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Tax on purchases made from unregistered dealers

Nagaraj (Sr Commercial Officer) (29 Points)

21 June 2012

Hi All,

I am new member here. I just want to know whether tax to be paid against purchases made from Unregistered dealers or not.

Anybody could help me out?

Thanks & Regards

Nagaraj

Mob:08981253487

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18 Replies

Giridhar S Karandikar (Team Lead) (7548 Points)
Replied 21 June 2012

Yes, you will not able to claim set-off from your VAT liability for the tax paid on purchases from URD.

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Nagaraj (Sr Commercial Officer) (29 Points)
Replied 21 June 2012

Thanks sir,

Is it necessary to pay the tax (on purchses made from unregistered dealers) the govt. since they (URD) make the bill without mentioning the tax.

Please reply

Regards

Nagaraj

Giridhar S Karandikar (Team Lead) (7548 Points)
Replied 21 June 2012

No tax is requried to paid on URD purchase. The tax liability is automatically adjusted from teh VAt paayble by you.

Suppose you have collected VAt of Rs 1000 & you have paid VAt of Rs 500 on purchases. There are also purchases from URD's, then thsese purchases wont be consdiered while calculating your VAT liability & you will be requreid to pay VAT of Rs. 500 only.

Sonu Kumar (Account Manager) (665 Points)
Replied 21 June 2012

Dear Mr Nagraj,

A Unregistered Dealer (URD) can not charge Vat in his invoice.... so there no any chance to give Tax and Take Input.... only a registred dealer can Charge Vat and you can take input against your output for it

(Guest)

yes completely agree with sonu sir

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RENGARAJ R.K (ADVOCATE) (7557 Points)
Replied 23 June 2012

If the question is under Tamilnadu vat act, there is a section 12 which states that the applicable vat has to be paid by separate payment and the same will be automatically adjusted in the next month return as excess. So, whenever a query is raised, please mention the state also since each state vat rules are different.

rengaraj r.k

1 Like

Anbuselvam (CMA Final Pursuing) (240 Points)
Replied 25 June 2012

A Unregistered Dealer has no rights to issue invoice with VAT. Even if he collects VAT from you, he can't pay VAT amount to the Govt.

Dhiraj Gupta (CEO) (21 Points)
Replied 15 September 2012

Dear Sir/Madam,

I am from Chennai, Tamilnadu.

We want to purchase scrap from Unregistered dealer and process it and sell @ 2% CST. Can we purchase the same @ 0% and pay 2% CST on sales without claiming any input vat.

If yes, please guide with the section number or referall GO.

Thanks & Regards!!!!

Dhiraj Gupta

dinesh (accountant) (23 Points)
Replied 12 December 2012

Dear Sir,

We have purchases of Lathe Machine from Unregistarar Dealer for the F. Yr. 2011-12. This period is not considered to Vat Returns, So know we have Considering to Income Returns for Asst. Yr. 2012-13.

Please Replay .

Regards Dinesh

Prajwal K.A (Article) (25 Points)
Replied 29 January 2014

Hi Friends,

We have a business in Karnataka and we purchase ready made garments from Kolkata from an unregistered dealer in that state. What are the consquenses to be followed. Weather URD tax to be paid in Karnataka for purchase from Unregistered dealer outside the state?

We are VAT dealer in Karnataka.

Kindly do reply and suggest!!!

Thanking You

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Sikender yadav (Market Manager) (21 Points)
Replied 23 September 2014

Hello,

My question is if someone is buying all his goods from URD then how would the reporting of Tax take place in this case.

Another point if that good is sold online without any VAT then will there be any tax liability( Sales or VAT) for the seller or he will just be liable to pay income tax.

S.Somasundaram (Tax & Management Consultant) (38 Points)
Replied 28 December 2014

In Tamilnadu under TNVAT Act 2006, If in a Jewellery Shop, Old Gold is purchased u/s 12 of TNVAT Act 2006, 1% purchase tax is paid in the current month. The TNVAT website automatically gives it as ITC (Input Tax Credit) c/fd for the next month. But the AO claims that for example

Old Gold Purc - 50 L (1%Tax) 50K

Payment in Current month 50 K

No Sales this month.

Next month ITC b/fd 50K

Sales - 60 L (1% Tax) 60K

To pay (after adjusting ITC 50K which is purc tax) 10 K

But AO says that purc u/s 12 is again added to your Sales Turnover as follows

Sales 60 L + u/s 12 Purc 50L = 1.10 C

Hence Input Tax Credit availed by paying purchase tax u/s 12 is adjusted for the deemed addition of Purchase turnover to Sales Turnover.

Hence ITC on purchase tax is effectively Nill.

Please comment on this strong interpretations and case laws.

Thanking you in advance