RECENT CHANGES IN U. P. VAT RULES
 

KESHAV DAYAL                
Ex Member Tribunal, U. P. Trade Tax

       The State Government of Uttar Pradesh has made some important changes in the U. P. VAT Rules, 2008. Several Forms including Forms of Periodical Returns and Form of Audit Report have been amended and some few new Forms have been introduced. These changes have come into force with effect from February, 04, 2010. Notes on important changes are given hereunder.
1. Assessing Authority and Principal place of business:
 
       Provisions of Rule 6 relating to assessing authority and declaration of principal place of business will also apply in cases of railway container contractor, air cargo operator, courier service provider, owner or person in-charge of warehouse, cold storage or go-down as they apply in cases of other dealers.
 
       In cases of transit pass for the purpose of assessment and penalty proceedings, assessing authority will be declared by the Commissioner.
 
       Casual dealer will not have to declare its principal place of business. For registration of casual dealer, separate rule has been made.
2. Discount claim for computation of taxable turnover
 
       While computing taxable turnover “all amounts allowed as cash or trade discount at the time of sale as is evident from invoice” shall be deducted from the gross turnover
3. Computation of taxable turnover where tax amount is included in sale price
 
       Whether a dealer is entitled or not for realizing amount of tax separately in case of a taxable sale, if he is liable to pay tax and has not realized amount of tax separately, amount of tax shall be computed using the formula:
 

Amount of tax = (turnover x rate of tax) / (100 + rate of tax)

4. Computation of turnover in works contract
 
  • Amount of subcontract shall be deducted on the basis of certificate issued by the assessing authority of the sub-contractor. In the certificate, the assessing authority will certify that subcontractor is a registered dealer and he has included specified turnover of goods in his returns submitted by him.
  •  In cases of building construction where value of land required for building construction is included in the total amount of the contract, proportionate amount of actual cost shall be deducted for computing turnover of goods under Rule9. Actual cost of land shall be computed on the basis of circle rate fixed by Collector for the purpose of stamp duty.
  • For the purpose of Rule 9, value of goods under inter-state sale, sale outside the State and sale in the course of import or export (value of goods under section 3, 4 and 5 of the Central Sales Tax Act, 1956) and tax paid non vat goods, shall also include amount of profit on such goods.
  • Where value of labour and services and profit thereon is to be determined on the basis of percentage basis given in sub-rule (3) of rule 9 and where contractor awards full or part of the contract to subcontractors, whether or not subcontracts fall in the same category in which main contract falls, aggregate of values of labour and services and profit thereon claimed by all subcontractors and the contractor will not exceed the percentage of the gross amount received or receivable in respect of main contract.
5. Input Tax Credit: Stock transfer /consignment cases
 

      In case of stock transfer or consignment of goods outside the State, credit of amount computed using the formula given hereunder shall not be allowed:

P x R /100

      Where P is the purchase price of the goods consigned or used or consumed, as the case may be; and R is the rate of tax applicable to the commodity where it is less than 4 and in other cases is equal to 4.

6. Computation of Reverse Input Tax Credit in case of stock transfer /consignment of goods
 

      In case of stock transfer or consignment of goods outside the State, amount of Reverse Input Tax Credit shall be computed using the formula given hereunder:

P x R /100

      Where P is the purchase price, according to the Tax Invoice or purchase invoice in respect of which input tax credit has been claimed of full amount of input tax; and R is the rate of tax applicable to the commodity under the Act where it is less than 4 and in other cases is equal to 4.

7. Claim of Input Tax Credit in respect of capital goods
 

      It has been provided that where manufactured goods are disposed of in different modes, whether by sale or otherwise, only proportionate amount of annual installment computed on pro rata basis shall be claimed and allowed.

8. Claim of Input Tax Credit in respect of captive power plant:
 

      Where percentage consumption of electrical energy is less than Ninety, only proportionate amount of annual installment of input tax credit shall be claimed and allowed.

9.
Claim of amount of input tax credit in respect of goods held in opening stock either on January 01, 2008 or on the date on which dealer becomes liable to pay tax:
 

      Explanation added that where fifth or fourth month expires in a tax period, the first installment shall be claimed in the tax return of the tax period in which fifth or fourth month respectively expires.

10. Registration of dealers
 
  • For registration of “casual dealers” new Rule 32-A has been inserted. Application in Form VII-A is to be presented before the assessing authority in whose jurisdiction business place of casual dealer falls.
  • For disposal of registration application, Commissioner has been empowered to revise the time schedule.
  • In place of two identity proofs, now only one identity proof will be required.
  • Time limit of 60 days for presenting Registration certificated held under the U. P. Trade Tax Act, 1948 for endorsement abolished. Now application can be presented within the time provided in sub-section (5) of section 17 of the U. P. VAT Act.
11. Information regarding change of business
 

       Now the application will also accompany Registration Certificate and evidence in respect of change in business.

12. Printing of TIN and the date from which it is effective on documents
 

       Every registered dealer shall get his Taxpayer Identification Number (TIN) and date from which it is effective on every tax invoice, sale invoice, purchase invoice, credit and debit notes, challan or goods transfer invoice.

13. Registration of transporters, carriers and forwarding agents
         Provision relating to registration of transporter, carrier or forwarding agent dropped.
14
Service Provider Number for railway container contractor, air cargo operator, courier service provider, owner or person in charge of warehouse, cold storage or go-down
 

         Amended in Rules requires that railway container contractor, air cargo operator, courier service provider, owner or person in charge of warehouse, cold storage or go-down will obtain service provider Number and for this purpose they will have to present application within 30 days from the date of commencement of business before the assessing authority with proof of deposit of fee of rupees Hundred.

         In old cases such persons may apply for Service Provider Number within 90 days from February 19, 2010. In case of delay, a late fee of rupees Fifty shall be payable for every month or part thereof.

15
Accounts to be maintained by railway container contractor, air cargo operator, courier service provider, owner or person in charge of warehouse, cold storage or go-down:
 

       Documents which will be maintained by railway container contractor, air cargo operator, courier service provider, owner or person in charge of warehouse, cold storage or go-down are given in sub-rules (7), (8) (8-A) and (90 of Rule 38. Transporters and carriers have also been required to maintain certain documents. Following documents shall be maintained by all:

  (i) Register of all consignments received for transportation or storage;
(ii) Office copy of goods received or consigned;
(iii)
Office copy of goods challan prepared by him for delivering to the person in charge or driver of the vehicle;
(iv) Goods receipt and delivery register in respect of goods received and delivered by him.

       Railway container contractor, air cargo operator and courier service provider shall obtain declaration in Form XVII while receiving goods from any person and a declaration in Form XVII while delivering goods to any person.
       Where an owner or person in charge of warehouse, cold storage or go-down receives any goods he shall obtain from owner of the goods a declaration in Form XIX and where he delivers goods, he shall obtain declaration in Form XX from the owner of the goods.
       All records maintained shall be preserved for a period of eight years.

16 Turnover for the purpose of audit.
       Limit of turnover for audit shall be the aggregate of-
  (i) turnover of purchase of goods liable to tax under section 5 of the Act;
(ii)

turnover of sale of goods other than goods covered in clause (i) above where such sale is-

    1. within the State;
    2. in the course of inter-State trade or commerce;
    3. in the course of export of goods;
    4. in the course of import of goods;
(iii) outside the State;
17.
In case of single sale exceeding Rs. 50,000.00 when made to a person other than registered dealer:
 

       Where sale of vat goods is made to any person other than a registered dealer and person makes payment other than by way of account payee cheque, the selling dealer will obtain self certified copy of identification proof of the purchaser as prescribed by the Commissioner and shall preserve it. This provision will not apply where a single unit of commodity will be sold.

18.

Tax return period for dealers dealing in sensitive commodities and dealers to whom section 42 apply (New Units under U.P. Trade Tax claiming refund) :

 

       For the dealer dealing in sensitive commodities declared by the Commissioner or a dealer to whom provisions of section 42 (dealers entitled for refund in cases of new units) applies, every calendar month will be tax period if their annual turnover exceeds one crore rupees.

19
Tax Period for dealers whose turnover is likely to exceed Rs. twenty five lakh or whose such turnover during the preceding assessment year has exceeded twenty five lakh rupees.
 

       Except dealers mentioned at serial no. 18 above, all other dealers whose turnover is likely to exceed Rs. twenty five lakh or whose such turnover during the preceding assessment year has exceeded twenty five lakh rupees shall pay monthly tax by 20th day of succeeding month and deposit quarterly return by 20th day of the month immediately succeeding the last month of the quarter.

20. TDS annual statement
 
       TDS annual statement to be submitted by October 31st of the next assessment year. Assessing authority can extend time upto 90 days.
21. Filing of Returns by retailers under composition:
         Deposit tax on quarter basis and submit only annual return of turnover and tax.
22 Filing of return by works contractor:
 

       Those who carry on exclusive business in works contracts shall submit tax period return in Form XXIV-C. A works contractor who also carries on other business of purchase- sale or manufacture and sale of goods, shall keep separate account of such business and shall in addition to return in Form XXIV-C, also submit return of such other business in Form XXIV or Form XXIV-A, as may be applicable.

23 Filing of return by casual dealer:
 

       Casual dealer will file return of turnover and tax in Form XXIV-D by the day succeeding day on which business has been concluded. Where return is not filed, the assessing authority shall issue show cause notice for furnishing the return and if dealer fails, the assessing authority shall make assessment in accordance with provisions.

24.
       For the purpose of return, Treasury challan includes Tax Deduction certificate in Form XXXI and tax payable includes “composition money”. Hence, TDS Certificates are to be submitted in the same time in which Treasury Challans are to be submitted.
25. Power of Commissioner for issuing directions regarding submission of returns.
       Commissioner has been empowered for issuing instructions regarding submission of Returns.

26. Time Period for issuing TDS Certificate:
 
       TDS Certificate shall be issued by contractee to contractor or by contractor to sub-contractor or by lessor to lessee for transactions of one calendar month before expiry of 20th day of succeeding month.
27. Cost of Declaration Form XXXVIII:
         For obtaining Form XXXVIII from the assessing authority fee of Rupees Fifty per Form has been fixed.
28. Regarding Transit Pass
 

       In respect of vehicles carrying goods from outside U. P. and passing through U.P., it has provided that procedure, prescribed by the Commissioner, shall be followed and documents prescribed by the Commissioner will be carried by driver or person in charge of the vehicle.

29.
Rule 70 relating to “Tax Deferment” substituted by new Rule 70. “Tax Deferment and Entitlement Certificate”. Such dealers will, along with tax return file details in Form XLII.
30. Fee for copy of any order passed by assessing authority:
 

       First copy of any order passed by assessing authority shall be supplied free of cost. Next copy of any order will be supplied on furnishing of copying folio of twenty rupees. If order is more than four pages, the fee shall be Five rupees per page.

31
       Commissioner has been empowered for issuing instructions regarding procedure to be followed and submission of certificate relating imported goods and procedure for search and seizure of goods.
32. Procedure before the Settlement Commission:
         Application shall also accompany proof of deposit of tax on turnover not disclosed before the Assessing authority.
33 Format of Petition before the Settlement Commission amended.
34.

AMENDMENTS IN U.P VAT FORMS

  (i) Form VII-A:  New Form introduced for Registration of casual dealers.
(ii) Form XXIII: Form of Audit amended.
(iii) Form XXIV: Form of Tax Period Return amended.
(iv) Form XXIV–B: Form of Tax Period Return amended.
(v) Form XXIV-C: New Form of Tax Period Return For works contracts introduced.
(vi) Form XXIV-D: New Form of Tax Return for casual dealers introduced.
(vii)
Form XLV: Form of Application for issue or amendment of Certificate of Entitlement amended.
(viii)
Form XLVI: Report of Assessing Authority on Form of Application for issue of Certificate of Entitlement amended.
(ix) Form XLVII: Format of Certificate of Entitlement amended.
(x)  Form XLVIII: Statement of net tax payable and input tax credit amended (Tax Deferment & Refund).
(xi)
Form L: Format of Register relating to purchase of VAT Goods: Newly introduced Form.
 

       Few other minor changes have also been made. For complete amendments and Formats of amended Forms, you may after availing free access to login services, visit the page VAT AND ENTRY TAX NOTIFICATIONS page of this web site.