FAQ

  
 

NO

INDEX

1

INPUT TAX-ELIGIBLE DEALERS.

2

INPUT TAX CREDIT ON STOCK HELD ON THE COMMENCEMENT OF THE VAT.

3

INPUT TAX CREDIT NOT FULLY ADJUSTED WILL NOT LAPSE.

4

INPUT TAX CREDIT ON CAPITAL GOODS PURCHASED PRIOR TO VAT.

5

INPUT TAX CREDIT ON PURCHASE OF SECOND HAND MACHINERY.

6

INPUT TAX CREDIT ON COMPONENTS USED IN FABRICATING MACHINE.

7

INPUT TAX ON PURCHASE OF ASSETS LIKE DELIVERY VEHICLE, COMPUTER

8

INPUT TAX CREDIT FOR VAT PAID ON LEASE AMOUNT.

9

INPUT TAX PAID IN EXCESS OF OUTPUT TAX ELIGIBLE FOR ADJUSTMENT.

10

INPUT TAX CREDIT ON EXEMPTED SUPPLIES LAPSE.

11

INPUT IS USED PARTLY FOR TAXABLE GOODS & PARTLY FOR EXEMPTED GOODS

12

PROCEDURE FOR ADJUSTING INPUT TAX ON OUTPUT TAX.

13

INPUT PAID AT HIGHER RATE –SUBSEQUENT REDUCTION OF VAT

14

INPUT TAX SET OFF FOR INTERSTATE AND EXPORT SALES.

15

INPUT TAX CREDIT WHILE MAKING LOCAL, INTERSTATE & EXPORT SALE.

16

INPUT TAX CREDIT ON REPLACEMENT OR REPAIR OF CAPITAL GOODS.

17

MANUFACTURE OF TAXABLE & NON-TAXABLE GOODS-RATIO OF INPUT TAX.

18

INPUT TX ON CONSUMABLES LIKE FURNCE OIL, LUBRICNTS -ELIGIBILITY.

19

INPUT TAX CREDIT ON CAPITAL GOODS USED IN EXECUTION OF WORKS CONTRACT.

20

CREDIT FOR TAX PAID ON INPUT IF GOODS SOLD INTERSTATE OR EXPORT.

21

IS INPUT TAX CREDIT IS AVAILABLE ON ALL PURCHASES.

22

IS INPUT TAX CREDIT IS AVAILABLE ON PETROLEUM PRODUCTS.

23

INPUT TAX CREDIT ON PACKING MATERIALS USED FOR PETROLEUM PRODUCTS.

24

INPUT TAX CREDIT IS DEPENDENT ON THE MANNER OF DISPOSAL OF GOODS.

25

NO INPUT TAX CREDIT FOR INTERSTATE PURCHASES.

26

NO INPUT TAX CREDIT IF TAX IS ILLEGALLY COLLECTED.

27

PROOF REQUIRED FOR CLAIMING INPUT TAX CREDIT.

28

PROCEDURE FOR REFUND OF INPUT TAX CREDIT.

29

REFUND OF INPUT TAX ON STOCK TRANSFER.

30

OUTPUT TAX APPLICABLE TO PACKING MATERIALS.

31

LEASING OUT MACHINES PURCHASED FOR OWN USE.

32

SPECIAL REBATE-ELIGIBLE TO SET OFF ENTRY TAX.

33

PURCHASE TAX SET OFF AGAINST CST.

34

GOODS PURCHASED FOR RESALE CONSUMED – REVERSE TAX.

35

VAT DEALER –CHANGE OVER TO PRESUMPTIVE SCHEME.

36

PRESUMPTIVE SCHEME CAN OPT IF PAYING PURCHASE TAX FOR UNREGISTERED DEALERS PURCHASE.

37

PRESUMPTIVE SCHEME-ENTIRE TURNOVER EXIGIBLE TO LEVY.

38

CONTRACTOR HAVING OCCATIONAL INTERSTATE PURCHASE- NOT ELIGIBLE FOR COMPOUNDING.

39

CONTRACTOR CAN OPT COMPOUNDED TAX AS WELL AS NORMAL RATE.

40

WORKS CONTRACT- LAIBILITY OF SUB CONTRACTOR.

41

SALE OF OLD PLANT AND MACHINERY ATTRACT VAT.

42

REGISTRATION APPLICATION FILED AT PRINCIPAL PLACE OF BUSINESS.

43

CANCELLATION OF REGISTRATION CERTIFICATE.

44

SALE BILL ISSUED INCLUSIVE OF VAT-NOT CORRECT.

45

SALES INCENTIVES-IS PART OF TURNOVER.

46

COMMISSION RECEIVED CANNOT DEDUCT FROM SALE PRICE.

47

COPY OF MANUFACTURING ACCOUNT IS NOT REQUIRED TO FILE WITH RETURN

48

CASH INCENTIVES TO DISTRIBUTER-CAN DEDUCT FROM TOTAL TURNOVER.

49

PURCHASE FOR EXPORT- TAX LAIBILITY.

50

ENHANCEMENT OF TAX RATE-APPLICABILITY.

51

SALES RETURN-NEED FOR FILING REVISED RETURN.

52

SALE OF CAPITAL GOODS AS SCRAP-TAX LAIBILITY.

53

SALE AT SUBSIDIZED PRICE-INPUT TAX ELIGIBILITY.

54

DETAILS REQUIRED FOR ISSUING DEBIT NOTE AND CREDIT NOTE.

55

DEBIT NOTE RAISED –OUTPUT TAX REDUCTION.

56

PURCHASING DEALER –RETURN THE REJECTED GOODS TO THE SELLER.

57

DEALERS ELIGIBLE FOR PRESUMPTIVE SCHEME.

58

NO CLAIM OF INPUT TAX CREDIT FOR DEALERS WHO OPTED PRESUMPTIVE SCHEME

59

BEST JUDGEMENT ASSESSMENT AVAILABLE REMEDY.

60

CIRCUMSTANCES WITHHOLDING REFUND.

61

VAT AUDIT IS IT COMPULSORY.

62

TIME LIMIT FOR CONDUCTING AUDIT.

63

IS THERE ANY HARRASMENT IN AUDIT.

64

NON-APPEALABLE ORDERS.

65

SALES RETURN-NEED FOR REVISED RETURN.

1.  Are all dealers eligible to claim input tax credit?

No. Unregistered dealers, dealers paying presumptive tax or compounded tax and dealers who transfer the right to use any goods are not eligible to claim input tax credit.

2.      Can input tax credit be claimed on stock of goods held on the date if implementation of VAT?

Tax paid under the KGST Act 1963, and under the Kerala Tax on Entry of Goods into Local Areas Act, 1994 on goods purchased during the period from 01.04.04 to 31.03.05 and held as opening stock on 01.04.05 will be eligible for input tax credit subject to certain conditions and restrictions specified under Rule 12 of the KVAT Rules, 2005.  

3.  Under section 11(13) of the KVAT Act, 2003 read with Rule 12   (6) of the KVAT Rules input tax credit can be availed of in respect of tax paid under the KGST Act on goods purchased during the period from 01.04.04 to 31.03.2005 and held as opening stock on 01.04.05 in three installments commencing from the return for the month of May 2005 onwards. Is there a condition that if the input tax cannot be fully set off by the return for the month of July 2005, the balance remaining unadjusted will lapse? 

A dealer can claim input tax credit under section 11(13) in three installments as specified in Rule 12(6) ie 1/3 rd each of the input tax claim on opening stock of goods which suffered KGST will be credited to the account of the dealer along with the return for the months of May, June and July 2005, provided the statement in Form No. 25A is submitted in the prescribed manner. Once the input tax is so credited and is not fully set off after the 3rd month the balance remaining unadjusted will be carried over to the next return period under section 11(6). If the dealer is not able to claim the input tax credit during the above three months, the dealer can claim the same in any subsequent month during the year 2005-2006.

4. Will input tax credit be available on capital assests held by a dealer on 01.04.05?

No input tax credit will be available on capital goods purchased prior to 01.04.05.

5. Will input tax credit be available on purchases of second hand machinery?

Yes.  Input tax credit will be available on purchase of second hand machinery as well.

6. Will input tax credit be available on components used in fabricating a machine in house?

If the machine fabricated is sold as such, input tax credit can be availed of. But if the machine is used as Capital goods, input tax credit will be allowed from the date of commencement of commercial production or from the date of which it is put to use, whichever is later.

7. I am a trader. Can I claim input tax credit in respect of VAT paid on purchase of my capital assets such as delivery vehicle, computers, electronic scales etc?

      Yes.  You can claim input tax credit in respect of VAT paid within the state in respect of the purchase of the above items subject to the conditions stipulated in section 11(2) and Rule 13 and notification SRO No. 324/2005 dated 31.03.2005.

8. I brought capital goods on lease. The dealer who supplied the goods has collected VAT @ 4% and has issued invoice in Form No 8A. Am I eligible for input tax credit for the VAT paid on the lease amount?

 Yes, The VAT is collected on the lease amount under section 6(1) (c) of the Act. Input tax credit will be available subject to the other restrictions and conditions relating to granting of input tax credit on capital goods.

9. Do I have to sell all the goods that I have purchased to avail input tax credit for the taxes paid on all my purchases?

No. Input tax paid on all eligible purchases during a return period is set off against the output tax for the return period. If the input tax paid is in excess of the output tax, the balance will be carried over to the next return period for allowing set off during that return period.

10. How can a dealer adjust the input tax against output tax when he makes taxable and exempt sales? Will the input tax credit relating to exempt supplies lapse?

Where a dealer is having sales of taxable and exempted goods in a return period, the input tax will be apportioned in the ratio of the turnover of taxable and exempted goods for the return period. The dealers can avail of the portion of input tax in relation to taxable goods and that in relation to exempted goods will lapse.

11. If the input is used partly for making taxable goods and partly for exempted goods, will input tax credit be available?

If goods on which input tax paid are used partly for making taxable goods and partly for exempted goods, input tax credit will be allowed in the ratio of the turnover of taxable goods and exempted goods.

12. What is the procedure for adjusting input tax paid against the output tax payable?

The dealer claiming input tax credit can deduct the input tax for a return period from the output tax for the return period and pay the balance. But for claiming input tax credit in the case of capital goods the dealer has to apply to the assessing authority in Form No. 25. The assessing authority has to grant a certificate in Form No. 25B. Input tax credit on capital goods can be claimed only after getting the certificate in Form No 25B.

13. I had purchased certain industrial inputs @ 12.5 % in July 2005. By the KVAT (Amendment) Act, 2005 the rate of tax on these items has been reduced to 4 % w.e.f 01.04.05 I had claimed input tax credit in respect of the tax paid on these items @ 12.5 % before the reduction in rate w.e.f 01.04.05. Will I be eligible for input tax credit for the entire tax paid @ 12. 5%. ?

      Yes.  Where the rate of tax of any commodity is reduced as per the KVAT (Amendment) Act, 2005, the reduced rate is applicable from 01.04.05. But where a dealer had collected tax at higher rate, such collection has been validated as per section 24 of the KVAT (Amendment) Act, 2005. So you will be eligible for input tax credit for the full amount of tax paid at the time of purchase.

14. A dealer is making local, interstate and exports sales. Can he take set off for the input tax for the input used for his interstate and export sales against his local sale?

               In the case of input tax in relation to goods sold on interstate, set off can be availed of if there is excess input tax after adjusting against the output tax liability of the dealer under the KVAT Act, and the arrear, if any, outstanding against the dealer for any previous return period. If the output tax is sufficient to set off the input tax in relation to export sales also, it can be set off. However, if the dealer claims input tax credit, he will not be eligible for any refund in relation to such export.

15. A dealer is making local, interstate and export sale in a month for which he purchased inputs commonly. What will be his eligibility for set off/ refund of input tax credits?

             Where a dealer is having local, interstate and export sales in a month, the input tax paid or special rebate attributable to each type of transaction will be calculated on the basis of the ratio of the turnover under each category and input tax credit, special rebate or refund will be claimed accordingly. 

16. Can a manufacturer take input tax credit for the goods used for replacement/repair of his capital goods?

             If the capital goods are of the category for which input tax credit is admissible, input tax credit will be available for the goods used for replacement or repairs of such capital goods.

17.  I am manufacturing goods falling under the first schedule and third schedule to the VAT Act. Can I claim and use common inputs set off in respect of input tax paid for the purchase of inputs for the manufacture of goods included in the first schedule against the output tax payable for the goods included in the third schedule?

             No. As per section 11(5) (c) no input tax credit is allowable for goods used in the manufacture or packing of goods included in the first or fourth schedule to the Act. In such cases input tax attributable to taxable and exempted goods will be apportioned on the basis of the ratio of the turnover of such goods and the portion attributable to taxable goods alone should be claimed.

18. In the course of the manufacture of taxable goods certain consumables such as furnace oil, lubricating oil for machinery etc are use. Can input tax credit be availed of in respect of such goods?

             Yes. As per section 2(xxiii) “input tax” means the tax paid or payable under the Act by a registered dealer to another registered dealer on the purchase of goods in the course of business. Consumables (Other than fuel used in motor vehicles or vessels) are also covered by this. 

19. Will input tax credit be available on capital goods used in the    execution of work contract?

No input tax credit will be available on capital goods, which are used in relation to supply of labour or service in the execution of a works contract. But where capital goods (other than those included in the negative list) notified as per SRO 324/2005 dated 31.03.05) are used to convert any material to the form in which it is incorporated in the works contract or for storage of the goods transferred in the execution of works contract, input tax credit will be available.

            20. Is it possible to avail of credit for taxes paid on input if goods

        are sold interstate or are exported?

Input tax credit is allowed against output tax. If there is excess of input tax over output tax, it will be adjusted first against any arrears outstanding under the KVAT Act. If there is still any excess input tax, it can be adjusted against CST payable. In the case of exports it is permissible to set off the corresponding input tax against any out put tax payable. If input tax is so set off the exporter cannot claim any refund of input tax under section 13.

        21. Will input tax credit be available on all purchases for the

     business?   

No input tax credit will be available to the dealers specified in sub-section (4) and purchase specified in sub-section (5) of section 11. In respect of the purchases of goods specified in notification SRO No. 324/2005 dated 31.03.05 also no input tax credit will be available.

22. Can input tax credit be availed of on the purchase of petroleum   products?

In the case of petroleum products included in the fourth schedule, no input tax credit will be available. In respect of other petroleum products, input tax credit will be available subject to the other provisions of the Act.

23.  Can input tax credit be availed of on packing material used for petroleum products?

If the goods are used as packing materials for any of the petroleum products included in the Fourth Schedule no input tax credit will be available. Other wise input tax credit will be available subject to the other restrictions imposed by section 11.

24.  Is there any restriction on availing of input tax credit depending on the manner of disposal of goods, say as free gift or on stock transfer?

Yes.  Input tax credit is dependent on the manner of disposal of goods.

25.Will input tax credit be available on interstate purchases?

No input tax credit will be available on interstate purchases.

26. Will input tax credit be available for the entire tax paid on eligible purchases?

Yes. Input tax credit will be available for the entire tax paid on eligible purchases. But no input tax credit will be available if any tax has been illegally collected.

27.What proof is required to claim input tax credit?

In order to claim input tax credit the dealer should have tax invoice issued by a registered VAT dealer showing the tax collection separately. The tax invoice should also show the TIN (Tax payer’s Identification Number) of the buying dealer. A bill issued in Form No.8B will not be treated as a tax invoice for claiming input tax credit.

28.What are the circumstances in which refund of input tax credit is permissible?

Refund of input tax is allowed where the goods purchased are-

a.       sold interstate or exported.

b.      used for packing materials of goods sold interstate or exported

c.       used in the manufacture of goods and the manufactured goods are sold interstate or exported.

d.      used as capital goods in relation to goods sold interstate or exported.

e.       Sent as stock transfer to outside the state or the goods manufactured or packed using the goods purchased are sent as stock transfer to outside the state (in this case tax paid in excess of 4 % alone is eligible for refund.)

No refund will be available if the goods sold interstate or sent as stock transfer are not taxable. But in the case of export refund of input tax will be available even if the goods exported are not taxable.(item included in the first schedule)

29. Is input tax refund available on goods stock transferred? If ineligible, will the input tax credit relating to the goods stock transferred lapse?

If the tax paid on input tax does not exceed 4 % no input tax refund will be available on goods sent as stock transfer. The input tax to the extent of 4 % in relation to the goods sent on stock transfer outside the State during a return period will lapse at the end of that return period.

30. What is the rate of tax applicable on packing materials as outputs?

Rate of tax on an item is not dependant on the use to which it is put. If it is an item included in the first schedule (eg. Textile fabrics) it will be exempt from tax. If it is an item included in the third schedule, rate of tax will be 4 %. If is an item not included in any of the schedules to the Act, it will attract tax @ 12.5 %.

31. Is there any restriction on leasing out machines purchased for own use? If no, what will be its tax implication under VAT?

There is no restriction on leasing out machines purchased for own use. If the total turnover reaches the limit specified in sub-section (1) of section6, tax will be payable.   

32. I bring machinery required for use in manufacture from outside the state and pay entry tax in Kerala. Will I be eligible to set off the entry tax paid against by VAT liability?

Entry tax paid in Kerala in respect of any goods intended for resale or use in manufacture or for use as capital goods is eligible for set off. In the case of entry tax paid in respect of goods intended for resale or use in manufacture, special rebate can be availed of under section 12 in the return for the month in which the entry tax is paid. But where entry tax is paid on capital goods (including machinery), special rebate will be allowed in 36 monthly installments commencing from the month in which the assessee commences commercial production using the goods in respect of which entry tax is paid. Where capital goods are purchased after the commencement of commercial production or where they are not used in connection with manufacture, special rebate will be allowed from the month in which the capital goods are put to use. But before availing of the special rebate, the dealer has to apply to the assessing authority in Form No. 25 and get his permission in Form No. 25B. For more details see Rule 13 of the KVAT Rules, 2005.

33. I purchased goods from unregistered dealers and paid purchase tax on such goods under section 6(2). I sell the goods interstate. Can I set off the purchase tax paid against my CST Liability?

If purchase tax is paid during a month, it can be claimed as special rebate in the return for the month in which the payment of the purchase tax is made if purchase from unregistered dealers is made during November 2005 and payment of the purchase tax is made in December 2005 along with the return for November 2005, special rebate can be claimed in the return for the month of December 2005. But special rebate will first be adjusted against any tax liability under the KVAT Act, 2003, then towards any arrears outstanding for any previous return period and if there is any surplus it can be set off against the CST liability. But if the purchase from unregistered dealer is effected in November 2005 and interstate sale is also effected in the same month, special rebate can be claimed in the month in which the purchase is made, if liability for purchase tax is created, ie if the purchase tax payable on such purchase is Rs. One lakh, in the return Rs. One lakh shall be shown as purchase tax payable and special rebate can be claimed for Rs. One lakh if the entire goods are sold interstate in the same month (see section 12(1) (second proviso)

34.  I purchased goods within the State for resale and they were duly brought to accounts. I require a portion of the goods for my personal use can I claim input tax for the goods? If not, how should the transaction be accounted ?

No input tax credit will be available in respect of goods, which are purchased for resale but taken for own use. While claiming input tax credit, tax paid in relation to goods taken for own use should be deducted from the total input tax and input tax credit claimed for the balance. If input tax credit is claimed in the month in which the purchase is made and the goods are appropriated for own use in any subsequent month, the input tax credit availed of in respect of such goods shall be paid back as reverse tax under section 11(7) in the month in which the goods are so appropriated.

35. I was registered as a VAT Dealer. I do not have any CST Registration. My annual turnover is not likely to reach Rs. 50 lakhs. Can I opt for payment of presumptive tax?

              Yes. You can change over to the presumptive tax scheme.

36. I am a provision dealer buying entire goods from within the state for resale. But certain goods like coconut, pepper, tamarind, ball tamarind etc are purchased from household and therefore no tax invoice is available. I do not have any CST registration. Can I opt for payment of presumptive tax?

              Yes. Since you are not, bringing any taxable goods from outside the State you can opt for payment of presumptive tax under section 6(5). But on the goods purchased from persons other than registered dealer, tax will be payable at the normal rates applicable to such goods. The sales turnover of taxable goods on which presumptive tax is payable will include the sales turnover of the goods purchased from persons other than registered dealers within the State.

37. I am a presumptive tax dealer. My turnover is not likely to reach Rs. 10 lakhs.  Will I be liable to pay any tax?

             Yes.  As per section 6(5) presumptive tax @ 0.5% of the turnover of sale of taxable goods is payable by a dealer who has opted for payment of presumptive tax. The sub-section does not specify any basic exemption limit. If such a dealer buys any taxable goods from a person other than a registered dealer he will have to pay purchase tax on the purchase turnover goods at the normal rate applicable to such goods in addition to the presumptive tax payable. But no purchase tax will be payable if the total turnover of the dealer is less than five lakh rupees.

38. I am a works contractor. I normally buy the materials required for the execution of the works contract from within the State. But occasionally I buy some goods from outside the state. I do not have a CST Registration. Can I opt for payment of compounded tax @ 2 % for the works contract if I pay normal tax on the turnover of the goods brought from outside the state?

              No. As per section 8(a)(i) of the KVAT Act, 2003 the benefit of payment of tax at the compounded rate of 2 % is available to a contractor if he-

(i)           is not a dealer registered under the CST Act,1956

(ii)          is not a dealer effecting first taxable sale in the state (ie a dealer effecting sale of goods either immediately after its entry into the state or immediately after its manufacture in the State).

 Since a portion of the materials is purchased from outside the state, you are not entitled to opt for payment of compounded tax @ 2%.

39. Can a contractor opt for payment of compounded tax in respect of certain contractors and pay tax at the normal rate in respect of others? 

     Yes. Compounding option has to be filed in respect of each works contract. A single option (Form No.1D) can cover more than one contract.

40.  I undertake a contract for construction of an office complex for Rs. 10 crores. The works relating to electrification, air-conditioning and flooring with marbles are given as sub-contract for an amount of Rs. 3 crores. I have opted for payment of tax on the contract at compounded rate of 4 %. Will I be liable to pay tax on the portion of the works given as sub-contract? If I pay tax @ 4% on the total amount of the contract (Rs. 10 crores) will the sub-contractor be liable to pay any tax?

           Where the principal contract or awards sub-contract for Rs. 3 crores and opt for payment of tax at compounded rate of 4 %, the principal contractor will be eligible to deduct Rs. 3 crores from the total amount of the contract and pay compounded tax on the balance amount of Rs. 7 crores, if the sub-contractor is a registered dealer liable to tax and the sub-contractor furnishes a certificate in form No. 20G to the principal contractor. Even if the principal contractor pays compounded tax @ 4% on the total amount of the contracts, the sub-contractor will be liable to tax on the turnover in relation to the amount of the sub-contract.

41. My company intends to sell second hand plant and machinery, which was purchased about twelve years ago. Will the sale be taxable? Should we show this sale in the VAT return?

              Any transaction in connection with or incidental or ancillary to trade also comes under the definition of “business”. Any transfer of property in goods by one person to another in the course of trade or business for cash or for deferred payment will come under the definition of “sale”. So the sale of old plant and machinery will be liable to tax subject to the other provisions of the Act. The turnover of such sale should be included in the VAT return to be filed.

42. A dealer has his registered office at one place and branches at several other places. The purchases and sales are made only at branches and all the administrative works are handled at the Head Office. With which assessing authority should the dealer get himself registered? Can he continue with the assessing authority with which he was registered, under the KGST Act?

          Application for registration has to be submitted to the registering authority of the area in which the dealer’s principal place of business is situated. Registered office need not always be the principal place of business. One of the branches where the major portion of the purchases and sales are carried on can be declared as the principal place of business and application for registration can be submitted accordingly. If application for registration had already been submitted, the dealer can request the registering authority, before whom the application had been submitted, to transfer the application for registration to the registering authority having jurisdiction over the area where the new principal place of business is situated. If registration has been granted, the dealer can request for transfer of the registration to the above office.

43.  I was a registered dealer under the KGST Act during the year 2004-2005 having only second sales of taxable goods. My total turnover during 2004-05 was only Rs. 3 lakhs. I do not expect that my turnover will reach Rs. 5 lakhs during the current year (2005-06). As per section 15 of the KVAT Act, 2003 as it stood on 01.04.05 all dealers registered under the KGST Act as on 31.03.05 were required to get registered under the VAT Act irrespective of the turnover. Accordingly I also got registered under the VAT Act. But as per the amendment made to section 15 by the KVAT (Amendment) Act, 2005 such dealers are required to get registered under the VAT Act only if their turnover is Rs. 5 lakhs or above. Can I get my registration cancelled?

         If you are not liable to get registered under section 15 of the KVAT Act, 2003 as amended by the Kerala Value Added Tax (Amendment) Act, 05 you can get the registration cancelled.

44.   I am a VAT dealer running a margin free super market. I issue sale bills inclusive of VAT and pay it by bifurcating the tax and taxable turnover. Is the procedure correct? 

                No. As per Rule 58(10) a VAT dealer has to issue sale bill in the prescribed format showing the sale price and output tax separately. Under Rule 10(j) amount collected by way of tax will be allowed deduction from the total turnover for arriving at the taxable turnover only if the same is shown separately in the bills If you collect an all inclusive price, the price so realized will be the taxable turnover and tax will be payable on the amount so realized.

45.  I received certain amount as sales incentives at regular intervals from my supplier, based on the quantum of goods lifted by me. Is this incentive includible in my turnover?

            No. But if you sell any goods purchased by you at price lower than that at which it was purchased and subsequently receives any amount from any person towards reimbursement of the balance of the price, the amount so received shall be deemed to be turnover in respect of such goods.

 46.  I accepted payment through credit cards with 3 % commission. Can I deduct the commissioner paid from the sale price shown in the bill, before charging VAT?

No. The Commission in this case is an expense incurred by you for getting prompt payment of the sale price, which cannot be deducted from the consideration received from the buyer.

47.  Should a manufacturer file a copy of the manufacturing account in Form No. 14 along with the return?

              Records to be submitted along with the return are enumerated in Rule 22(3). Copy of the manufacturing accounts is not required to be filed along with the periodical returns filed.

48. On the basis of the total lifting of goods during a quarter we allow cash incentives to our distributors. Can we claim deduction in respect of such amounts from the total turnover?

   No. Discount will be eligible for deduction from the total turnover only if the discount is shown in the tax invoice and the buyer pays only the amount reduced by such discount.

49. I am an exporter. I have received an export order for the export of ten tons of pepper. In order to comply with this order, I propose to buy pepper from dealers within the state. Am I required to pay tax to my supplier?

 Your supplier can supply the goods without collecting tax provided you fulfill the requirements of sub-section (3) and (4) of section 5 of the CST Act, 1956.

50.  I had collected tax on a commodity in the first week of August 2005 @ 4 % which was the rate applicable as per the 3rd schedule as on 1st April 2005. This was subsequently revised to 12.5 % as per the amendment Act of 2005. At what rate should I pay tax?

As per section 24 of the Kerala Value Added Tax (Amendment) Act, 2005, where the rate of tax of any goods is enhanced as per the amendment Act, the enhanced rate is applicable w.e.f the date of notification of the Amendment Act (ie. 28.08.2005). So you need pay tax @ 4 % only till 27.08.05.

51. A dealer received back the goods sold by him in a month to another dealer as sales return after two months of the sale? Should the dealer file a revised return for the month in which the original sale was effected or can the sales return be shown in the return for the month in which the sales return takes place?

                Turnover of the goods received back as sales return will be allowed deduction only if the sales return takes place within three months from the date of sale. Where a revision of the turnover so becomes necessary, the dealer has to revise the return for the month in which the sale was effected. The revised return is to be filed on or before the tenth day of the month following the month in which the sales return takes place.    

52. Is there any tax liability on the sale (as scrap) of any capital asset on which input tax credit had been availed?

Yes.   Tax will be payable on the sale of capital asset sold as scrap.

53. What is to be done by a purchasing dealer in case of downward revision of price after the sale of goods to him?

If the downward revision of price is due to market fluctuation, the buying dealer can set off the revised prices and claim input tax credit for the tax paid by him. But if goods are sold at a price lower than that at which it was purchased and subsequently receives the balance amount from any person as reimbursement of the balance of the price, the amount so received shall be deemed to be the turnover of such goods. If any goods are sold at a subsidized price, the input tax credit allowable in respect of such goods shall not exceed the output tax payable in respect of such goods.

54. What information should be contained if the purchasing dealer issues a debit note to the selling dealer?

Debit note and credit note should contain the information prescribed in Form No. 9 of the Kerala VAT Rules, 2005.

55. Will output tax reduction be available to selling dealer on debit note raised on him?

Output tax reduction will be available to the selling dealer where a debit note is raised on him within a period of three months from the date of sale.

56. What should be done by a purchasing dealer to return the rejected goods to the seller? What happens in case such dealer is not registered under the Kerala VAT Act?

          Where goods are rejected before taking delivery thereof, the consignee can make an endorsement to that effect on the delivery note, which transports the goods to him, under his hand and seal. But if the goods are returned after taking delivery, the goods should be sent back to the seller using the delivery note of the dealer returning the goods. 

57. What is the system for payment of presumptive tax? Who are the dealers eligible to come under the system?

Under the presumptive tax system dealers pay tax @ 0.5 % on the turnover of taxable goods. In addition, if they buy any taxable goods from any person other than registered dealers, purchase tax at the normal rate applicable to the goods will also be payable. Presumptive tax system is optional.

 The following categories of dealers are not eligible to opt for the scheme:

i.                     importer (Dealer bringing taxable goods from outside the state)

ii.                   dealer registered under the CST Act

iii.                  dealer making any interstate sale or export

iv.                 dealer effecting first taxable sale of goods within the state (“first taxable sale” means sale of taxable goods by a registered dealer immediately after its import into the state or after its manufacture in the state.)

 

58. If a dealer opts for presumptive tax, can he claim input tax credit and issue tax invoice?

A dealer who has opted for payment of presumptive tax cannot claim input tax credit. He can issue only a sale bill in Form No. 8D for his sales. He cannot collect any tax on his sales.

59. What is the remedy available to dealers in case of best judgment?

In case of best judgment assessment, the assessee can file an appeal before the Deputy Commissioner (Appeals). In order that an appeal should be entertained, the dealer should have paid the tax or other amount admitted by the appellant to be due or such installments thereof, which have become due. But where the appeal is against an assessment completed under section 22(3) (Where the assessee has failed to file the statutory return or failed to file a fresh return after defects were pointed out) the appeal will be entertained only if the assessee pays the entire tax assessed.