DELHI VALUE ADDED TAX ACT, 2004

Act, No. 3 of 2005

An Act to consolidate and amend the law relating to levy of tax on sale of goods, tax on transfer of property involved in execution of work contracts, tax on transfer of right to use goods and tax on entry of motor vehicles in the National Capital Territory of Delhi BE it enacted by the Legislative Assembly of the National Capital Territory of Delhi in the 1 [Fifty-sixth] Year of the Republic of India as follows:- 1. Substituted by THE DELHI VALUE ADDED TAX (AMENDMENT) Act, 2005 for the words "Fifty -fifth".

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S.1 Short title, extent and commencement

(1) This Act may be called the Delhi Value Added Tax Act, 2004.

(2) It extends to the whole of the National Capital Territory of Delhi.

(3) It shall come into force on such date 1 as the Government may, by notification in the official Gazette, appoint:

Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.

1. 1st April 2005

S.2 Definitions

(1) In this Act, unless the context otherwise requires, -

• (a) "Accountant" means -
  • (i) a chartered accountant within the meaning of the Chartered Accountant's Act, 1949 (Act 38 of 1949);
  • (ii) a person who by virtue of the provisions of sub-section (2) of section 226 of the Companies Act, 1956 (1 of 1956), is entitled to be appointed to act as an auditor of companies registered; or
  • (iii) 1 [a cost accountant within the meaning of the Cost and Works Accountants Act, 1959 ( 23 of 1959);or]
  • 2 [(iv)] a person referred to in section 619 of the Companies Act, 1956 (1 of 1956);
• (b) "Adequate proof" means such documents, testimony or other evidence as may be prescribed;
• (c) "Appellate Tribunal" means the Appellate Tribunal constituted under section 73 of this Act;
• (d) "Business" includes -
  • (i) 3 [the provision of any services, but excludin
    

S.3 Imposition of tax

(1) Subject to other provisions of this Act, every dealer who is -

• (a) registered under this Act; or
• (b) required to be registered under this Act;

shall be liable to pay tax calculated in accordance with this Act, at the time and in the manner provided in this Act.

1 [(2) Every dealer shall be liable to pay tax at the rates specified in section 4 of this Act on every sale of goods effected by him-

• (a) while he is a registered dealer under this Act; or
• (b) on and from the day on which he was required to be registered under this Act.";]

2 [(3) The amount of tax payable under this Act by a dealer, is the dealer's net tax for the tax period calculated under section 11 of this Act.]

7 [(4) The net tax of a dealer shall be paid within twenty one days of the conclusion of each calendar month.
Explanation.-The obligation to pay the tax arises by v



S.4 Rates of tax

(1) The rates of tax payable on the taxable turnover of a dealer shall be

• (a) in respect of goods specified in the Second Schedule, at the rate of one paisa in the rupee
• (b) 5 [in respect of goods specified in the Third Schedule, at the rate of five paise in the rupee: 7 [***]]
• (c) in respect of goods specified in the Fourth Schedule, at the rate of twenty paise in the rupee; 1 [***]
• 2 [(d) in respect of the goods involved in the execution of the works contract, at the rate of twelve and a half paise in the rupee; and:]

4 [Provided that tax shall be paid at the rate of 8 [five] paise in the rupee of the turnover of the dealer pertaining to declared goods, as defined from time to time in the Central Sales Tax Act, 1956 (74 of 1956), involved in the execution of works contract if such goods are transferred from the contractor to the contracted in the same form in wh


S.5 Taxable turnover

(1) For the purposes of this Act, taxable turnover means that part of dealer's turnover arising during the tax period which remains after deducting therefrom -

• (a) the turnover of sales not subject to tax under section 7 of this Act; and
• (b) the turnover of sales of goods declared exempt under section 6 of this Act.

1 ["(2) In the case of turnover arising from the execution of a works contract, the amount included in taxable turnover is the total consideration paid or payable to the dealer under the contract excluding the charges towards labour, services and other like charges, subject to such conditions as may be prescribed:
Provided that where the amount of charges towards labour, services and other like charges is not ascertainable from the books of accounts of the dealer, the amount of such charges shall be calculated at the prescribed percentages."]


1. Substituted by THE DELHI VALUE ADDED TAX (AM


S.6 Sale exempt from tax

(1) The sale of goods listed in the First Schedule shall be exempt from tax subject to the conditions and exceptions set out therein.

(2) The dealers or class of dealers specified in the Fifth Schedule shall be exempt from payment of tax on all sales of goods effected by them subject to such conditions as may be prescribed.

(3) Where a dealer sells capital goods which he has used since the time of purchase exclusively for purposes other than making non-taxed sale of goods, and has not claimed a tax credit in respect of such capital goods under section 9 of this Act, the sale of such capital goods shall be exempt from tax.




S.7 Certain sales not liable to tax

Nothing contained in this Act or the rules made thereunder shall be deemed to impose or authorise the imposition of tax on any sale of goods when such sale takes place -

• (a) in the course of inter-state trade or commerce; or
• (b) outside Delhi; or
• (c) in the course of import of the goods into or export of the goods out of, the territory of India.
• 1 [d) in accordance with the notification issued by the Central Government in exercise of its powers under section 3 of the Foreign Aircraft (Exemption from Taxes and Duties on Fuel) Act, 2002(36 of 2002), no tax shall be levied on sales of the fuel and lubricants which are filled into receptacles forming part of any aircraft registered in a country other than India, if-
  • (i) the said country is a party to the Convention on International and Civil Aviation, 1944; and
  • (ii) the said country has entered into an Air Services agreement with India; and
  • (iii)
    

S.8 Adjustments to tax

1 [(1) "Subject to such conditions as may be prescribed, this section shall apply where, in relation to the sale of goods by any dealer - "]

• (a) that sale has been cancelled;
• (b) the nature of that sale has been fundamentally varied or altered;
• (c) the previously agreed consideration for that sale has been altered by agreement with the recipient, whether due to the offer of a discount or for any other reason;
• (d) 2 [ the goods or part of the goods sold have been returned to the dealer within six months of the ate of sale;] or
• (e) the whole or part of the price owed by the buyer for the purchase of the goods has been written-off by the dealer as a bad debt; and the dealer has -
  • (i) provided a tax invoice in relation to that sale and the amount shown therein as tax charged on that sale is not the tax properly chargeable on that sale; or
  • (ii) furnished a return in relation to a tax per
    

S.9 Tax credit

1 [(1) Subject to sub-section (2) of this section and such conditions, restrictions and limitations as may be prescribed, a dealer who is registered or is required to be registered under this Act shall be entitled to a tax credit in respect of the turnover of purchases occurring during the tax period 12 [where the purchase arises] in the course of his activities as a dealer and the goods are to be used by him directly or indirectly for the purpose of making -

• (a) sales which are liable to tax under section 3 of this Act: or
• (b) sates which are not liable to tax under section 7 of this Act.

Explanation. - Sales which are not liable to tax under section 7 of this Act involve exports from Delhi whether to other States or Union territories or to foreign countries." ;]

(2) No tax credit shall be allowed -

• (a) in the case of the purchase of goods for goods purchased from a person who is not a registered dealer;
  

S.10 Adjustment to tax credit

(1) Where any purchaser has been issued with a credit note or debit note in terms of section 51 of this Act or if he returns or rejects goods purchased, as a consequence of which the tax credit claimed by him in any tax period in respect of which the purchase of goods relates, becomes short or excess, he shall compensate such short or excess by adjusting the amount of the tax credit allowed to him in respect of the tax period in which the credit note or debit note has been issued or goods are returned.

(2) If goods which have been purchased were

• (a) intended to be used for the purposes specified under sub-section (1) of section 9 of this Act and are subsequently used, fully or partly, for purposes other than those specified under the said sub-section;
• (b) intended for purposes other than those specified under sub-section (1) of said section 9 of this Act, and are subsequently used, fully or partly, for the purposes specified in the said sub-sectio
  

S.11 Net tax

(1) The net tax payable by a dealer for a tax period shall be determined by the formula: Net Tax = O – I – C where
O = the amount of tax payable by the person at the rates stipulated in section 4 of this Act in respect of the taxable turnover arising in the tax period, adjusted to take into account any adjustments to the tax payable required by section 8 of this Act.
I = the amount of the tax credit arising in the tax period to which the person is entitled under section 9 of this Act, adjusted to take into account any adjustments to the tax credit required by section 10 of this Act.
C = the amount, if any, brought forward from the previous tax period under sub-section (2) of this section.




1 [(2) "Where the net tax of a dealer calculated under sub-section (I) of this section amounts to a negative value, the dealer shall

• (a) adjust the said amount in the same tax period against the tax payable by him under th
  

S.11A Tax on goods supplied by contractee

1 [11A. Tax on goods supplied by contractee
No tax shall be payable under this Act by acontractor on the amount representing the value of the goods supplied by thecontractee to the contractor in the execution of works contract in which theownership of such goods remains with the contractee under the terms of thecontract and the amount representing the value of the goods supplied by thecontractee to the contractor does not form part of the contract and is notdeductible from the amount payable to the contractor by the contractee for theexecution of the works contract].


1. Inserted videTHE DELHI VALUE ADDED TAX (SECOND AMENDMENT) ACT, 2005




S.12 Time at which turnover, turnover of purchases and adjustments arise

(1) Subject to sub-sections (2), (3) and (4) of this section, the amount of the turnover and the turnover of purchases of a dealer which arises during any tax period shall be the amount recorded in the accounts of the dealer where those accounts are regularly and systematically prepared and maintained, give a true and fair view of his dealings, and are employed by the dealer in determining the turnover of the dealer’s business for commercial or income tax purposes.

(2) The Commissioner may by notification –

• (a) permit certain classes of dealer to record turnover based on amounts paid or received; and
• (b) require certain classes of dealer to record turnover based on amounts payable or receivable.

(3) Where a dealer wishes to change the method of determining the turnover and turnover of purchases, he may only make the change with the consent of the Commissioner and on such terms and conditions as the Commissioner may impose.

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S.13 Priority

Where a provision in this Chapter is inconsistent with a provision in Chapter II, the provision in this Chapter shall, to the extent of the inconsistency, prevail.




S.14 Treatment of stock brought forward during transition

(1) Within a period of four months of the commencement of this Act, all registered dealers wishing to claim the credit referred to in sub-section (2) of this section, shall furnish to the Commissioner a statement of their trading stock, raw materials and packaging materials for trading stock (in this section referred to as "opening stock") which -

• (a) is held in Delhi on the date of the commencement of this Act;
• (b) was purchased by the dealer after the first day of April 2004; in such form as may be prescribed.

(2) If

• (a) the dealer has furnished the statement referred to in sub-section (1) of this section;
• (b) the opening stock has borne tax under the Delhi Sales Tax Act, 1975 (43 of 1975) at the point specified by the Government under section 5 of the said Act; and
• (c) the opening stock has been purchased by the dealer from a registered dealer for such
• (d) purposes as are specified in su
  

S.15 Second-hand goods

(1) This section applies where -

• (a) a registered dealer sells second-hand goods;
• (b) the registered dealer has purchased goods from a resident seller who was not registered under this Act;
• (c) 1 [the goods were purchased either as trading stock for re-sale in an unmodified form or otherwise or as raw material for incorporation or division into trading stock;]
• (d) the registered dealer will be liable to tax under section 3 of this Act on the sale of the goods or the goods into which they were incorporated, as the case may be; and
• (e) the registered dealer has adequate proof of the amount paid for the goods.

(2) In the circumstances mentioned in sub-section (1) of this section, the registered dealer shall be entitled to a tax credit for the purposes of section 9 of this Act of the least of -

• (a) the input tax borne by the resident seller when he purchased the goods;
• (b) t
  

S.16 Composition scheme for specified dealers

(1) Notwithstanding anything contained 1 [to the contrary] in this Act, every dealer whose -

• (a) turnover in the year preceding the commencement of this Act; or
• (b) turnover in the current year,
7 ***does not exceed 2 [fifty lakh] rupees or such other amount as may be specified by the Government by notification in the official Gazette, shall have an option to pay tax under this section:
Provided that this 10 [sub-section] shall not apply to dealers procuring goods from any place outside Delhi or selling or supplying goods to any place outside Delhi at any time during the year in which he opts to pay tax under this 10 [sub-section] or if he is registered 1 [in Delhi] under the Central Sales Tax Act, 1956 (74 of 1956).
11 [PROVIDED FURtheR that in case the Government has notified a composition scheme for a class of dealers under sub-section




S.16A Special provisions relating to casual traders

1 [16A. Special provisions relating to casual traders
(1) Notwithstanding anything contained to the contrary in this Act, a casual trader shall -

• (a) at least three days before commencing business in Delhi, inform the Commissioner of such particulars of his business in such form and manner as may be prescribed;
• (b) deposit security in cash or in the form of bank draft as may be fixed by the Commissioner which shall not exceed estimated liability to pay tax for seven days or such lesser period for which the casual trader is conducting the business in Delhi;
• (c) pay tax daily on the sales made during the previous day;
• (d) furnish to the Commissioners immediately after conclusion of his business in Delhi, a return in the prescribed form and manner; and
• (e) not issue any tax invoice.



(2) The Commissioner shall, after verification of information furnished to him under clause (a) of sub-sect


S.17 Transactions between related parties

If –

• (a) a registered dealer sells or gives goods to a related person;
• (b) the terms or conditions of the transaction have been influenced by the relationship; and
• (c) the related person had purchased the goods, the related person would not be entitled to a tax credit for the purchase, or the amount of the tax credit would be reduced under sub-section (3) of section 9 of this Act;
the transaction shall be deemed to be a sale made by the registered dealer and the sale price of the goods shall be deemed to be their fair market value.



S.18 Mandatory and voluntary registration

(1) Every dealer is required to apply for registration under this Act if

• (a) the dealer’s turnover in the year preceding the commencement of this Act exceeded the taxable quantum; or
• (b) the dealer’s turnover in the current year exceeds the taxable quantum; or
• (c) the dealer is liable to pay tax, or is registered or required to be registered under Central Sales Tax Act, 1956 (74 of 1956):Provided that a dealer dealing exclusively in goods mentioned in the First Schedule shall not be required to register.

Explanation.- For the purposes of this section, in case of dealers involved in execution of works contracts, the taxable quantum shall be calculated with reference to the total contract amount received.

(2) For the purposes of this Act, “taxable quantum” of a dealer shall be 1 [ 2 [twenty] lakh rupees], or such other amount as may be specified by the Government by notification in the official Gazet


S.19 Registration

(1) An application for registration shall be made in the prescribed form, within such time,, containing such particulars and information and accompanied by such fee, security and other documents as may be prescribed.
Explanation.-The Commissioner may, by order to be published in the official Gazette, specify certain classes of persons who may not be required to furnish a security.


(2) Where –

• (a) an applicant furnishes a security in the prescribed form and for the prescribed amount, and
• (b) all other forms and evidence required by and prescribed under this Act are complete and in order, the Commissioner shall register the applicant.

(3) Where the Commissioner has not registered the person within fifteen days from the date on which the application is made, the Commissioner shall, after conducting such inquiries as he deems fit, either –

• (a) register the person forthwith as a registered dealer; or

S.20 Effect of registration

(1) If at the time at which an unregistered dealer'sregistration takes effect after the commencement of this Act and -

• (a)thedealer holds trading stock for the purpose of sale, or for use as raw materialsfor the production of 1 [finishedgoods];
• (c)thedealer furnishes a statement of its trading stock and raw materials in theprescribed form to the Commissioner; and
the dealer shall be entitled to a tax credit for thetrading stock or raw materials held by the dealer on the date that the dealer'sregistration takes effect; Provided that the dealer must claim the entireamount of tax credit to which he is entitled in a single claim, whichaccompanies the first return furnished by the dealer under this Act.
ExplanationI.-This section applieswhere goods have borne tax imposed after the commencement of this Act.
ExplanationII.-Section 14 of thisAct deals with goods which have borne sales tax prior to the




S.21 Amendment of registration

(1) A registered dealer shall inform the Commissioner in the prescribed manner within one month, if he -

• (a) sells or otherwise disposes of his business or any part of his business or any place of business, or effects or comes to know of any other change in the ownership of the business; or
• (b) discontinues his business or changes his place of business or warehouse, or opens a new place of business, or closes the business for a period of more than one month; or
• (c) changes the name, style, constitution or nature of his business; or
• (d) enters into partnership or other associationL in regard to his business or adds, deletes or changes the particulars of the persons having interest in business;
and if any such registered dealer dies, his legal representative shall, in like manner, inform the said authority.

(2) The Commissioner may, after considering any information furnished under this Act or otherwise receive


S.22 Cancellation of registration

(1) Where –

• (a) a registered dealer who is required to furnish security under the provisions of this Act has failed to furnish or maintain such security;
• (b) a registered dealer has ceased to carry on any activity which would entitle him to be registered as a dealer under this Act;
• (c) an incorporated body is closed down or otherwise ceases to exist
• (d) the owner of a proprietorship business dies leaving no successor to carry on the business;
• (e) in the case of a firm or association of persons, it is dissolved;
• (f) registered dealer has ceased to be liable to pay tax under this Act;
• (g) a registered dealer knowingly furnishes a return which is misleading or deceptive in a material particular;
• (h) a registered dealer has committed one or more offences or contravened the provisions of this Act and the offence or contravention is, in the opinion of the Commissioner, of such magnitude that it is necessary
  

S.23 Effect of de-registration

(1) Every person whose registration is cancelled shall pay in respect of all goods held on the date of cancellation an amount equal to the higher of –

• (a) the tax that would be payable in respect of those goods if the goods were sold at their fair market value on that date; or
• (b) the tax credit previously claimed in respect of those goods.

(2) Where the dealer has accounted for turnover on the basis of amounts received and amounts paid, he shall include in the turnover of his final return -

• (a) any amount not yet received in respect of sales made while he was registered; and
• (b) any amount not yet paid in respect of purchases made while he was registered.



S.24 Registration during transition

1 [( 1 ) Every dealer who is registered under the Delhi Sales Tax Act, 1975 ( 43 of 1975 ) or the Delhi Sales Tax on Works Contract Act, 1999 (Delhi Act 9 of 1999 ) or the Delhi Sales Tax on Right to Us e Goods Act, 2002 (Delhi Act 13 of 2002 ), at the time of commencement of this Act sh all be deemed to be registered under this Act with effect from the first day of April, 2005 .]

(2) The security furnished by a dealer registered under the Delhi Sales Tax Act, 1975 (43 of 1975) or the Delhi Sales Tax on Works Contract Act, 1999 (Delhi Act 9 of 1999) 2 [ or the Delhi Sales Tax on Right to Us e Goods Act, 2002 (Delhi Act 13 of 2002 )] under the said Acts and valid on the date of the commencement of this Act, shall be deemed to have been furnished under this Act and shall be deemed to be valid under this Act for a period of six months from the commencement of this Act or till the time a fresh security as required under sub-section (3) of this section is fu