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Purchase from Exempted Unit

ANWAR (CA Final Sudent) (95 Points)

08 February 2011

Sir,

Can any1 tel me

If we purchased goods from Exempted Unit

are we liable to charge VAT on sales ?

if yes

we have to charge Vat on Profit Margin or on Total Sales Value ?

sir if possible provide reference or case law

Thanks & Regards

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8 Replies

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 08 February 2011

you have to charge full vat and pay full vat as input credit is not available to you.

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ANWAR (CA Final Sudent) (95 Points)
Replied 08 February 2011

but the thing is dat

our client Purchased good from Dealer who purchased goods from Manufacturer (AKAI)

wher Manufacturer is a Exempted Unit but dat Dealer also does not charge any Vat to our Client

so Our Client is Liable to charge Vat to customers ?

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 08 February 2011

Originally posted by : ANWAR
	but the thing is dat our client Purchased good from Dealer who purchased goods from Manufacturer (AKAI) wher Manufacturer is a Exempted Unit but dat Dealer also does not charge any Vat to our Client so Our Client is Liable to charge Vat to customers ?

1st dealer is either unregistered or availing any conditional exemption e.e. composition scheme.

ANWAR (CA Final Sudent) (95 Points)
Replied 08 February 2011

1 dealer i.e Manufacturer is Exempted bcoz he is manufacturing in SEZ

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 08 February 2011

SEZ is exempted unit for export only, but DTA sales attract VAT / Excise. perhaps they have not followed the rules correct way.

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Shashikant Shridhar Jain (Self Employed / Freelancer Consultant) (30 Points)
Replied 09 February 2011

Dear Anwar,

You have to claim deduction as per Rule 57 (2) of the MVAT Actthat is eauivalent to the purchase price of goods purchased from Exmepted Unit and on balance amount only VAT is to be charged at applicable rate.

For Example purchase value from Exampted unit say Rs. 100/- and sale value Rs. 125/- Then VAT is to be charge no sale value less deduction U/R 57(2) i.e. purchase price i.e. in this case VAT is to be paid on Rs. 25/- only.

This deduction is available to all dealers

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Pradeep (Proprietor) (35 Points)
Replied 25 November 2011

If purchase is Emempted then less it in sale amount. calculate vat on balance sale amount after deducting purchase value

C.A. Sandeep Wawhal (CA, PGDFM, BCom) (1831 Points)
Replied 17 December 2011

Exemption available for SEZ Unit dealers if there is inter unit transfer i.e. from one Unit of SEZ to another Unit of SEZ of SEEPZ as declared by state govt. if Manufacturer selling good to to dealer other than such units then he has to collect vat/ cst if goods are taxable.

Please confirm that goods which are sold are coverd under catagory or not, if not then you have to collect tax from purchaser.