Karnataka VAT changes wef 01.04.12 (Special Summary)

Clarifications given in Circular No. GST/CR.11/2011-12 dt.3.4.2012 issued by the Commissioner of Commercial Taxes, Govt. of Karnataka - on the modifications and changes under different tax enactments effective from 1.4.2012:

Input Tax Restrictions – Sec.11 [amended]

• Amendment is made to avoid double deduction by a dealer executing works contract.

Deduction of tax at source in the case of certain goods: Sec. 18-A• This section is omitted in view of the judgment of the Hon’ble High Court of Karnataka in the case of Suman Enterprises, Shimoga.

Credit Notes & Debit Notes - Sec.30This section is omitted.
• Any document issued by dealers is sufficient to explain any subsequent changes in the amounts originally shown in the tax invoice.
• Deduction from the total turnover towards goods returned by the purchasers within 6 months from the date of delivery of goods provided under Rule 3(2)(d) of K VAT Rules, 2005 would continue.
• It is sufficient if such deductions are supported by accounts of the seller.
• Due to omission of Sec.30(3) – dealers are not required to declare the credit note or debit note in the Return.
• Change of turnovers should be declared in the Revised Return within a period of 6 months.
• In case of additional consideration demanded and received should be declared in the Return
• Credit Note/Debit Note – provision is valid only upto 31.3.2012.

Returns - Sec.30:•
A Dealer is now permitted to file ‘Revised Return’ for a month only within 1 month from the date of original filing of Return. e.g., Return for the month of April is filed on 20th May. The Revised Return should be filed within 20th June.
• If the dealer desires to file a Revised Return after the above date, then he has to get permission of LVO or VSO. With the above permission, he can file the Revised Return within 6 months.
• Similar changes are made for the Quarterly Return also.

Period of Limitation for Assessment - Sec.40
Existing
Assessment or reassessment is within a period of 4 or 5 years after the end of the relevant tax period
Revised
Assessment or re-assessment for any tax period during the period from 1.4.2005 to 31.3.2007 may be made within a period of 8 years.
Existing
In case of un-registered dealers, assessment or reassessment is within a period of 8 or 10 years
Revised
Assessment or re-assessment in case of Unregistered Dealer can be made within a period of 10 years.

Check-post procedures - Sec.53•
Empowering the Commissioner to notify the website in which the particulars prescribed to be contained in the declaration.
• Declaration of particulars in the website is mandatory. Any contravention or non-compliance would attract penalty under sub-section 12.

Transit of goods by road through the state and issue of transit pass – Sec.54•
Empowering the commissioner to notify the goods in respect of which transit pass should be mandatorily obtained by the driver or person-in-charge of the vehicle carrying the goods through the state.

Appeals – Sec.62•
Joint commissioner (Appeal) will admit the appeal, if the undisputed amounts are paid before filing the appeal. Deposit of 50% + Balance in Bank Guarantee procedure will continue. Appeals should be disposed of within 60 days from the date of issue of stay orders.

Rectification of mistakes – Sec.69•
All applications for rectifications should be disposed of within 60 days from the date of their receipt.
Penalties relating to Returns and assessment – Sec.72•
Prosecution of dealers who fail to file Return continuously for period of 3 months or 2 quarters. Charge sheet should be filed by the LVOs & VSOs concerned.
Penalties relating to keeping of records - Sec.74•
Penalty for non maintenance of proper books of accounts increased from Rs.2000 to Rs.5000/- in respect of first offence
• In respect of subsequent offence, penalty increased from Rs.5000 to Rs.10000/-.
Penalties relating to production of records and furnishing of information – Sec.75
• Maximum penalty for non production of records and non furnishing of information by dealers and other persons has been increased from Rs.5000 to Rs.10000/-
Amendment to First Schedule:•
All varieties of Fabrics are exempted - excluding HDPE and other plastic woven fabrics.

Amendment to Third Schedule:

• HDPE and other plastic woven fabrics are taxable @ 5% VAT.

Amendment to sixth schedule•
New Sl. No.7 inserted wherein the turnover in respect of transfer of property in goods in execution of works contract of manufacture and supply of ready-made garments etc., now liable to be taxed @ 5% instead of earlier rate of 14%.