Company : Sol Infotech Pvt. Ltd. Website : www.courtkutchehry.com Gujarat Value Added Tax (Second Amendment) Act, 2006 CONTENTS 1. Short Title And Commencement 2. Amendment Of Section 2 Of Guj. 1 Of 2005 3. Amendment Of Section 9 Of Guj. 1 Of 2005 4. Amendment Of Section 11 Of Guj. 1 Of 2005 5. Amendment Of Section 14 Of Guj. 1 Of 2005 6. Insertion Of New Sections 14B And 14C In Guj. 1 Of 2005 7. Amendment Of Section 31 Of Guj. 1 Of 2005 8. Amendment Of Section 41 Of Guj. 1 Of 2005 9. Amendment Of Section 60 Of Guj. 1 Of 2005 10. Amendment Of Section 64 Of Guj. 1 Of 2005 11. Amendment Of Section 98 Of Guj. 1 Of 2005 12. Amendment Of Section 2 Of Guj. 1 Of 2005 13. Amendment Of Section 11 Of Guj. 1 Of 2005 14. Insertion Of New Section 14D In Guj. 1 Of 2005 15. Amendment Of Section 31 Of Guj. 1 Of 2005 16. Amendment Of Section 60 Of Guj. 1 Of 2005 17. Amendment Of Section 11 Of Guj. 1 Of 2005 18. Amendment Of Section 29 Of Guj. 1 Of 2005 19. Amendment Of Section 30 Of Guj. 1 Of 2005 20. Repeal And Savings Gujarat Value Added Tax (Second Amendment) Act, 2006 AN ACT further to amend the Gujarat Value Added Tax Act, 2003. It is hereby enacted in the Fifty-seventh Year of the Republic of India as follows:- 1. Short Title And Commencement :- (1)This Act may be called the Gujarat Value Added Tax (Second Amendment) Act, 2006. (2)The provisions of Part I of this Act shall be deemed to have come into force onthe 10 May, 2006; the provisions of Part II shall deemed to have come into forceon the 4th August, 2006 and the provisions of Part III of this Act shall comeinto force at once. PART- I 2. Amendment Of Section 2 Of Guj. 1 Of 2005 :- Inthe Gujarat Value Added Tax Act, 2003 (Guj. 1 of 2005) ( hereinafter referred toas "the principal Act" in section 2, in clause (27), for the word and figures "section 14" the words, figures and letters "section 14,14A, 14B or 14C" shall be substituted. 3. Amendment Of Section 9 Of Guj. 1 Of 2005 :- Inthe principal Act, in section 9, after sub-section (3), the following sub-section shall be added, namely:- (4)Where a dealer or a Commission Agent who is liable to pay tax under this Actpurchases taxable goods from a Commission Agent to whom permission to pay lumpsum tax is granted under section 14B and the goods so purchased by him are not resold within the State, then such dealer or the Commission Agent shall beliable to pay purchase tax on the turnover of such purchases at the rate set outagainst each of such goods in Schedule II. 4. Amendment Of Section 11 Of Guj. 1 Of 2005 :- Inthe principal Act, in section 11, sub-section (5), in clause (c), for the word and figures "section 14", the words, figures and letters "section14, 14A, 14B or 14C" shall be substituted. 5. Amendment Of Section 14 Of Guj. 1 Of 2005 :- Inthe principal Act, in section 14, in sub-section (1),- (1)in clause (a), in the proviso, clause (vii) shall be deleted; (2)in clause (b), for the words, brackets and figures "clauses (i) to(vii)", the words, brackets and figures "clauses (i) to (vi)"shall be substituted. 6. Insertion Of New Sections 14B And 14C In Guj. 1 Of 2005 :- Inthe principal Act, after section 14A, the following sections shall be inserted, namely:- "14B.Composition of tax on agricultural produce. (1)Notwithstanding anything contained in this Act, the Commissioner may, in such circumstances and subject to such conditions as may be prescribed, permit a Commission Agent engaged in the business of agricultural produce, to pay at his option in lieu of the amount of tax leviable from him under this Act, a lumpsum tax by way of composition at such rate as may be fixed b y the StateGovernment by notification in the Official Gazette. (2)The permission to pay lump sum tax under sub-section (1) shall b e grantedby the Commissioner to a Commission Agent who, - (a)exclusively carries on a business of agricultural produce, and (b)is licensed as general commission agent with a market committee establishedunder the Gujarat Agricultural Produce Markets Act, 1963. (3)The Commissioner shall not grant permission to pay lump sum tax undersub-section (1) to a Commission Agent who,- (a)sells the goods in the course of inter-State trade and commerce or exports goodsout of the territory of India, (b)purchases the goods in the course of inter-State trade and commerce or importsgoods from a place out of the territory of India, (c)dispatches the goods to his branch or his consigning agent out side the State orreceives the goods from his branch situated out side the State or from hisconsigning agent out side the State, (d)sells the goods to a person who is not a registered dealer, or (e)sells the goods to a dealer who is permitted to pay lump sum tax under section14. (4)The Commission Agent who is permitted under sub-section (1) to pay lump sum taxshall not,- (a)be entitled to claim tax credit in respect of tax paid by him on his purchases, (b)charge any tax under this Act in his sales bill or sales invoices in respect ofthe sales on which lump sum tax is payable, and (c)issue tax invoice to any dealer who has purchased the goods from him. (5)The Commission Agent who is permitted to pay lump sum tax undersub-section (1) shall be liable to pay purchase tax leviable under sub-sections(1), (3) and (4) of section 9 in addition to the lump-sum tax under thissection. (6)The permission granted under sub- section (1) shall remain valid so long as theprovisions of this section and rules made in this behalf are complied with; andin case of breach of any of the provisions of this section or rules, theCommission Agent shall be liable to pay tax under sections 7 and 9 for such taxperiod as may be prescribed. 14C.Composition of tax on turnover of right to use the goods. (1)The Commissioner may, in such circumstances and subject to such conditions asmay be prescribed, permit a dealer referred to in sub-clause (h) of clause (10)of section 2, to pay at his option in lieu of amount of tax leviable from himunder this Act, a lump sum tax by way of composition at such rate as may befixed by the State Government by notification in the Official Gazette. (2)The provisions of sub- sections (3) and (4) of section 14 shall applymutatis-mutandis to a dealer who is permitted under sub-section (1) to pay lumpsum tax by way of composition. (3)The permission granted under sub- section (1) shall remain valid so long as theprovision of this section and rules made in this behalf are complied with; andin case of breach of any of the provision of this section or the rules, thedealer shall be liable to pay tax under sections 7 and 9 for such tax period asmay be prescribed." 7. Amendment Of Section 31 Of Guj. 1 Of 2005 :- Inthe principle Act, in section 31, in sub-section (2), for the word and figures"section 14", the words, figures and letters "section 14, 14A,14B or 14C" shall be substituted. 8. Amendment Of Section 41 Of Guj. 1 Of 2005 :- Inthe principal Act, in section 41, in sub-section (1), for the words"inequitable situation", the words "inequitable situation or forsufficient and reasonable cause" shall be substituted. 9. Amendment Of Section 60 Of Guj. 1 Of 2005 :- Inthe principal Act, in section 60, in sub-section (1), in the proviso- (i)in clause (b), for the word and figures "section 14", the words,figures and letters "section 14, 14A, 14B or 14C" shall besubstituted; (ii)in clause (c), the word "or" appearing at the end shall be deleted; (iii)in clause (d), the word " or" shall be added at the end; (iv)after clause (d), the following clause shall be added, namely:- "(e)in such other cases as the State Government may, by notification in the OfficialGazette, specify." 10. Amendment Of Section 64 Of Guj. 1 Of 2005 :- Inthe principal Act, in section 64,- (1)for the words "eight years", the words "six years" shall besubstituted; (2)the following proviso shall be added, namely:- "Provided that where the dealer is a party to an appeal or revision under thisAct, he shall preserve the books of accounts and the records pertaining to thesubject matter of such appeal or revision until the appeal or revision isfinally disposed of." 11. Amendment Of Section 98 Of Guj. 1 Of 2005 :- Inthe principal Act, in section 98, after sub-section (2), the followingsub-section shall be inserted, namely:- "(2A) Any rule m a d e under the Act, may be made so as to have retrospectiveeffect.". PARTII 12. Amendment Of Section 2 Of Guj. 1 Of 2005 :- Inthe principal Act, in section 2, in clause (27), for the figures, letters andword "14B or 14C", the figures, letters and word "14B 14C or14D" shall be substituted. 13. Amendment Of Section 11 Of Guj. 1 Of 2005 :- Inthe principal Act, in section 11, in sub-section (5), in clause (c), for thefigures, letters and word "14B or 14C, the figures, letter and word"14B, 14C or 14D" shall be substituted. 14. Insertion Of New Section 14D In Guj. 1 Of 2005 :- Inthe principal Act, after section 14C, the following section shall be inserted,namely:- "14D.Composition of tax on sales of eatables by hotels, restaurants, caterers, etc. (1)Notwithstanding anything contained in this Act, the Commissioner may, in suchcircumstances and subject to such conditions as may be prescribed, permit anydealer who is engaged in the business of sale of eatables in any form (whetherprocessed or unprocessed) served, delivered or given in package from the placeof business of the dealer or any other place, to pay at his option in lieu ofthe amount of tax leviable from him under this Act in respect of sales ofeatables, lump sum tax by way of composition at such rate as may be fixed by theState Government by notification in the Official Gazette: Providedthat the Commissioner shall not grant permission to pay lump sum tax to a dealerwho is engaged in the activity of manufacture of such goods as the StateGovernment may, by notification in the Official Gazette, specify. (2)The provisions of sub-section (3) and (4) of section 14 shall apply mutatismutandis to a dealer who is permitted under sub-section (1) to pay lump sum taxby way of composition. (3)The permission granted under sub-section (1) shall remain valid so long as theprovisions of this section and rules made in this behalf are complied with; andin case of breach of any of the provisions of this section or the rules, thedealer shall be liable to pay tax under sections 7 and 9 for such tax period asmay be prescribed. Explanation.-For the purpose of this section, the word "eatables" means all kind offoods for the purpose of consumption including all types of alcoholic andnon-alcoholic beverages, water (mineral, purified or aerated) and soda water,ice-cream and kulfi, sweets and sweetmeats, fruits and fruit juice, all types ofmilk preparations, bakery products and such other goods as the State Governmentmay, by order specify". 15. Amendment Of Section 31 Of Guj. 1 Of 2005 :- Inthe principal Act, in Section 31, in sub-section (2), for the figures, lettersand word "14B or 14C, the figures, letters and word "14B, 14C, or 14Dshall be substituted. 16. Amendment Of Section 60 Of Guj. 1 Of 2005 :- Inthe principal Act, in section 60, in sub-section (1), in the provisio, in clause(b), for the figures, letters and word "14B or 14C" the figuresletters and word "14B, 14C or 14D" shall be substituted. PARTIII 17. Amendment Of Section 11 Of Guj. 1 Of 2005 :- Inthe principal Act, in section 11, in sub-section (3), to clause (b), thefollowing proviso shall be inserted, namely:- "Providedthat where the rate of tax, of the taxable goods consigned or dispatched by adealer for branch transfer or to his agent outside the State is less than fourper cent., then the amount of tax credit in respect of such dealer shall bereduced by the amount of tax calculated at the rate of tax set out in theSchedule on such goods on the turnover of purchases". 18. Amendment Of Section 29 Of Guj. 1 Of 2005 :- Inthe principal Act, in section 29, after sub-section (2), the followingsub-section shall be inserted, namely:- "(2A)The Commissioner may, in such circumstances and on such terms and conditions asmay be prescribed, extend the date of furnishing the return by any dealer orclass of dealers." 19. Amendment Of Section 30 Of Guj. 1 Of 2005 :- Inthe principal Act, in section 30, after sub-section (2), the followingsub-section shall be inserted, namely:- "(2A)The Commissioner may, in such circumstances and on such terms and conditions asmay be prescribed, extend in respect of any dealer or class of dealers, the dateof payment of tax payable by the dealer according to his returns." 20. Repeal And Savings :- (1)The Gujarat Value Added Tax (Second Amendment) Ordinance, 2006 (Guj. Ord. 1 of2006) and the Gujarat Value Added Tax (Third Amendment) Ordinance 2006 (Guj. Ord.2 of 2006) are hereby repealed. (2)Notwithstanding such repeal, anything done or any action taken under theprincipal Act, as amended by the said Ordinances shall be deemed to have beendone or taken under the principal Act, as amended by this Act. STATEMENTOF OBJECT AND REASONS OF BILL NO. 28 OF 2006 TheGujarat Value Added Tax Act, 2003 (Guj. 1 of 2005) has been implemented in theState with effect from 1st April, 2006. Representations were received by theGovernment from the traders and businessmen to remove the difficulties andhardship caused in the implementation of the Act and to grant the benefit ofpayment of lump sum tax. The State Government had considered such representationand it was considered necessary to amend the Act so as to provide for thefollowing matters which are included in Part I and II of Bill:- (i)New sub-section (4) inserted in section 9 imposses liability on the purchasingdealer to pay purchase tax where the agricultural produce purchased by him fromthe commission agent has not been resold within the State. (ii)Under the provisions of section 14, a dealer who has been permitted to pay lumpsum tax cannot effect sales or purchases with another dealer who is permitted topay lump sum tax. This restriction has been removed. (iii)New section 14B empowers the Commissioner to permit a commission agent engagedin the business of agricultural product, to pay lump sum tax. (iv)New section 14C empowers the Commissioner to permit a dealer engaged in thebusiness of transfering the right to use the goods, to pay lump sum tax. (v)New section 14D empowers the Commissioner to permit a dealer engaged in thebusiness of sale of eatables i.e. Hotels, restaurants, caterers etc., to paylump sum tax. (vi)New section 14A, 14B, 14C and 14D are proposed to be inserted in the Act, andtherefore consequential amendments are made in section 2, sufficient andreasonable cause for granting the remission. (viii)Section 65 provides that the books of accounts shall b e preserved by the dealerfor a period of eight years. This time limit of eight years has been reduced tosix years except in case where an appeal or revision is pending before anyAuthority. (ix)In order to enable the State Government to make rules with the retrospectiveeffect, new sub-section (2A) is inserted in section 98. Anopportunity has been taken to amend the clause (b) of sub- section (3) of section11 so s to provide that where the rate of tax o f taxable goods consigned ordispatched by a dealer of branch transfer or to his agent outside the State isless than four per cent., the amount of tax credit in respect of such dealershall be reduced by the amount of tax calculated at the rate of tax provided inthe Schedule of tax Act on such goods. It is also considered necessary to amendsection 29 and 30 so as to empower the Commissioner to extend the date offurnishing the return as well as the date for making payment of tax by thedealer or class of dealers. Asthe Gujarat Legislative Assembly was not in session at that time, the GujaratValue Added Tax (Third Amendment) Ordinance, 2006 were promulgated to amend thesaid Act. This Bill seeks to replace the said Ordinances by an Act of the StateLegislature and also seeks to amend section 1, 29 and 30 to achieve theaforesaid objects. SAURABHPATEL MEMORANDUMREGARDING DELEGATED LEGISLATION ThisBill provides of delegation of legislative powers in the following respects: Clause6: (i)Sub-section (1) of section 14B and sub-section (1) section 14C proposed to beinserted by this clause empower the State Government to prescribed by rules, thecircumstances in which and the conditions subject to which the dealer can bepermitted to pay lump sum in lieu of the Amount of tax leviable unde the Act. Inalso empowers the State Government to fix, by notification in the officialGazette, the rate of lump sum tax. (ii)Sub-section (6) of section 14B, and sub-section (3) of section 14C proposed tobe inserted by this clause empower the State Government to prescribed by rulesthe tax period in respect to which the commission agent/dealer shall be liableto pay tax under section 7 and 9 in case of branch of provisions of the Act orthe rules. Clause-9:- Clause(e) proposed to be added in the proviso to sub-section (1) of section 60empowers the State Government to specify, by notification in the OfficialGazette, such other cases for which tax invoice shall not be issued. Clause11:- Sub-section(2A) proposed to be inserted in section 98 by this clause empowers the StateGovernment to make rules with retrospective effect. Clause14:- (i)Sub-section (1) of section 14D proposed to be inserted by this clause empowersthe State Government to prescribe by rules, the circumstances in which and theconditions subject to which and the conditions subject to which the dealer canbe permitted to pay lump sum tax in lieu of the amount of tax leviable unde theAct. It also empowers the State Government to fix, by notification in theOfficial Gazette, the rate of lump sum tax. (ii)The proviso the sub-section (i) of section 14D proposed to be inserted by thisclause empowers the State Government to specify, by notification in the OfficialGazette, the activity of the manufacture of such goods for which theCommissioner shall not grant permission to pay lump sum tax to dealer who isengaged in the business of sales of eatables. (iii)Sub-section (30) of section 14D proposed to be inserted by this clause empowersthe State Government to prescribe by rules the tax period in respect of whichthe dealer shall be liable to pay tax under section 7 and 9 in case of branch ofprovisions of the Act on the rules. (iv)The Explanation to section 14D empowers the State Government to specify, byorder, the other goods which falls within the term eatables in the section. Clause18:- Sub-section(2A) proposed to be inserted in section 29 by this clause empowers the StateGovernment to prescribed by rules, the circumstances in which and terms andconditions on which the Commissioner may extend the date of furnishing thereturn by any dealer or class of dealers. Clause19:- Sub-section(2A) proposed to be inserted in section 30 by this clause empowers the StateGovernment to prescribe by rules, the circumstances in which and terms andconditions on which the Commissioner may extend the date of payment of taxpayable by any dealer of class of dealers. The delegation of legislative powers as aforesaid is necessary and is of a normalcharacter.