.
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B.Com 1st Sem. Subject- Business Law
Inclusions:
Following will be included in sales price
1. Cost price of stock
2. Cost of packing material
3. Packing charges
4. Excise Duty
5. Bonus for extra sales
6. Expenses incurred by trader before invoicing of goods
7. Central sales tax (if not shown separately)
Exclusions:
However, it shall not include the following :
1. Freight/transport charges for delivery of goods if charged separately,
2. Cost of installation if charged separately.
3. Cash discounts for making timely payment.
4. Trade discounts
5. Insurance charges of goods insured on behalf of the buyer or at the request of the buyer.
6. Goods returned within 6 months of the date of sale,
7. Goods rejected.
9. Turnover – Sec. 2 J Turnover used in relation to any dealer liable to tax under this Act means
the aggregate of the sale prices received and receivable by him in respect of sales of any goods
in the course of inter State trade or commerce made during any prescribed period.
10. Year – Sec. 2(k) Year in relation to a dealer, means the year applicable in relation to him under
the general sales tax law of the appropriate state, and where there is no such year applicable, the
financial year.
11. Taxable Turnover – [ Sec. 2 (w) ] – In relation to any period means that part of a dealer’s
turnover for such period which remains after deducting there from –
1. Exempted goods
2. Tax paid goods
3. Goods sold on declaration
4. Amount of tax included
5. Any other deduction
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3. Cotton – that is to say, all kinds of cotton (indigenous or imported) in its unmanufactured state,
whether ginned or unginned, baled, pressed or otherwise, but not including cotton waste.
4. Cotton fabrics
5. Cotton yarn – but not including cotton yarn waste.
6. Crude oil
7. Aviation turbine fuel – Aviation turbine fuel sold to a Turbo Prop Air Craft.
8. Hides and skins – whether in a raw or dressed stage.
9. Iron and steel
10. Jute
11. Oilseeds
12. Pulses
13. Sugar
14. Tobacco and Tobacco refuse
15. Woven fabrics of wool
16. Liquid Petroleum Gas (LPG)
Restrictions and conditions in regard to tax on sale or purchase of declared goods within a State:
(Sec. 15.)
1. Maximum tax rate 5% - in respect of any sale or purchase of such goods inside the State shall not
exceed five percent of the sale or purchase price.
2. Single point tax
3 Reimbursement of tax
4. Deduction for tax on paddy – Where a tax has been levied under that law in respect of the sale or
purchase inside the state of any paddy the tax leviable on rice procured out of such paddy shall be
reduced by the amount of tax levied on such paddy as treated as different commodity.
5. Tax on paddy – when exported where a tax on sale or purchase of paddy is leviable under that law
and the rice procured out of such paddy is exported out of India, then, the paddy and rice shall be
treated as a single commodity.
6. Tax on pulses – Each of the pulses whether whole or separated and whether with or without husk,
shall be treated as a single commodity for the purposes of levy of tax under that law.
II. Cases where there is no Inter-state sale: There may be a case where goods moved from one
State to another but not in pursuance to a contract for sale or purchase. In such cases there will be no
Inter-state sale. Such cases are illustrated below:
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B.Com 1st Sem. Subject- Business Law
b) Sent to C & F Agent – A C & F Agent dos not have the right on property in the goods stocked with
him by the manufacturer. His duties are confined to stocking the goods and forwarding them to persons
and places as instructed by the manufacturer. The right to sell the goods does not vest in him.
c) Sent to Branch Transfer – There is no transfer of property when goods are dispatched to branch
and hence there is no liability of CST.
2. Movement of goods commences and terminates is the same state
Where the movement of goods commences and terminates in the same State, it shall not be deemed to
be a movement of goods from one State to another by reason merely of the fact that in the course of
such movement, the goods pass through the territory of any other State.
3. Intra-state sales -
When a purchaser from another state comes in a state for purchasing some goods and seller
delivers the goods to him directly such sale will not be inter state sale, though purchaser and seller
belong to different states.
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B.Com 1st Sem. Subject- Business Law
45, Anurag Nagar, Behind Press Complex, Indore (M.P.) Ph.: 4262100, www.rccmindore.com
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B.Com 1st Sem. Subject- Business Law
45, Anurag Nagar, Behind Press Complex, Indore (M.P.) Ph.: 4262100, www.rccmindore.com
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B.Com 1st Sem. Subject- Business Law
UNIT-V
Proforma of Computation of Taxable Turnover under C.S.T.
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B.Com 1st Sem. Subject- Business Law
(8) Amendments in the certificate: Two types of amendments can be done in the certificate:
(a) On application by the dealer.
(b) At the discretion of the authorised officer.
MISCELLANEOUS PROVISIONS
I. Assessment Procedure: CST is implemented on the sales of inter state sale. This tax is imposed
by central govt. but is collected by state govt. The procedure of assessment of a dealer under
CST is as follows -
1. Tax Assessment Authority is working under the CST Act of there own state govt.
2. Submission of the statement of sales by every tax-paying dealer under sales tax law as applicable
to the state.
3. Information (Particulars) to be supplied in the return. Which is given below-
(i) Name & Address of dealer.
(ii) GIR no & PAN of Income Tax.
(iii) Name & Address of the branches of the dealer.
(iv) Amount of total sales of the period.
(v) Amount of sales with in state, outside the state & exports.
(iv) Sales return with in 6 months, cash discount, freight expenses included in sales.
(vii) Subsequent sales
(viii) Tax free goods Under CST.
(ix) The sales proceeds of other goods, besides the declared goods.
(x) Amount of CS Tax payable.
(xi) Amount of refundable under CST Act.
(xii) Amount of Tax paid so for by Treasury Challan, date & number.
4. Signature upon the return and its verification by best of his knowledge.
5. Documents to be enclosed with the return.
(i) A copy of Challan regarding tax paid under CST.
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(ii) List of those dealers to whom the assessee has sold the goods in various states in form No.
VI with
6. Duration of sales according to rules 11 of CST.
7. Proceeding of tax - Assessment by concerned authority under CST Act. If authority required any
details, information, proof or certificate he may demand for all these.
Types of offences
1. Furnishing wrong declaration
2. Giving false information regarding goods mentioned in the certificate of registration.
3. Non registered himself/does not follow the order of tax assessing officer.
4. Submitting false declaration in form ‘C’.
5. Collecting the Tax unlawfully in case any dealers is not registered.
6. Not collecting tax in prescribed way.
7. Furnished false information regarding registration.
8. Goods not used for the prescribe purposes.
Under the above circumstances, the dealer might be sentenced with simple imprisonment up to a
maximum of 6 months or be fined, when the offence is repeatedly, committed, he may be fined at the
rate of Rs. 50/- per day till the offence continuous.
Appeals (Sec.-20)
The following provisions shall apply to appeals filed by the aggrieved dealer against any order of the
assessing authority made u/s 6-A u/s – 9 of this Act –
(i) The authority shall adjudicate an appeal filed by aggrieved dealer.
(ii) This appeal filed with in 45 days from the date on which the order is served on him -
(iii) This appeal may be entertain by authority after expiry of 45 days, but no later than sixty days. by
the sufficient cause from filling the appeal in time.
(iv) The application shall be made in quadruplicate and be accompanied by a fee of Rs. 5000.
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