Whether Purchase liable for Purchase tax if goods purchased deemed tax paid in the hands of Seller

[SUNIL JAIN]

Levy of Sale Tax u/s 9 on cotton specified in Schedule II (Entry no 27) @ 5% and such tax shall be levied on the taxable turnover of a selling dealer.

Cotton is notified goods, (Noti. No. 19 dt. 3/8/09) procured for subsequently sale or consumption by purchasing dealer. Purchasing dealer issue TDS certificate u/s 26-A(1) to selling dealer after deducting VAT charged by selling dealer on invoice to discharge Sales Tax Liability of selling Registered Dealer.

The turnover of sale of goods deemed Tax paid Rule 45-A(9) on producing TDS certificate received from purchasing dealer at the time of assessment of selling registered dealer.

U/s 10 Every dealer who in the course of his business purchases any goods from a registered dealer in the circumstance in which no tax under section 9 is payable by the selling registered dealer on the sale price of such goods.

Whether Purchase liable for Purchase tax u/s 10 in the hands of purchasing dealer ?

AI Summary

Purchasing dealers not liable for purchase tax under Section 10 if TDS is deducted and paid on goods. A query was raised regarding the liability for purchase tax when goods purchased are deemed tax paid in the seller's hands. The discussion involves the Madhya Pradesh VAT Act, focusing on whether the purchasing dealer is liable for purchase tax under Section 10 when the selling dealer's sales tax liability is discharged through TDS by the purchasing dealer. The response clarifies that once TDS is deducted and paid by the purchasing dealer, the selling dealer is relieved of tax liability. Thus, no separate purchase tax is levied on goods where TDS has been deducted and paid.