Dealer (registred)

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 April 2013 If Dealer is registered as first dealer then whether he has to pass duty only or he has to pay excise duty of sale value and take cenvat credit???

to collect VAT and just to show passing excise duty in invoice is correct or not?

Please reply

Arun Kumar Singh

Arun Kumar Singh (Expert)
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09 April 2013 Dealer can only passed the duty no need to pay excise duty on sale value.

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

09 April 2013 Thanks sir, but can you please mention any specific section, rule in this regard? plsss.....

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Asha Kanta Sharma online

Asha Kanta Sharma

(Expert)
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20 July 2024 When a dealer is registered under Central Excise, the treatment of excise duty and VAT (Value Added Tax) varies based on whether the dealer is a "First Stage Dealer" or a "Second Stage Dealer."

### First Stage Dealer:

1. **Definition**: A First Stage Dealer is typically a manufacturer, importer, or a wholesale dealer who purchases excisable goods directly from the manufacturer or importer.

2. **Treatment of Excise Duty**:
- A First Stage Dealer is required to pay excise duty on the value of goods sold. This means they are responsible for calculating and paying excise duty to the government based on the selling price of the goods.
- They can also claim Cenvat Credit on the excise duty paid on inputs or capital goods used in manufacturing or processing those goods.

3. **VAT Collection**:
- A First Stage Dealer may collect VAT from the buyer if VAT is applicable on the sale of goods as per local VAT laws.
- The dealer should issue a proper tax invoice that reflects the VAT charged separately from the sale price of the goods.

### Second Stage Dealer:

1. **Definition**: A Second Stage Dealer purchases goods from a First Stage Dealer or another Second Stage Dealer and sells them to retailers or consumers.

2. **Treatment of Excise Duty**:
- Second Stage Dealers are not liable to pay excise duty on the goods they sell. They pass on the excise duty paid by the First Stage Dealer through their invoices.
- They can also claim Cenvat Credit on the excise duty paid by the First Stage Dealer, provided the conditions for availing Cenvat Credit are met.

3. **VAT Collection**:
- Similar to First Stage Dealers, Second Stage Dealers may collect VAT from the buyer if VAT is applicable.
- They should issue a tax invoice that correctly reflects the VAT charged separately from the sale price.

### Legal Basis:

- **Central Excise Act, 1944**: Section 3 and Section 4 of the Act deal with the levy and collection of excise duty.
- **Central Excise Rules, 2002**: Rule 11 deals with the payment of excise duty and issuance of invoices.
- **State VAT Laws**: These vary by state but generally govern the collection and payment of VAT.

### Conclusion:

- For a First Stage Dealer registered under Central Excise, it is correct to charge and collect excise duty on the sale value of goods and subsequently take Cenvat Credit on the duty paid on inputs.
- VAT should be collected separately and shown on the tax invoice as per applicable VAT laws.

It's crucial to comply with both Central Excise and State VAT laws applicable to your business to ensure correct invoicing and tax compliance. For detailed guidance specific to your circumstances, consulting with a tax advisor or legal expert familiar with Indian tax laws is recommended.