02 July 2011
Hi, My client is a trader of granites in Bagalkot (Karnataka) but registered delaer in Belgaum (Karnataka). My queries are 1) Can he trade (both purchase and sell) in Bagalkot district and pay tax and file return in Belgaum? 2) His turnover is below 25 lacs and all the purchases are from un registered dealers in Bagalkot. Is it beneficial to go for COT sceme. 3) If yes what is the procedure to switch over to COT. He is presently under monthly return filing scheme from past 1 year. 4) for the month of April and May 2011 he has already collected 14% VAT in sales bills. Does it have any effect?
03 July 2011
Mr D,souza, 1)If your client is registered in Belgaum and regularly does trading in Bagalkot dist.,he should declare his Bagalkot trading place as a branch in his LVO office and obtain a branch certificate. He can also request for transfer of his registration to Bagalkot LVO. Bagalkot branch sales and purchases can be filed in the return at Belgaum. 2)Till he crosses the limit of Rs25 lacs of T.O. he can opt for composition under sec15(1)(a) of KVAT Act.of course it is beneficial.He can buy granites from UrDs 3)The procedure for change over is to file a letter before the concerned LVO seeking permision.Even if no permission is informed automatically you can switch over from the next month to COT. You should surrender your VAT certificate along with the letter. 4)There will no problem due to collection of tax in the first two months.If you file a letter now you can change over to COT from 1st August.From then onward no tax is to be collected in the bills. MJK
04 July 2011
Thank you Mr. M J Krishnamurthy for the reply. I request you for the following clarification 1) Client's demands is that purchases and sales should be shown in Belgaum and doesn't want to register for a branch office in Bagalkot.
2) I was told in VAT office that if COT is opted, then apart from tax on sales, tax on purchases from un-registered dealer should be paid seperately, which should be collected from un registered dealers.
Kindly clarify me as a consequence of above whether the client will end up paying more tax than if opted for monthly VAT.
04 July 2011
Mr.A D'souza, There is no problem,your client can do purchases from and sales to the Bagalkot dist people from Belgaum also and there is no compulsion to have a branch in Bagalkot.
Please see in Sec 15(1) after clause (d),'may elect to pay inlieu of the net amount of tax payable under this Act'. This means that there will be no further liability under the Act and it is inclusive of tax on URD purchases u/s3(b) also.Only in the case of contractors a special clause has been added to levy tax on URD purchases in addition to composition tax,please note.
Therefore,your client should be benifitted by opting to composition.But he can not collect tax in bills. MJK
CAclubindia
