KVAT Act 8

Section 8 · Payment of tax at compounded rates

- Notwithstanding anything contained in section 6-

(a)

(i)any works contractor not being a dealer registered under the provisions of the Central Sales Tax Act, 1956 (Central Act74 of 1956), and who is not an importer may, at his option, instead of paying tax in accordance with the provisions of the said section, pay tax at three per cent of the whole contract amount;

(ii)any works contractor not falling under clause (i) above may, at his option, instead of paying tax in accordance with the provisions of the said section, shall pay tax at three per cent of the contract amount after deducting the purchase value of goods excluding freight and gross profit element consigned into the State on stock transfer or purchased from outside the State and for the purchase value of goods so deducted shall pay tax at the scheduled rate applicable to such goods.

Provided that notwithstanding anything contained in sub-clause (ii) above, the compounded tax payable by any works contractor under this clause in respect of works contracts awarded by Government of Kerala, Kerala Water Authority or Local Authorities shall be four per cent of the whole contract amount:Provided further that the provisions of this clause shall not apply to any works contract in which the transfer of material is in the form of goods:Provided also that notwithstanding anything contained elsewhere in this Act, a works contractor who intends to pay tax at compounded rate in accordance with this clause in respect of all works undertaken by him during a year, may, instead of filing separate application for compounding for individual works, file a single option for payment of tax under this clause before 30th day of April of the year to which the option relates, subject to eligibility:Provided also that in the case of any work covered under the above provisos which remains unexecuted fully or partly at the end of the year, the contractor shall continue to pay tax in respect of such works in accordance with the provisions of this clause.Provided also that notwithstanding anything contained in this Act, in cases of works which commenced prior to 1st April, 2008 and which remains partly unexecuted as on 1st April, 2008, the contractor shall pay tax at the rates as it existed prior to 1st April, 2008 till the completion of work, or up to 31st March, 2009, whichever is earlier:Provided also that notwithstanding anything contained in this Act, contractors who have opted for payment of tax under sub-clause (ii) of clause (a) of section 8 during the previous years shall continue to pay tax on that portion of the works remaining unexecuted as on 1st April, 2009, at the rates applicable as on 1st April, 2009.Explanation.1. - For the purpose of this clause "whole contract amount" shall not include the amount paid to sub-contractors for execution of the portion of works contract if the sub-contractor is a registered dealer liable to tax under sub-section (1) or sub-section (lA) of section 6, and the contractor claiming deduction in respect of such amount furnishes certificates in such form as may be prescribed.;Explanation 2. - Notwithstanding anything contained in any other Act, a dealer who had surrendered his registration and unused declaration forms under the Central Sales Tax Act, 1956 (74 of 1956), before the assessing authority on or before 31st March, 2008 and who does not have any closing stock of materials purchased interstate as on 31st March, 2008 or who pays tax on such closing stock at scheduled rates, shall be eligible for paying compounded tax under sub-clause (i) of this clause, for the year 2008-2009.";

(b)

Any dealer producing granite metals with the aid of mechanized crushing machine may, at his option, instead of paying tax in accordance with the provisions of the said sections, pay tax at the following rates, namely:-

(i)for each crushing machine of size not exceeding 30.48 cm x 22.86 cm = Rs.40,000 per annum;

(ii)for the each crushing machine of size exceeding 30.48 cm x 22.86 cm but not exceeding 40.64 cm and 25.40 cm = Rs.1,40,000 per annum;

(iii)for the each crushing machine of size exceeding 40.64 cm x 25.40 cm = Rs.2,80,000 per annum;

(iv)for each cone crusher Rs.15,00,000 per annum.

Provided that in the case of dealers, who opted to pay compounded tax under this clause, no separate assessment shall be made in respect of m-sand produced by them.Provided further that notwithstanding anything contained in this clause, dealers with a single crushing machine of size not exceeding 30.48 cm. × 22.86 cm. shall pay rupees twenty five thousand only per annum and those with a single crushing machine of size above 30.48cm x 22.86 cm but not exceeding 40.64 cm X 25.40 cm shall pay rupees one lakh only per annum as tax under this clause.";Explanation. - For the purpose of this clause, primary crushers shall also be reckoned for the purpose of computation of compounded tax, and the rate applicable to primary crushers shall be at fifty per cent of the aggregate of the tax payable on secondary crushers.

(c)

(i)Any dealer in cooked food and beverages, including beverages prepared by him, other than a dealer supplying cooked food or beverages to any airline service company or institution or shipping company for serving in air craft, ships or steamer or served in air craft, ship, steamer, bar attached hotel or star hotel may, at his option, instead of paying tax in accordance with the provisions of sub-section (1) of section 6 but subject to payment of tax, if any, payable under sub- section (2) thereof, pay tax at half per cent of the turnover of cooked food and beverages prepared by him and also on the turnover of other goods in respect of which he is not the dealer effecting first taxable sale, as defined in the explanation under sub- section (5) of section 6.

Explanation. - Cooked food for the purpose of this clause shall include sweets and fresh fruit juice prepared and served in the restaurants and hotels.

(ii)

Any bar attached hotel, not being a star hotel of and above three star or a club or a heritage hotel may, at its option, instead of paying tax in accordance with the provisions of section 6, but subject to such conditions and restrictions as may be prescribed, pay tax at one hundred and twenty five per cent of the tax paid or payable under this Act, in respect of the highest turnover of cooked food and beverages prepared by them, and packaged water, aerated water, cigarettes, soft drinks and other goods purchased from registered dealers, for the previous three consecutive years, immediately preceding the year to which the option relates:

Provided that the dealers who have paid compounded tax during the previous year shall pay tax at one hundred and fifteen per cent of the compounded tax paid and one hundred and fifteen per cent of the tax paid on packaged water, aerated water, cigarettes and soft drinks purchased from registered dealers.Provided further that where a dealer had paid tax under this sub clause for the previous year, the tax paid for the succeeding year under this clause shall be one hundred and fifteen percent of such tax paid during the previous yearExplanation. - For the purpose of this clause "bar attached hotel" shall mean a hotel or restaurant or club or any other place, which is licensed under the Foreign Liquor Rules to serve foreign liquor falling under Serial Number 2 of the Fourth Schedule, but shall not include any hotel or restaurant, not being a star hotel, which is licensed to serve only beer.

(d)

Any dealer who transfers the right to use Video Cassette or Compact Disc may, instead of paying tax in accordance with the provisions of section 6, pay tax at the rate of one thousand rupees per year for every main or branch shop situated in any place within the limits of any Municipal Corporation or Municipality and rupees five hundred per year for any main or branch shop situated in any other place or places.

(e)

Any dealer, who is an importer or a manufacturer who is not entitled to any deferment of tax under section 32, of medicines and drugs falling under the Third schedule may, at his option, pay, in such manner and subject to such conditions and restrictions as may be prescribed, in lieu of the tax payable by him on such goods under sub- section (1) of section 6, tax at the rate of 4 per cent of the maximum retail price of such goods.

Explanation. - For the purpose of this clause, maximum retail price in respect of the goods mentioned means the maximum price printed on the package of any goods at which such goods may be sold to the ultimate consumer and in respect of supplies to Government of Kerala, where such price is not so printed on the package, the price charged on the sales to Government:Provided that where a registered dealer has purchased any goods,

(a)from an importer or a manufacturer who has opted for payment of tax under this clause; or

(b)from another registered dealer where the tax on the maximum retail price of such goods was paid in the state on an earlier sale, such dealer shall, notwithstanding anything contained elsewhere in the Act, but subject to such conditions and restrictions as may be prescribed, be exempt from payment of tax under sub-section (1) of section 6 in respect of the sale of such goods and be entitled to recover from the buyers the amount of tax paid by him at the time of purchase of such goods and the turnover of such goods shall not be included in the total turnover for the purpose of sub-section.(5) of section 6where the dealer opts for payment of tax in accordance with the said subsection in respect of goods other than medicines and drugs.

Provided further that a dealer who opts payment of tax under this clause shall not allow any trade discount or incentive in terms of quantity of goods in relation to any sale of goods covered under the clause, effected by him, for the purpose of calculating his tax liability.

(f)

(i)any dealer in ornaments or wares or articles of gold, silver or platinum group metals including diamond may at his option, instead of paying tax in respect of such goods in accordance with the provisions of section 6, pay tax at,-

(a)one hundred and fifteen per cent, in case their annual turnover for the above goods for the preceding year was rupees ten lakhs or below;

(b)one hundred and twenty per cent, in case their annual turnover for the above goods for the preceding year was above rupees ten lakhs and up to rupees forty lakhs;

(c)one hundred and thirty five per cent; in case their annual turnover for the above goods for the preceding year was above rupees forty lakhs and up to rupees one crore; and at

(d)one hundred and fifty per cent; in case their annual turnover for the above goods for the preceding year exceeded rupees one crore;

of the highest tax payable by him as conceded in the return or accounts, or tax paid by him under this Act, whichever is higher, for a year during any of the three consecutive years preceding that to which such option relates.Explanation 1. - Where a dealer had not transacted any business for the last three years consecutively, the highest tax paid or payable for the year during the year or years he transacted business shall be considered for the above purpose.Explanation 2. - Where during any such preceding year, the dealer had not transacted business for any period in that financial year, the tax payable for the twelve months shall be calculated proportionately on the basis of the tax payable or the turnover conceded, as the case may be, for the period during which such dealer had transacted business.Explanation 3. - Dealers opting for payment of tax under this clause shall pay compounded tax in respect of all their branches existing in the year to which the option relates.Explanation 4. - Where a dealer has not opted to pay compounded tax with respect to a new branch opened in 2008-09, the compounded tax payable for such branch for the year 2008-09 shall be notionally fixed as the average of the compounded tax paid for the principal place and branches in that year and if the new branch opened is the first branch, the compounded tax payable for it shall be the same as that payable for the principal place of business.Explanation 5. - Where a dealer opens a new branch in the current year, the additional compounded tax payable under this clause in respect of such branch shall be the average of the tax payable by him in respect of his principal place of business and all branches.Explanation 6. - Where a dealer has opted for payment of tax under this clause for the first time in 2009-10 and has commenced business only in 2008-09 and the tax payable as per return or account during 2008-09 is less than the output tax payable, then the tax payable for 2008-09 shall be notionally redetermined on the basis of output tax for determining the tax liability for 2009-10.Explanation 7. - Tax payable as conceded in the accounts includes the tax payable on suppressed turnover subsequently detected also.Explanation 8. - where a dealer who had opted and paid tax under this clause during previous years with respect to a branch that had remained closed during the whole of the year 2009-10 ,for the purpose of determining the compounded tax payable for 2010-11, the tax paid in respect of that branch shall not be reckoned.Provided that a dealer who opts for payment of tax under this clause may collect tax on the sales at the rate not exceeding the rate prescribed for the commodity under this Act, but where the tax so collected during the year is in excess of the tax payable for the year under this clause, the tax collected in excess shall be paid over to Government in addition to the tax payable under this clause

(ii)The assessing authority, for valid and sufficient reasons, such as shifting of place of business, holding of stock exceeding double the quantity held in the previous year, furnishing of false information, suppression of relevant information, failure to furnish such information demanded, may refuse permission to pay tax under this section and cancel the permission if any granted:

Provided that no orders under this sub-clause shall be issued without giving the dealer an opportunity of being heard and without prior approval of the District Deputy Commissioner.

(iii)

Notwithstanding anything contained in sections 55 or 60 of this Act, orders under sub - clause (ii) shall be appealable only to the Appellate Tribunals.

(iv)

In case where permission has been cancelled, the amount, if any paid based on the permission, shall be apportioned against the output tax due of the dealer.

(v)

Where a dealer had paid tax under this clause for the previous year, the tax payable for the succeeding year under this clause shall be:

(a)one hundred and five per cent of such tax paid during the previous year, in case their turnover for the preceding year was rupees ten lakhs or below

(b)one hundred and ten percent of such tax paid during the previous year, in case their turnover for the above goods for the preceding year was above rupees ten lakhs and upto rupees forty lakhs

(c)one hundred and fifteen percent of such tax paid during the previous year, in case their turnover for the above goods for the preceding year was above rupees forty lakhs and up to rupees one crore: and

(d)one hundred and twenty five percent of such tax paid during the previous year, in case their turnover for the above goods for the preceding year exceeded rupees one crore.

Provided that the tax payable under this sub clause by the dealers covered under Explanation 6 of this clause shall be at the appropriate percentage of tax mentioned in (a),(b),(c) or (d) above, of the tax re-determined under the said Explanation.

(vi)

where a dealer who opt for compounding under this clause has been transacting business under a brand name, the compounded tax payable under this clause shall not be less than the compounded tax payable had the business been run as a branch of the franchisee or of other franchisees.

(g)

Any dealer in poultry or poultry meat which are brought from outside the state may at his option, instead of paying tax in accordance with the provisions of the said section, pay tax on the basis of floor value fixed by the Commissioner from time to time at the rate of 12.5% during the time of entry of goods into the state.

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