Page 207 - DCOM308_DCOM502_INDIRECT_TAX_LAWS

Indirect Tax Laws

Notes reason of transfer of such goods by him to any other place of his business or to his agent or
principal, as the case may be, and not by reason of sale, the burden of proving that the movement
of those goods was so occasioned shall be on that dealer and for this purpose he may furnish to
the assessing authority, within the prescribed time or within such further time as that authority
may, for sufficient cause, permit, a declaration, duly filled and signed by the principal officer of
the other place of business, or his agent or principal, as the case may be, containing the prescribed
particulars in the prescribed form obtained from the prescribed authority, along with the
evidence of despatch of such goods and if the dealer fails to furnish such declaration, then, the
movement of such goods shall be deemed for all purposes of this Act to have been occasioned as
a result of sale.
Illustration: A from Bangalore sends goods in his own name to Delhi. At Delhi goods are sold
to different parties by the employees of A. In this case, the movement of goods is not result of
sale or agreement to sell. It is sale which takes place in Delhi and not subject to central sales tax.

12.6 Intra-state Sales Tax

State VAT Acts have been legislated by State Legislatures under Entry 54 of List-II of the Seventh
Schedule to the Constitution, which runs as under:

"Tax on sale or purchase of goods other than newspapers except tax on interstate sale or purchase."
Hence, every law legislated under Entry 54 of State List must levy tax only on the sale or
purchase of goods other than newspapers within the State Jurisdiction. If a state law legislated
under entry 54 levies tax on the inter-state sale or purchase of goods, it has to be struck down as
ultra vires of the Constitution.
Sales tax on intra-State sale (sale within State) (now termed as Vat) is levied by State Government
under Entry 54 of List II (State List) of Seventh Schedule to constitution of India. State Government
can impose sales tax only on sale within the State.
Value Added Tax (VAT) is nothing but a general consumption tax that is assessed on the value
added to goods & services. It is the indirect tax on the consumption of the goods, paid by its
original producers upon the change in goods or upon the transfer of the goods to its ultimate
consumers. It is based on the value of the goods, added by the transferor. It is the tax in relation
to the difference of the value added by the transferor and not just a profit.

Did u know?All over the world, VAT is payable on the goods and services as they form a
part of national GDP. More than 130 countries worldwide have introduced VAT over the
past 3 decades; India being amongst the last few to introduce it.
It means every seller of goods and service providers charges the tax after availing the input tax
credit. It is the form of collecting sales tax under which tax is collected in each stage on the value
added of the goods. In practice, the dealer charges the tax on the full price of the goods, sold to
the consumer and at every end of the tax period reduces the tax collected on sale and tax charged
to him by the dealers from whom he purchased the goods and deposits such amount of tax in
government treasury.
VAT is a multi-stage tax, levied only on value that is added at each stage in the cycle of production
of goods and services with the provision of a set-off for the tax paid at earlier stages in the cycle/
chain. The aim is to avoid 'cascading', which can have a snowballing effect on the prices. It is
assumed that because of cross-checking in a multi-staged tax; tax evasion would be checked,
hence resulting in higher revenues to the government.

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