VAT on Sale to Goverment Department

[Ganeshan Kalyani]

Dear Sir,

I would like to discuss on applicability of VAT or CST on sale of goods to Government Department. Say for eg. If Cold drinks are supplied to Indian Armed Forces, whether locally or Interstate sale then whether it is liable to tax under VAT and CST Act.

regards,

ganeshan

[Ganeshan Kalyani]

Sir, I referred to Karnataka VAT Act, 2003, section 9, Collection of tax by registered dealers, Governments and statutory authorities. wherein it is given that government department who deal in taxable goods are also liable to registered under VAT and CST Act, as applicable. Therefore, I understand that even if a dealer does a sale to government department, VAT or CST shall be levied on such sales invoice and remit the tax to the government treasury.

kindly validate my understanding.

regards,

ganeshan

[YAGAY andSUN]

Dear Ganeshan,

Normal rate of tax would be applicable unless until there is s notification under KVAT Act which specifically provide exemption for such sale/supplies.

Regards,

YAGAY and SUN

(Management and Indirect Tax Consultants)

[Ganeshan Kalyani]

Sir, I referred to one citation of Swarup Industries and Anr. Vs. State of Uttar Pradesh and Ors. Writ Petition No. 858 of 1995 Decided On: 07.08.2000, which says that if Government department issues Form III-D then the selling dealer shall charge VAT / CST at lower rate. But the same is as per section 3g of UP Trade Tax Act. I would like to explore for the State of Karnataka. Kindly through some light.

regards,

ganeshan

[YAGAY andSUN]

Dear Ganeshan,

Such Form III-D was valid under UP Trade Tax Act but are not valid under UPVAT Act, 2008. Further, Form D under CST Act, 1956 is also not valid and D form cannot be issued in case of sale made to Government on or after 1-4-2007.

Please refer following Notification and also check the onwards notification to the check whether the Cold drinks are included in this notification or in onwards notification (due to shortage of time we are not able to do research, please do it yourself) . Hiregange Sir may help you out in this matter. Please contact him by clicking on his name in the Experts - Discussions on this website.

GOVERNMENT OF KARNATAKA

 

No.FD 82 CSL 10 Karnataka Government Secretariat, Vidhana Soudha,

Bangalore, dated: 31.3.2010

NOTIFICATION- V

In exercise of the powers conferred by sub-section (3) of Section 4 of the KarnatakaValue Added Tax Act, 2003 (Karnataka Act 32 of 2004), read with Section 21 of the Karnataka General Clauses Act, 1899 (Karnataka Act III of 1899), and in supersession of the notification No. FD 116 CSL 2006 (14), dated 31stMarch, 2006, published in Karnataka Gazette, Extraordinary, dated 31stMarch, 2006 and Notification-VI No.FD 63 CSL 2009, dated 30thMarch, 2009, published in Karnataka Gazette, Extraordinatry, dated30thMarch, 2009, the Government of Karnataka hereby reduces with effect from the First

day of April, 2010, the tax payable under the said Act to five per cent on the sale by,-

(a) the Canteen Stores Department to the Regimental or unit run canteens;

(b) the Canteen Stores Department to the members of the Armed Forces;

(c) the Regimental or Unit run canteens to the members of the Armed Forces: and

(d) the Regimental or Unit run canteens to military pensioners and to the families of

the deceased military pensioners,

of the following goods, namely,-

(1) Articles of plastic.

(2) Coffee powder including french coffee and instant coffee.

(3) Electrical fans, iron boxes and immersion water heaters.

(4) Instant mix, sambar and rasam powder.

(5) Locks.

(6) Mosquito repellants including coils and electrical devices.

(7) Plastic moulded furniture.

(8) Suitcases costing not more than ₹ 2.000 per piece; suitcase covers, school bags.

(9) Television sets, and Audio and Video Cassette and Disc players.

(10) Tiffin boxes, thermos flasks, thermo ware and casseroles.

(11) Toilet articles of all kinds including tooth brush, sanitary napkins, toilet brushes and

toilet paper.

(12) Washing machine, refrigerators, microwave ovens and weighing scales.

(13) Washing soap, powder and flakes, detergents, laundary whiteners, stain busters and

stain removers.

(14) Wrist watches costing not more than ₹ 1,000 per piece.

By Order and in the name of the

Governor of Karnataka,

Sd/-

(D.R. SHASHIDAR)

Under Secretary to Government,

Finance Department (C.T.-I).

[Ganeshan Kalyani]

Dear Mr.Madhukar Sir i would be thankful if you could share your view in the query post - regarding applicability of VAT/CST on local sale or Interstate sale from assessee in Karnataka to customer in Delhi, where the customer is a government undertaking. Meanwhile I surfing all Notifications in search of wayout.

regards,

ganeshan

AI Summary

VAT on government purchases: sales to government departments are generally taxable and require dealer registration, subject to notifications. Sales of taxable goods to government departments are generally subject to VAT and CST and selling dealers must be registered; normal tax rates apply unless a specific exemption notification provides otherwise. Concessionary forms historically used for reduced tax treatment are not effective under the successor VAT/CST regime for sales to government, and Karnataka has issued a limited notification granting reduced tax on specified goods sold by Canteen Stores Department or regimental canteens to armed forces members and pensioners.