Exemption limit of vat in gujarat and input tax credit

This query is : Resolved

DHRUVIL S. BARBHAYA (Querist)
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17 January 2013 Provision of Gujarat VAT Act, 2003 Sec.3(1)(iii) - Incidence of Tax is as under:

"Subject to the provisions of this Act, every dealer whose total turnover and taxable turnover in any year first exceed the thresholds of turnover (i.e. Total turnover exceeds Five lacs and Taxable turnover exceeds Ten thousand), shall be liable to pay tax in accordance with the provisions of this Act."

Does the word in above provision "in any year first exceed" mean that the exemption limit of Threshold turnover will be available every year to the dealer, means at the beginning of each financial year dealer will be allowed exemption from collecting and paying VAT up to the threshold limit. Or it means that in any preceding year, if turnover of dealer exceed the threshold limit then he will have to collect and pay VAT and no any exemption of threshold limit will be allowed in next financial years.

And what will be the fate of the input tax paid on the stock lying on the date, when the dealer will become liable to collect and pay VAT as per Sec.3(1)(iii).

MJ Krishnamurthy

MJ Krishnamurthy (Expert)
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08 February 2013 Mr DS Bharbhaya,
Please read more sub section down under in the same section. If you once cross the threshold mark and become liable to pay tax
you will pay tax in that year as per rules and in the next year you will continue to pay tax irrespective of your sales/purchases coming below the threshold mark. Once you are liable to pay tax all rules of input and output taxes apply.If your turnover continues to be low for the third year,you will not be liable to pay tax,input tax paid on purchases will be wasted,and the department may give notice to cancel or you may opt for cancellation of your registration.......MJK