Imported Goods use for Self Consumption

Adv. S Sharma (Lawyer) (574 Points)
Replied 28 December 2007

hi
well, for this u have to check the registeration certificate of the company under DVAT. if the goods are imported for consumption purpose nd in actual registeration certificate specified it for the purpose of resale then u have nt to pay VAT bt if it specified or nt that or the purpose of consumption or fr self use then u will nt liable for VAT. this issue depends on urs registeration certificate.
i hope issue is clear, if nt then plz feel free to contact me.

Ritesh (CA Final) (326 Points)
Replied 29 December 2007

Dear Ajay Jain, It means that if an assessee has mentioned Good 'X' in its registeration Certificate, then it can purchase such Good 'X' only for resale & not for any other purpose? But is it been mentioned anywhere in DVAT Act . Please mention the relevant Sections?. What are the consequences if an assessee uses such imported goods partly for own consumption & partly for resale ? Please clarify Thanks

Adv. S Sharma (Lawyer) (574 Points)
Replied 29 December 2007

Asianet Satellite Communications (P) Ltd. v. Additional Sales Tax Officer- 1, 1st Circle, Peroorkada, Thiruvananthpuram and Another [2007] 10 VST 622 (Ker) The taxpayer is engaged in the activity of distribution of TV signals. In pursuance of application filed by him, he had been issued a registration certificate under section 7 of the Central Sales Tax Act permitting him to effect inter-state purchase of certain goods for the purpose of resale alone. Subsequently the assessing authority being of the view that the taxpayer after purchasing the goods for the purpose specified in section 8(3) as per the registration certificate had failed to make use of the goods for the declared purpose and thereby had violated provisions of section 10 (d) of the Act, imposed penalty under section 10A. The Commissioner and the single judge of High Court upheld the decision of the Assessing Authority. In the writ appeal filed before the division bench of the High Court, it was held that the registering authority had specifically authorized the taxpayer to effect inter-state purchase of certain items which might be used for the purpose of distribution of TV signals by issuing the ‘C’ forms, only for the purpose of resale but they had used it for their own purpose and had not effected any resale. He had not presented any fact which would establish a ‘reasonable excuse’ as under section 10 (d) for the deviation from the declaration made in the registration certificate. The use of the words ‘without reasonable excuse’ in section 10(d) implies that blameworthy conduct is necessary ingredient for the offence under the section. It was observed that the taxpayer did not believe honestly that he could use the goods for his own purpose. He was fully aware of the goods specified in the certificate and the purpose for which they could be used. Keeping in view the huge liability involved it could not be said that the cause shown by the taxpayer for misuse of ‘C” forms was worthy of acceptance. There was blameworthy conduct of the taxpayer and therefore the penalty imposed was held to be justified.

CA. O.P. Agarwalla (C.A.) (2916 Points)
Replied 02 January 2008

I am afraid to be in disagreement with Mr. Sharma. My submission in this regard is as follows:- 01. For imposing VAT or SALES TAx there must be a sale within the State. Here in the given case, I think no such sale is executed. No question of VAT, whether the goods are specified in the RC or not. 02. The case cited hereinabove, is relating to misutilisation of C form, this case is no nexus with this query. I will like to welcome further comments on this.

Ritesh (CA Final) (326 Points)
Replied 02 January 2008

Dear Mr. O.P Aggarwal, Sir,I also think on the same lines. The case which Mr. Sharma has cited is relating to CST, not regarding Vat. Since in CST Form 'C' is given as declaration that goods mentioned have been purchased for resale as a result of which a lower tax rate is imposed,max upto 3%. However there is not such incentive given in Vat.If one uses the goods for resale, he geta the input credit. If he doesn't, no input credit. Please let me know if i am wrong. Thanks for your reply.

Ritesh (CA Final) (326 Points)
Replied 02 January 2008

Dear all, Another query i have. Since Vat is yet to come in Uttar pradesh. If a Dealer purchases goods within UP & sold it further as Inter state sale to Delhi. Whether the Dealer will get the input credit against such Inter State Sale. What will be the scenario if the dealer sold the said purchased goods within Uttar Pradesh. This one is a separate query, Is it necessary that Vat amount should be shown separately on bills in order to avail Vat Credit. Does that bill fall within definton of 'Tax Invoice'? Thanks