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case study Value Added Tax

case study Value Added Tax

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Value Added Tax

Value added tax is a tax on exchanges. It is levied on the added value that results from

exchange |transfer It was invented by French economist “Maurice Laure” in 1954,who

was joint director of French tax authority. Thus vat is a Sales tax on sale of goods &

services. In some countries this is know as Goods & service tax i.e. GST. Thus it is an

indirect tax i.e. that the tax is collected from someone other than the person who actually

bares the cost of tax. At present there are around 135 countries in the world who have

adopted value added tax system as major source of revenue. In India, there are 28 states

that have opted for the system of vat. In Maharashtra this act was enacted in the year

2002 know as Maharashtra Value Added Tax Act 2002. However this act became

applicable w.e.f. 1

April 2005. This act has replaced the Bombay Sales Tax Act 1959

which was administered in Maharashtra earlier.

INCIDENCE AND LEVY OF TAX ( Section 3 )

Incidence of Tax:

1) Every dealer who, immediately before the appointed day, holds a valid or effective

certificate of registration or licence under any of the earlier laws or, who is liable to pay

tax under any of the earlier laws, in the year ending immediately before the appointed day

shall, if his turnover of sales or purchases has, in the said year under any of such earlier

laws, exceeded rupees [five lakh], or, as the case may be, who was an importer in the said

year [and his turnover of sales or purchases in the said year had] exceeded rupees one

lakh, be liable to pay tax with effect from the appointed day, in accordance with the

provisions of the Act, till his certificate or licence is duly cancelled under this Act.

2) A dealer to whom Sub-Section (1) does not apply and whose turnover, [of all sales]

made, during the year commencing on the appointed day or any year subsequent thereto,

first exceeds the relevant limit specified in Sub-Section (4), shall, until such liability

ceases under Sub-Section (3),be liable to pay tax under this Act with effect from first day

of April of the said respective year:

Provided that, a dealer shall not be liable to pay tax in respect of [such sales] as take

place during the period commencing on the first day of April of the said respective year

upto the time when his turnover of sales, as computed from the first day of April of the

said respective year, does not exceed the relevant limit applicable to him under Section(4)

3) Every dealer who has become liable to pay tax under this Act, shall continue to be so

liable until his registration is duly cancelled; and upon such cancellation his liability to

pay tax, other than tax already levied or leviable, shall remain ceased until his turnover of

sales against first exceeds the relevant limit specified in Sub-Section (4) or, as the case

may be, until he becomes liable to pay tax under [ Sub-Section ] (8) or (9).

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4) For the purposes of this section, the limits of [turnover of sales] shall be as follows :

a) Limit of [ turnover of sales ] in case of a dealer, who is an

Rs.100000.00 importer, and the value of

taxable goods sold or

purchased by him during the

year is not less than

Rs.10000.00

b) b) Limit of [ turnover of sales ] in any other case, where the

Rs.500000.00 value of taxable goods sold

or purchased by him during

the year is not less

than

Rs.10000.00

16. Registration

(1) No dealer shall, while being liable to pay tax under this Act, be engaged in the

business as a dealer, unless he possesses a valid certificate of registration as provided by

this Act:

Provided that, the provisions of this sub-section shall be deemed not to have been

contravened, if the dealer having applied, within the prescribed time, for such registration

as provided in this section, is engaged in such business:

Provided further that, if any dealer, holds the certificate of registration granted under the

Bombay Sales Tax Act, 1959, (Bom. LI of 1959) which is effective or valid immediately

before the appointed day, it shall not be necessary for him to apply for a fresh certificate

under this section so long as the said certificate is not duly cancelled under this Act:

Provided also that, a dealer holding an effective certificate of registration or, as the case

may be, a licence granted before the appointed day, under any laws other than the

Bombay Sales Tax Act, 1959 (Bom. LI of 1959), shall, notwithstanding the fact that he is

holding such effective certificate be required to apply for grant of certificate of

registration under this section.

(2) Every dealer, required by sub-section (1) to possess a certificate of registration or one

who voluntarily desires to get registered shall apply in the prescribed manner to the

prescribed authority for grant of such registration.

(3) If the prescribed authority, after scrutiny of the application and after such enquiry as it

deems fit, is satisfied that the application for registration is in order and the prescribed

conditions are fulfilled, shall register the applicant and issue to him a certificate of

registration in the prescribed form No.102 :

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Value Added Tax Value added tax is a tax on exchanges. It is levied on the added value that results from exchange |transfer It was invented by French economist "Maurice Laure" in 1954,who was joint director of French tax authority. Thus vat is a Sales tax on sale of goods & services. In some countries this is know as Goods & service tax i.e. GST. Thus it is an indirect tax i.e. that the tax is collected from someone other than the person who actually bares the cost of tax. At present there are around 135 countries in the world who have adopted value added tax system as major source of revenue. In India, there are 28 states that have opted for the system of vat. In Maharashtra this act was enacted in the year 2002 know as Maharashtra Value Added Tax Act 2002. However this act became applicable w.e.f. 1St April 2005. This act has replaced the Bombay Sales Tax Act 1959 which was administered in Maharashtra earlier. INCIDENCE AND LEVY OF TAX ( Section 3 ) Incidence of Tax: 1) Every dealer who, immediately before the appointed day, holds a valid or effective certificate of registration or licence under any of the earlier laws or, who is liable to pay tax under any of the earlier laws, in the year ending immediately before the appointed day shall, if his turnover of sales or purchases has, in the said year under any of such earlier laws, exceeded rupees [five lakh], or, as the case may be, who was an importer in the said year [and his turnover of sales or purchases ...
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