(xxxvi) “Prescribed” means prescribed by rules made under this Act;

 (xxxviA) “ Prevailing market price” means the wholesale price of any goods in force in the market as published by the Economics and Statistics Department of the State or any other authorised agency or in the news paper and in cases where no such published whole sale price is available, the price at which goods of the kind or quality is sold by the Kerala State Civil Supplies Corporation or any other similar agency on the date of sale of such goods.

(xxxvii) “Purchase” with all its grammatical variations and cognate expressions shall be construed from the word “sale”;

(xxxviii) “Purchase price” shall be construed from the words “sale price”;

(xxxix) “Registered dealer” means a dealer registered under this Act;

(xl)“Registering authority” means the officer designated, by notification in the Gazette, as registering authority; 

(xli) “Return period” means and includes a calendar month or a quarter of an year or an year;

(xlii)  “Reverse tax” means that portion of input tax of the goods for which credit has been availed but such goods remain unsold at the closure of business or are used subsequently for any purpose other than resale or manufacture of taxable goods or execution of works contract or use as containers or packing materials of taxable goods within the State;

(xliii)“Sale” with all its grammatical variations and cognate expressions means any transfer whether in pursuance of a contract or not of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or for other valuable consideration, but does not include a mortgage, hypothecation, charge or pledge;

Explanation I: - A transfer of property in goods by the Central Government or a State Government for cash or for deferred payment or other valuable consideration whether or not in the course of business shall be deemed to be a sale for the purposes of this Act;

Explanation II: - The transfer of property involved in the supply or distribution of goods by a society (including a co-operative society), club, firm or any association or body of persons, whether incorporated or not, to its members, for cash or for deferred payment or other valuable consideration, whether or not in the course of business, shall be deemed to be a sale for the purposes of this Act;

Explanation III:-  A transfer of goods on hire-purchase or other installment system of payment shall, notwithstanding the fact that the seller retains the title in the goods as security for payment of the price, be deemed to be a sale on the date of delivery of the goods in pursuance of the agreement of such hire purchase or other system of payment in installments;

Explanation IV: - A transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract shall be deemed to be a sale;

Explanation V: - A transfer of right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration shall be deemed to be a sale;

Explanation VI:-  Any supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other articles for human consumption or any drink (whether or not intoxicating), where such supply or service is for cash, deferred payment or other valuable consideration shall be deemed to be a sale;

Explanation VII: - Unless otherwise expressly provided in this Act, any transfer, delivery or supply of any goods referred to in this clause shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and purchase of those goods by the person to whom such transfer, delivery or supply is made;

Explanation VIII:- (a) The sale or purchase of goods shall be deemed, for the purposes of this Act, to have taken place in the State where the contract of sale or purchase might have been made, if the goods are within the State,-

(i)    in the case of specific or ascertained goods at the time the contract of sale or purchase is  made; and

(ii)   in the case of unascertained or future goods, at the time of their appropriation to the  contract of sale or purchase by the seller or by the purchaser, whether the assent of the other party is prior or subsequent to such appropriation;

(b) Where there is a single contract of sale or purchase of goods situated at more places than one, the provisions of clause (a) shall apply as if there were separate contracts in respect of the goods at each of such places;

(c) For the purpose of this Act, the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract shall be deemed to have taken place in the State, if the goods are within the State at the time of such transfer irrespective of the place where the agreement of works contract is made, whether the assent of the other party to the contract is prior or subsequent to such transfer;

Explanation IX: - Notwithstanding anything to the contrary contained in this Act or any other law for the time being in force, two independent sales or purchases shall, for the purposes of this Act, be deemed to have taken place, -

(a)    when the goods are transferred from a principal to his selling agent and from the selling agent to the purchaser; or

(b) when the goods are transferred from the seller to a buying agent and from the buying agent to his principal, if the agent is found in either of the cases aforesaid,

(i)       to have sold the goods at one rate and to have passed on the sale proceeds to his principal, at another rate; or

(ii)     to have purchased the goods at one rate and to have passed them  on to his principal at  another rate; or

(iii)     not to have accounted to his principal for the entire collections or deductions made by him in the sales or purchases effected by him on behalf of his principal ; or

(iv)    to have acted for a fictitious or non-existent principal:

        Provided that the deduction or addition, as the case may be, of the commission agreed upon and specified in the accounts and incidental charges incurred by the agent which are specified in the accounts and which the assessing authority considers legitimate shall not be deemed to be a difference in the rates referred to in sub-clauses (i) and (ii).

(xliv) “Sale price” means the amount of valuable consideration received or receivable by a dealer for the sale of any goods less any sum allowed as cash discount, according to the practice normally prevailing in the trade, but inclusive of  any sum  charged for anything done by the dealer in respect of the goods or services at the time of or before delivery thereof, excise duty, special excise duty or any other duty or taxes except the tax imposed under this Act.

(xlv) “Settlement Commission” means the Settlement Commission appointed under Section 5;

(xlvi) “Smuggling” means transportation of notified goods exceeding such value as may be prescribed, into or out of the State, without the documents prescribed by sub-section (3) of section 46 or under cover of a document which is bogus or forged or where the consignor or consignee, as the case may be in the State, as shown in the document accompanying the goods, is non-existent or bogus.

(xlvii)  “State” means the State of Kerala;

(xlviii)  “Tax” means the tax payable under this Act;

(xlix)  “Tax invoice” includes a bill of sale containing such particulars as may be prescribed.

(l) “Taxable turnover” means the turnover on which a dealer shall be liable to pay tax as determined after making such deductions from his total turnover and in such manner as may be prescribed;

(li) “Total turnover” means the aggregate turnover in all goods of a dealer at all places of business in the State, whether or not the whole or any portion of such turnover is liable to tax, including the turnover of purchase or sale in the course of inter-state trade or commerce or in the course of export of the goods out of the territory of India or in the course of import of goods into the territory of India;

 (lii) “Turnover” means the aggregate amount for which goods are either bought or sold, supplied or distributed by a dealer, either directly or through another, on his own account or on account of others, whether for cash or for deferred payment or for other valuable consideration, provided that the proceeds of the sale by a person not being a Company or Firm registered under the Companies Act, 1956 (Central Act 1 of 1956) and Indian Partnership Act, 1932 (Central Act 9 of 1932) or society including a co-operative society or association of individuals whether incorporated or not of agricultural or horticultural produce grown by himself or grown on any land in which he has an interest whether as owner, usufructuary mortgagee, tenant or otherwise, shall be excluded from his turnover.

Explanation I: - The turnover in respect of delivery of goods on hire purchase or on any system of payment by instalments shall be the market price of such goods at the time of delivery.

Explanation II: - The turnover in respect of the transfer of the right to use any goods shall be the aggregate amount received or receivable by the dealer as consideration for such transfer.

Explanation III: - Subject to such conditions and restrictions, if any, as may be prescribed in this behalf

(i)    The amount for which goods are sold shall include any sums charged for anything done by the dealer in respect of the goods sold at the time of, or before, the delivery thereof;

(ii)   Any discount on the price allowed in respect of any sale where such discount is shown separately in the tax invoice and the buyer pays only the amount reduced by such discount; or any amount refunded in respect of goods returned by customers shall not be included in the turnover

(iii) Where for accommodating a particular customer, a dealer obtains goods from another dealer and immediately disposes of the same to the said customer, the sale in respect of such goods shall be included in the turnover of the latter dealer but not in that of the former;

Explanation IV: - “Agricultural or horticultural produce” shall not include such produce as has been subjected to any physical, chemical or other process for being made fit for consumption, save mere cleaning, grading, sorting, drying or de-husking;

Explanation V: Where a dealer receives in any return period any amount due to price variations in respect of any sale effected during any earlier return period, such amount shall be deemed to be the turnover relating to the return period in which such amount is received.

Explanation VI:  The turnover in respect of rubber shall be deemed to include any cess leviable under the Rubber Act, 1947 irrespective of whether the payment of cess is deferred till the rubber is consumed by the manufacturer of rubber goods or not:

Explanation VII:  Where a dealer sells any goods purchased by him at a 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.

(liii) “Vehicle” includes every wheeled conveyance used for the carriage of goods solely or in addition to passengers;

 (liv) “Vessel” includes any ship, barge, boat, raft, timber, bamboos or floating materials propelled in any manner;

(lv) “Works contract” includes any agreement for carrying out for cash or for deferred payment or other valuable consideration the construction, fitting out, improvement, repair, manufacture, processing, fabrication, erection, installation, modification or commissioning of any movable or immovable property;

(lvi)  “Year” means the financial year.

(lvii) “Zero rate sale” means the sale of any goods on which no tax is chargeable but in relation to which input tax credit or refund of input tax paid is admissible.” 

See RELAVANT RULES

CHAPTER  - II

AUTHORITIES, APPELLATE TRIBUNAL AND SETTLEMENT COMMISSION

3.Commercial Tax Authorities. -  (1) The Commissioner shall have and exercise all the powers and shall perform all the duties conferred or imposed upon him by or under this Act.

                Provided that the Commissioner may, by an order in writing, delegate any power vested in him to any officer appointed under sub-section (3).

(2) The Commissioner shall have superintendence over all officers and persons employed in the execution of this Act and the Commissioner may, -

(a)    call for returns from such officers and persons;

(b)    make and issue general rules and prescribe forms for regulating the practice and proceedings of such officers and persons;

(c)    issue such orders, instructions and directions to such officers and persons as it may deem fit, for the proper administration of this Act.

(3) The Government shall appoint as many Joint Commissioners, Deputy Commissioners, Deputy Commissioner (Appeals), Assistant Commissioners, Commercial Tax Officers and such other officers as they think fit for the purpose of performing the functions respectively assigned to them by or under this Act.   Such officers shall perform the said functions within such local limits as the Commissioner may assign to them.

(4) All officers and persons employed for the execution of this Act shall observe and follow the orders, instructions and directions of the officers superior to them:

         Provided that no such orders, instructions or directions shall be given so as to interfere with the discretion of the Deputy Commissioner (Appeals) in the exercise of their appellate functions.

(5) The Commissioner or the Deputy Commissioner may by order in writing. -

(a)     transfer any case or cases relating to any assessee or class of assessees pending before an assessing authority to another assessing authority having jurisdiction to deal with such case or cases; or

(b)    specify one of the assessing authorities having jurisdiction over an area, which shall deal with any case or cases relating to any assessee or class of assessees.

(6) Where any case is transferred to an assessing authority under clause (a) of sub-section (5), such assessing authority may deal with the case either de novo or from the stage at which it was transferred.

4. Appellate Tribunal. - (1) The Government shall appoint an Appellate Tribunal consisting of a Chairman and as many other members as they think fit to perform the functions assigned to the Appellate Tribunal by or under this Act.

(2) The Chairman shall be a person who is or has been a Judicial Officer not below the rank of a District Judge and the other members shall possess such qualifications as may be prescribed.

(3) Any vacancy in the office of a member of the Appellate Tribunal shall be filled by the Government.

(4) The functions of the Appellate Tribunal may be performed –

(i) by a Bench consisting of the Chairman and any other member; or

(ii) by a Bench consisting of the Chairman and two other members; or

(iii) by a Bench consisting of two or more members other than the Chairman

(5) In any case which comes up before a Bench of which the Chairman is not a member, involves a question of law, the bench may, in its discretion, reserve such case for decision by the Chairman or by a Bench to be constituted under sub-section (6), of which the Chairman shall be a member.

(6) The Bench or Benches of the Appellate Tribunal shall be constituted by the Chairman in accordance with the provisions of this Act and the rules made there under.

(7) If the members of a Bench differ in opinion on any point, the point shall be decided according to the opinion of the majority, if there is a majority but if the members are equally divided, they shall state the point or points on which they differ, and such point or points shall be heard –

(i)    When the Chairman is not a member of that Bench, either by the Chairman or by the Chairman and any other member or members as the Chairman may direct; and

(ii)   When the Chairman is a member of that Bench, by any other member or members to whom the case is referred by the Chairman;

and such point or points shall be decided according to the opinion of the majority of the members of the Tribunal who have heard the case, including those who first heard it.

(8) Any member who has previously dealt with any case coming up before the Appellate Tribunal in any other capacity or is personally interested in any case coming up before the Appellate Tribunal shall be disqualified to hear that case.

(9) Where any case is heard by a Bench consisting of two members and the members are divided in their opinion on any point and the other member or members of the Tribunal are disqualified under sub-section (8) to hear the case, the Government may appoint a person qualified to be appointed as a member of the Appellate Tribunal as an additional member of the Tribunal and the point shall be decided in accordance with the opinion of the majority of the members of the Tribunal who have heard the case, including those who first heard it.

(10) The additional member appointed under sub-section (9) shall cease to hold office on the disposal of the case for which he was appointed.

(11) The appellate Tribunal shall, with the previous sanction of the Government make regulations consistent with the provisions of this Act and the rules made there under for regulating its procedure and the disposal of its business.

(12) The regulations made under sub-section (11) shall be published in the Gazette.

SEE RELEVENT RULES

5. Settlement Commission. - (1) The Government may appoint a Settlement Commission consisting of a Chairman and as many other members as they think fit, to perform the functions assigned to the Settlement Commission by or under this Act. The Chairman shall be a person who is a judicial Officer not below the rank of a District judge and the other members shall possess such qualifications as may be prescribed;

(2) Any vacancy in the office of the members of the Settlement Commission shall be filled by the Government.

(3) The functions of the Settlement Commission may be performed –

(i)      by a bench consisting of the Chairman and any other member; or

(ii)     by a bench consisting of the Chairman and two other members; or

(iii)by a bench consisting of two or more members other than the Chairman.

(4) Any member who has previously dealt with any case coming up before the Commission in any other capacity or is personally interested in any such case shall be disqualified to hear such case.

(5) The Commission may, with the previous sanction of the Government, make regulations consistent with the provisions of this Act and the rules made there under for regulating its procedure and the disposal of its business.

(6)The regulations made under sub-section (5) shall be published in the Gazette.

SEE RELEVENT RULES

CHAPTER – III

INCIDENCE AND LEVY OF TAX

6. Levy of tax on sale or purchase of goods. - (1) Every dealer whose total turnover for a year is not less than ten lakh rupees and every importer or casual trader or agent of a non-resident dealer, or dealer in jewellery of gold, silver and platinum group metals or silver articles or contractor or any state Government, Central Government or Government of any Union Territory or any department thereof or any local authority or any autonomous body whatever be his total turnover for the year, shall be liable to pay tax on his sales or purchases of goods as provided in this Act. The liability to pay tax shall be on the taxable turnover, -

(a)    in the case of goods specified in the Second and Third Schedules, at the  rates specified therein and at all points of sale of such goods within the State;

(b)   Omitted.

(c)    in the  case of transfer of the right to use any goods for any purpose whether or not for a specified period, at the rate of four percent at all points of such transfer;

(d) in the case of goods not falling under clauses (a) or (c) at the rate of 12.5% at all points of sale of such goods within the State. Government may notify a list of goods taxable at the rate of 12.5%;

(e) in the case of transfer of goods involved in the execution of  works contract where transfer is in the form of goods, at the rates specified for such goods in clauses (a) or (d) above, as the case may be;

(f)  in the case of transfer of goods involved in the execution of works contract, where the transfer is not in the form of goods but in some other form,—

(i)      where the goods incorporated in the work are separately ascertainable, at the rates applicable to the goods; and

(ii) where the goods incorporated in the work are not separately   ascertainable, at the rate of 12.5 per cent at all points of sale;

Provided that where the sale is to the Administrator, Union Territory of Lakshadweep, Laccadive Co-operative Marketing Federation, Kozhikode or the Lakshadweep Harbour Works and registered dealers certified by the Administrator, Union Territory of Lakshadweep, the tax payable under clause (d) shall be at the rate of four per cent, subject to such conditions as may be prescribed:

Provided further that a bar attached hotel, as defined under explanation to clause (c) of section 8 or a dealer in petroleum products shall be liable to pay tax under this sub-section if his total turnover under this Act and the total turnover under the Kerala General Sales Tax Act, 1963 (15 of 1963) together is not less than the limit specified under this sub-section:

Provided also that where the total turnover of a dealer, other than an importer or casual trader or agent of a non-resident dealer or dealer in jewellery of gold, silver and platinum group metals and silver articles or contractor, exceeds ten lakh rupees for the first time during the course of an year, such dealer shall be liable to pay tax under this sub-section only on the turnover in excess of ten lakh rupees; but he shall be liable to pay tax irrespective of the total turnover in any subsequent year :

Provided also that in respect of works contracts executed under the Sampurna Gramin Rosghar Yojana or the beneficiary committees using the Member of Parliament/Member of Legislative Assembly Funds or Natural Calamity Relief Funds or Sarva Siksha Abhiyan Funds, where the total amount in respect of individual contract does not exceed ten lakhs rupees, the tax payable under clause (f) above shall be four per cent.


1. Provided also that where the sale is to be or by the Military , Naval, Air Force or NCC Canteen and Canteen Stores Department, the tax payable under clauses (a) or (d) above shall, subject to such conditions and restrictions, as may be prescribed, be at half the rate applicable to such goods.

(1A)     Notwithstanding anything contained in sub-section (1), —

(a) where a dealer whose total turnover for a year is below the limit specified in sub­-section (1) collects tax under section 30 on his sales, he shall, whatever be his total turnover for the year, be liable to pay tax under sub-section (1) on the taxable turnover for the year.

(b) where the sale of any goods is exempted at the point of sale by any dealer, such dealer may, at his option, pay tax in respect of the sale of such goods and thereupon he shall, whatever be his total turnover, be liable to pay tax on the taxable turnover for the year.

 (2)       Notwithstanding anything contained in sub-section (1), —

(a) every dealer who purchases taxable goods from any person other than a registered dealer shall pay tax on the purchase turnover of goods at the rates specified under sub-section (1).

(b) every dealer who purchases taxable goods from any registered dealer other than a dealer liable to tax under this Act and despatches the goods to any place outside the state otherwise than by way of sale in the course of interstate trade or export shall pay tax on the purchase turnover of the goods at the rates specified under sub-section (1), provided that the maximum rate leviable under this clause shall not exceed four per cent:

Provided that a dealer, other than an importer, casual trader, agent of non-resident dealer, dealer in jewellery of gold, silver and platinum group metals or silver articles or contractor or any State Government, Central Government or Government of any Union Territory or any department thereof or any local authority or autonomous body shall not be liable to tax under this sub-section if his total turnover is less than five lakh rupees.

(3)        Omitted.

(4)        Goods specified in the First Schedule shall be exempted from tax. 

(5)   Notwithstanding anything contained in sub-section (1), but  subject to sub­-section (2), any registered dealer not being, —                      

(a) an importer; or

(b) a dealer making any sale in the course of interstate trade                              
                  or commerce or export; or

(c) a dealer registered under the Central Sales Tax Act, 1956
                  (Central Act 74 of 1956); or

(d) a dealer effecting first taxable sale of goods within the State; or                                          

(e) a dealer covered by sub-section (1A); or

(f) a contractor,

whose total turnover for a year is below fifty lakh rupees, may, at his option, pay tax at the rate of half per cent of the turnover of sale of taxable goods as presumptive tax instead of paying tax under sub-section (1):

Provided that a dealer holding stock of goods purchased in the course of interstate trade on the date of coming into force of the Act, will have the option to pay tax under this sub-section from the beginning of the quarter following the quarter in which he has sold such ­goods in the state and paid tax under sub-section (1) of section 6 and his registration under the Central Sales Tax Act, 1956 (Central Act 74 of 1956) is cancelled:

Provided further that any dealer covered by sub-section (1A) may, at his option pay tax under this sub-section from such period as may be prescribed:

Provided also that a dealer shall not be eligible to opt for payment of tax under this sub-section if his total turnover in respect of goods to which this Act applies, whether under this Act or under the Kerala General Sales Tax Act, 1963 (15 of 1963) had exceeded fifty lakh rupees during the year preceding the year to which such option relates.

Explanation:  “First taxable sale” for the purpose of this sub-section shall mean the sale of taxable goods effected by a registered dealer immediately after the import of such goods into the State or its manufacture in the State as the case may be, but shall not include the sale of goods in respect of which tax under section 5 or under sub-section (4) of section 59 of the Kerala General Sales Tax Act 1963 (15 of 1963) had been paid and which are held as opening stock on the date of coming into force of the Act.

 (6)             Notwithstanding anything contained in sub-section (1), where goods sold are contained in containers or are packed in any packing materials, the rate of tax and the point of levy applicable to such containers or packing materials, as the case may be, shall, whether the price of the containers or the packing materials is charged separately or not be the same as those applicable to goods contained or packed, and in determining turnover of the goods, the turnover in respect of the containers or packing materials shall be included therein:

        Provided that where the sale or purchase of goods contained in any containers or packed in any packing materials is exempt from tax, then, the sale or purchase of such containers or packing materials shall also be exempt from tax.

Explanation: - For the purposes of sub-section (6), the word     “containers” includes gunny bags, tins, bottles or any other containers.

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