CHAPTER – III

  INCIDENCE, LEVY AND CALCULATION OF TAX

4.     Charge to Tax

(1)   Save as otherwise provided in the Act, every dealer registered or liable to be registered as a VAT dealer shall be liable to pay tax on every sale of goods in the State at the rates specified in the Schedules.

(2)   Every dealer who has not opted for registration as a VAT dealer and who is registered or liable to be registered for TOT or whose taxable turnover in a period of twelve (12) consecutive months exceeds

Rs.5,00,000/- (Rupees five lakhs only) but does not exceed Rs. 40,00,000/- (Rupees forty lakhs only) shall pay tax at the rate of one percent (1%) on the taxable turnover in such manner as may be prescribed.

(3)   Every VAT dealer shall pay tax on every sale of goods taxable under the Act on the sale price at the rates specified in the Schedules III, IV and V, subject to the provisions of Section 13.

(4)   Every VAT dealer, who in the course of his business purchases any taxable goods from a person or a dealer not registered as a VAT dealer or from a VAT dealer in circumstances in which no tax is payable by the 

selling VAT dealer, shall be liable to pay tax at the rate of four percent (4%) on the purchase price of such goods, if after such purchase, the goods are:

(i) used as inputs for goods which are exempt from tax under the Act; 

(ii) used as inputs for goods, which are disposed of  otherwise than by way of sale in the State or dispatched outside the State otherwise than by way of sale in the course of inter-State trade and commerce or export 

out of the territory of India; or

(iii) disposed of otherwise than by way of consumption or by way of sale either within the State or in the course of interstate trade or commerce or export out of the territory of India or ;

Provided that in respect of purchases of goods specified in Schedule III, the VAT dealer shall be liable to pay tax at the rate specified in that Schedule;

(iv) dispatch to a place outside the state otherwise than by way of sale in the course inter-state trade and commerce or export out of the territory of India. 

(5) Every dealer shall pay tax on the sale price of goods specified in Schedule VI at the special rates and at the point of levy specified therein;

Provided that every dealer shall, in addition to the tax payable under this sub-section, shall also pay additional tax of such amount on the quantity of the goods, specified in Schedule -VI, at the point of levy,as may be 

notified. 

(6) Every casual trader who sells goods within the State and any dealer covered under Explanation III and IV of clause (10) of Section 2 shall pay tax on the sale price of such goods at the rates specified in the 

respective Schedules. 

(7) Notwithstanding anything contained in the Act;-

(a) Every dealer executing works contracts shall pay tax on the value of goods at the time of incorporation of such goods in the works executed at the rates applicable to the goods under the Act:

Provided that where accounts are not maintained to determine the correct value of goods at the time of incorporation, such dealer shall pay tax at the rate of 12.5% on the total consideration received or receivable 

subject to such deductions as may be prescribed;

(b) Any dealer executing any works contracts for the Government or local authority may opt to pay tax by way of composition at the rate of 4% on the total value of the contract executed for the Government or local 

authority and in such cases, the tax at 4% shall be collected at source by such contractee and remitted to Government in such manner as may be prescribed; 

(c)  Any dealer executing works contracts other than for Government and local authority may opt to pay tax by way of composition at the rate of 4% *{…} of the total consideration received or receivable for any specific 

contract subject to such conditions as may be prescribed; 

( the words “of fifty percent (50%)” omitted by the Act No 23 of 2005 dated 26^th Oct 2005 w.e.f 29-08-2005 )

(d) Any dealer engaged in construction and selling of residential apartments, houses, buildings or commercial complexes may opt to pay tax by way of composition at the rate of 4% of twenty five percent (25%) of the 

consideration received or receivable or the market value fixed for the purpose of stamp duty whichever is higher subject to such conditions as may be prescribed;

(e)any dealer having opted for composition under clauses (b), (c) and (d), purchases or receives any goods from outside the State or India or from any dealer other than a Value Added Tax dealer in the State and uses 

such goods in the execution of the works contracts, such dealer shall pay tax on such goods at the rates applicable to them under the Act and the value of such goods shall be excluded for the purpose of computation 

of turnover on which tax by way of composition at the rate of four percent (4%) is payable”.;

(Inserted by the Act No 23 of 2005 dated 26^th Oct 2005 w.e.f 29-08-2005 )

f) Any dealer who is liable to be registered for TOT and executing any works contracts shall pay tax at the rate of 1% on total value of the goods at the time of incorporation of the goods used:

(e) is renumbered as (f) by the Act No 23 of 2005 dated 26^th Oct 2005 w.e.f 29-08-2005 )

Provided that where accounts are not maintained to determine the correct value of the goods at the time of incorporation, such dealers shall pay tax at the rate of 1% on the total consideration received or receivable 

subject to such deductions as may be prescribed.

“Provided further that no tax shall be payable under this sub-section on the turnover relating to the consideration received as a sub-contractor if the main contractor opted to pay tax by way of composition subject to 

the condition that the sub-contractor shall pay tax in respect of any goods purchased or received from outside the State of India or from any person other than a Value Added Tax dealer in the State on the value of 

such goods at the rates applicable to them under the Act”.

(Proviso is inserted by the Act No 23 of 2005 dated 26^th Oct 2005 w.e.f    29-08-2005 )

(8) Every VAT dealer who transfers the right to use goods taxable under the Act for any purpose whatsoever, whether or not for a specified period, to any lessee or licensee for cash, deferred payment or other valuable 

consideration, in the course of his business shall, on the total amount realized or realizable by him by way of payment in cash or otherwise on such transfer of right to use such goods from the lessee or licensee pay a 

tax for such goods at the rates specified in the Schedules.

((9) Every VAT dealer running any restaurant, eating house, or hotel by whatever name called, who supplies, 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 drink other than liquor and whether or not such goods have suffered tax under the Act, where such supply or service is for cash, deffered payment or other valuable consideration, may 

opt to pay tax by way of composition at the rate of twelve and half percent (12.5%) on sixty percent (60%) of the total amount charged by the said VAT dealer for such supply.)

(9) notwithstanding anything contained in the Act, every dealer running any restaurant, eating house, catering establishment, hotel, coffee shop, sweet shop or any establishment by whatever name called and any club, 

who supplies by way of or as part of any services or in any other manner whatsoever of goods being food or any other article for human consumption or drink shall pay tax at the rate of twelve and half percent (12.5%) 

on sixty percent (60%) of the taxable turnover, if the taxable turnover in a period of preceding twelve months exceeds Rs.5,00,000/- (Rupees five lakhs) or in the preceding three months exceeds Rs.1,25,000/- (Rupees 

one lakh twenty five thousand).