Kvat Rules

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716 Value Added Tax [2004: KAR. ACT 32

THE KARNATAKA VALUE ADDED TAX ACT, 2

Arrangement of Sections

Statement of 0bjects and Reasons:

Sections:

Chapter I

Introduction

1. Short title, extent and commencement

2. Definitions

3 Levy of tax



48. Tax to be first charge on property

49. Period of limitation for recovery of tax

50. Payment of interest on refunds

51. Power to withhold refund in certain ca

52. Production and inspection of documen

search and seizure

53. Establishment of check posts and inspe

54. Transit of goods by road through the St

55. Penalty in case of under-valuation of go

56 Liability to furnish information by certa



of goods sold (that would include tax paid, def

goods, raw materials, components and other i

with some restrictions and packing materials t

manufacture or processing of goods being sold

defined as output tax, at any point, the set offrebating;

(v) Tax paid on inputs purchased within the St

rebated against goods sold within the State, in

trade;(vi) Provides limited rebating of tax paid in exc



Certain consequential and incidental amend

Hence the Bill.

[ L.A. Bill No. 7 of 2006 ]

VI

Amending Act 6 of 2007.- It is considered ne

Karnataka Value Added Tax Act, 2003 to give

in the Budget and matters connected therew

Certain consequential and incidental amend

Hence the Bill.

[ L.A. Bill No. 21 of 2007 ]( ) h i i f i l



(v) empower the Commissioner of Commercial Taxes to

notify the officers empowered to intercept and inspect

goods vehicles;

(vi) empower the Commissioner of Commercial Taxes to

notify the website in which particulars in respect of goods

carried in a goods vehicle shall be entered into so as toexpedite inspection of such goods vehicle at the check

post and other places;

(vii) empower the Commissioner of Commercial Taxes to

notify the place to which the owner or person-in-charge of

the goods vehicle could be directed to take the goods

vehicle on its interception at places other than a checkpost or barrier for its inspection;

(viii) provide for levy of penalty for furnishing of incorrecth i l h f b i d fi f



chemical or other process for being made fit f

cleaning, grading, sorting or drying.

(4) Appellate Tribunal means the Karnataka

constituted under the Karnataka Appellate Tr

Act 59 of 1976).

(5) Assessment means an assessment made

been made under this Act and includes a re-a

1[(5-A) Body corporate means a corporation

defined under the Companies Act, 1956 (Centcompany incorporated outside India but does

di ib i d b h lf f i i



or distributing goods on behalf of any principa

(d) a non-resident dealer or an agent of a non-

local branch of a firm or company or associatio

the State ;

(e) a person who sells goods produced by him otherwise;

(f) a person engaged in the business of transfe

pursuance of a contract of property in any goo

deferred payment or other valuable considerat(g) a person engaged in the business of transfe

( h th d i th f ) i

d h d h f i f I



goods have crossed the customs frontiers of In

procurement of goods from outside the State

or otherwise.

(19) Input means any goods including capita

a dealer in the course of his business for re-samanufacture or processing or packing or storin

use in business.

(20) Input tax has the meaning assigned to i

(21) Maximum retail price

or MRP

shall mon the package in which the goods are contain

(iii) t t h t d t hi i i l f t



(iii) not to have accounted to his principal for t

collections or deductions made by him in the s

purchases effected by him on behalf of his prin

(iv) to have acted for a fictitious or non-existen

(4) Every transfer of property in goods by the Cany State Government, a statutory body or a lo

deferred payment or other valuable considera

course of business, shall be deemed to be a sa

Act.(30) State Representative means any person

S R i d S i 58 d i

(C t l A t 74 f 1956) t th i t if



(Central Act 74 of 1956) at the maximum rate specif

under Section 15 of the said Act;

(ii) cigarettes, cigars, gutkha and other manufacture

cent;

(iii) other goods at the rate of fourteen per cent.]1

1. Substituted by Act 12 of 2011 w.e.f. 01-04-2011

(2) Where goods sold or purchased are contained in

are packed in any packing material liable to tax und

tax applicable to taxable turnover of such container

shall, whether the price of the containers or packingseparately or not, be the same as the rate of tax app

so contained or packed and where such goods sold

th i th f i t St t t d



than in the course of inter-State trade or comm

import or export, shall be deemed, for the pur

taken place in the State irrespective of the pla

or purchase is made, if the goods are within th

(a) in the case of specific or ascertained goodscontract of sale or purchase is made; and

(b) in the case of unascertained or future good

appropriation to the contract of sale or purcha

by the purchaser, whether the assent of the otsubsequent to such appropriation.

( ) h h l f l

ti l l th it t t t b d h



time or a local authority or a statutory body, sh

payable by them to a dealer in respect of any w

them in the State, an amount equivalent to the

under the Act.

(2) No such deduction shall be made under subamounts payable by them are in respect of sale

of inter-State trade or commerce or, in the cou

territory of India or, import into the territory o

(3) The deduction under sub-section (1) shall bauthority on the basis of tax payable as calcula

1[(4) ( ) Wh it i f d th t th t bl

may be prescribed to claim input tax in such cases



may be prescribed to claim input tax in such cases.

1. Substituted by Act 6 of 2005 w.e.f. 19.3.2005.

(3) Subject to input tax restrictions specified in Sections 11

17, 18 and 19, the net tax payable by a registered dealer in

tax period shall be the amount of output tax payable by him

less the input tax deductible by him as may be prescribed inshall be accounted for in accordance with the provisions of

1. Shall be and shall always be deemed to have been substi

(4) For the purpose of calculating the amount of net tax to

refunded, no deduction for input tax shall be made unless a

debit note or credit note, in relation to a sale, has been issu

with Section 29 or Section 30 and is with the registered dea

deduction at the time any return in respect of the sale is fu

(2) Deduction of input tax under this Section sha



(2) Deduction of input tax under this Section sha

after commencement of commercial production

sale of any goods in the course of export out of t

the registered dealer 1[xxx]1.

1. Omitted by Act 4 of 2006 w.e.f. 1.4.2006.13. Pre-registration purchases.- Deduction of inp

allowed to the registered dealer, subject to the r

respect of tax charged to him by a seller on taxa

him for the purpose of the business within three

his registration provided that no input tax shall b

goods which have been sold or otherwise dispos

1 deemed to have been Substituted by Act 5 of 2008 w e



1. deemed to have been Substituted by Act 5 of 2008 w.e

(5) Notwithstanding anything contained in 1[sub-section

1. deemed to have been Substituted by Act 5 of 2008 w.e

(a) a dealer executing works contracts and who purchase

obtains goods from outside the State or from outside the

territory of India shall be eligible to opt for composition usub-section (1),and if the property in such goods (whethe

goods or in some other form) is transferred in any works

contract executed by him, the dealer shall be liable to pa

on the value of such goods at the rate specified in section

and such value shall be deducted from the total considerof the works contracts executed on which an amount as

notified is payable under sub-section (1) by way of comp

sales and despatches of goods or such purpose



sales and despatches of goods or such purpose

accordance with Rules or by special methods t

Commissioner or any other authorised person

excess shall become repayable forthwith.

1[18. Deduction of tax at source in the case of Notwithstanding anything contained in this Ac

concern or any other establishment, in which a

restaurant or other similar facility is run, throu

provided for the employees of such factories oshall deduct out of any amounts payable by th

ib i b h ll d i

(5) Where default is made in complying with the 1[p



(5) Where default is made in complying with the 1[p

(4)]1 the prescribed authority may, after such enqui

and after giving opportunity to the concerned deale

determine to the best of its judgment, the amount p

by such dealer and the amount so determined shall

be an amount due under the Act for the purposes of


(6) If default is committed in the payment of tax ded

period specified under sub-section (4), the dealer m

sub-section (1) shall pay, by way of interest, a sum e

specified under sub-section (1) of Section 37 during

such default is continued

1[21 Reimbursement of tax Tax collected un



1[21. Reimbursement of tax.- Tax collected un

of purchases as may be prescribed, made by sp

United Nations Organisation, Multilateral Fina

Organisations notified under the United Nation

Immunities) Act, 1947 (Central Act 46 of 1947)Embassies of any other country but excluding c

may be notified shall be reimbursed, in such m

conditions as may be prescribed.]1

1. substituted by Act 12 of 2011 w.e.f. 1.4.201Chapter III

R i t ti

the competent authority may after conducting



the competent authority may after conducting

enquiry as may be prescribed, proceed to regis

Section 22.

25. Registration.- (1) The form of application to

Section 22 or 23, the time and manner of makipayable shall be as may be prescribed.

1[Provided that the Commissioner may notify t

application shall be made electronically.]1

Inserted by Act 12 of 2011 w.e.f. 01-04-2011

(2) On receipt of an application to register unde

the prescribed authority shall register any such

final return at such time as may be prescribed



final return at such time as may be prescribed.

28. Obligation of registered dealer to inform ch

registration.- (1) Where.-

(a) a registered dealer sells or otherwise dispos

business or any part thereof, or(b) there is any other change in the ownership

including any change in the status, or

(c) a registered dealer discontinues his busines

place of business or opens a new place of busin

(d) a registered dealer changes the name or na

b i

1[(3) Any registered dealer who receives or issu



1[(3) Any registered dealer who receives or issu

debit notes shall declare them in his return to b

in which the credit note is received or debit not

reduction in tax or pay tax due thereon]1

1. Substituted by Act 4 of 2006 w.e.f. 1.4.2006.1[(4) Any document issued by the registered de

under any other law containing particulars of c

prescribed shall be deemed to be a credit or de

this section.]1

1. Inserted by Act 4 of 2006 w.e.f. 1.4.2006.

2004: KAR ACT 32] Value Added Tax 757

period specified in Section 32



period specified in Section 32.34. Requirement to provide documents and infor

Notwithstanding anything to the contrary contai

2004: KAR. ACT 32] Value Added Tax 759

prescribed authority may, for any purpose relateenforcement of this Act, by notice, require any p

prescribed authority, within such reasonable tim

notice, with any information or additional inform

under this Act, or any other document, whether

Chapter V Administration and

collection of tax

2004: KAR ACT 32] Value Added Tax 761



2004: KAR. ACT 32] Value Added Tax 761(a) from the date the tax had become payable to the

payment or to the date of any assessment under thi

whichever is earlier; and

(b) from the date on which any amount payable und

due.

(2) For the purpose of this Section interest in respec

month shall be computed proportionately and mont

of thirty days.

38. Assessment of tax.- (1) Every dealer shall be dee

been assessed to tax based on the return filed by him

except in cases where the Commissioner may notify

periods that would apply to such dealer if he we



periods that would apply to such dealer if he wegiving the dealer an opportunity of showing cau

in writing and the tax assessed and any interest

ten days from the date of service of such assess

1. Inserted by Act 6 of 2007 w.e.f. 1.4.2007.39. Re-assessment of tax.- (1) Where the prescr

grounds to believe that any return furnished wh

1[or]1 any assessment issued under Section 38

liability of the dealer, it, -

(a) may, based on any information available, re

of its judgement the additional tax payable 2[a

in the appeal the prescribed authority may in such



in the appeal, the prescribed authority may, in such period as may be prescribed, inform the dealer or th

authority under whose order the recovery is to be m

such proceedings may be continued with the modifi

amount of tax, penalty or interest therein substitute


(4) No order of rectification under this Section shall

without giving the dealer an opportunity of showing

such rectification.

42. Payment and recovery of tax, penalties, interest

amounts, issuance of clearance certificates]1.- (1) Ev

dealer shall furnish returns to the prescribed author

(c) notwithstanding anything contained in the Cod



(c) notwithstanding anything contained in the CodProcedure, 1973 (Central Act 2 of 1974), on applic

Magistrate, by such Magistrate as if it were a fine

him.

(10) Where a dealer or other person who has app

revision of any order made under this Act and has


made by the appellate or the revising authority in

the tax or other amount, no proceedings for recov

shall be taken or continued until the disposal of sfor revision.

offence under this Act has been committed by a company,



offence under this Act has been committed by a company, that the offence has been committed with the consent or c

that commission of the offence is attributable to any neglec

any director, manager, managing agent or any other office

such director, manager, managing agent or any other office


deemed to be guilty of that offence and shall be liable to be

against and punished accordingly.

(3) When two or more companies are to be amalgamated b

order of a Court or of the Central Government, and the ord

from a date earlier to the date of the order, and any two or

companies have sold or purchased any goods to or from ea

period commencing on the date from which the order is to

(2) When a firm liable to pay the tax or penalty



(2) When a firm liable to pay the tax or penaltyassessment of the tax and imposition of penalt

dissolution of the firm had taken place, and ev

time of dissolution a partner of the firm and th

2004: KAR. ACT 32] Value Added Tax 771such person who is deceased shall be jointly an

tax or penalty assessed or imposed.

1[(2-A) Where the business of a registered dea

whole on account of change in ownership, sale

lease or transfer of the business to a joint vent

registration subject to such restrictions and co

1 Shall be and shall always be deemed to have been



1. Shall be and shall always be deemed to have been1.4.2006.

1[(5) For the purpose of sub-section (2), non-payme

period during which recovery of any amount due un

stayed by an order of any authority or Court in any a


proceedings disputing such amount, shall be deeme

unless the appeal or other proceeding is allowed by


1[47-A. Rounding off of tax, etc.- The amount of tax,

other amount payable and the amount of refund du

rounded off to the nearest rupee and for this purpo

52. Production and inspection of documents and power



52. Production and inspection of documents and powerentry, search and seizure.- (1) Any officer authorised by

1[to exercise all or any of the powers specified below ei

specifically]1 in this behalf shall have the power.-


1. Shall be and shall always be deemed to have been ins(a) to enter and inspect the place of business of any dea

other place, where it is believed by such Officer that bu

being carried on or accounts including documents are b

by such dealer.

1[(a-1) to cause purchase of any goods by any person auhim from the business premises of any dealer, to check

bill f l b h d l d t f d

the dealer or any other person from whose cu



the dealer or any other person from whose cuare seized.

(k) in circumstances where it is not possible to

records or documents under sub-section (1) o

2004: KAR. ACT 32] Value Added Tax 777sub-section (3), to serve on the owner or the

immediate possession or control thereof, an o

not remove, part with or otherwise deal with

prior consent of such Officer, and after servinsuch steps as are deemed necessary to secure

copy until termination of movement of the goods; and



py g ;1. Inserted by Act 6 of 2005 w.e.f. 19.3.2005.




(d) on entering the State limits, report at the first situated

or barrier and, on leaving the State limits, report at the las

situated check post or barrier and give a declaration conta

such particulars as may be prescribed in respect of the goo

carried in the goods vehicle or boat, ship or similar vessel,

any officer-in-charge of the check post or barrier or any ot

officer as may be empowered by the Government 1[or the

Commissioner]1, in this behalf; and

particulars as may be prescribed regarding the good



particulars as may be prescribed regarding the goodname and address and the name and address of the

and the consignee.


(c) The power conferred by clause (a) shall also inclu

1[(i) to take possession of any goods liable to tax, in

documents prescribed are not produced, till the com

any proceedings under sub-section (8) or (12)]1


1[(ii)]1 the power to seal any box or receptacle, god

or any part of the godown or building in which accou

taxable goods are suspected to be kept or stored w

period for completion of the verification. Howe



period for completion of the verification. Howebe permitted for a period exceeding fifteen day

(10) Where such officer or other officer to who

referred, upon such verification, is of the opinio

KAR. ACT 32] Value Added Tax 783compliance with sub-section (2), punishable un

proceed, in respect of such goods in the custod

person-in-charge of the vehicle or the godown,

(12) and (14).

(11) Where the officer-in-charge of the check p

empowered officer has issued a notice for cont

same before the expiry of the period of ten days, if in his od l



p y p y ,disposal is necessary.

(15) Any person aggrieved by the levy of penalty under this

may appeal within thirty days from the date on which the o

was served on the person to the prescribed authority.

54. Transit of goods by road through the State and issue of

transit pass.-

(1) Where a vehicle is carrying goods taxable under this Act

(a) from any place outside the State and bound for any plac

the State and passes through the State ; or


(b) imported into the State from any place outside the counsuch goods are being carried to any place outside the State

respect of goods liable to tax under this Act carri



respect of goods liable to tax under this Act carriboat, ship or similar vessel, or held in stock by an

any other person, or held in the custody of any t

authority, or any officer empowered under Secti

that the value shown in the document accompan

in the purchase invoice is lower than the prevaili

Maximum Retail Price, by a difference of thirty p

difference is not on account of any discount or m

accordance with the regular trade practice of the

discount or margin allowed by the seller or the gseller after manufacture to the trade mark or bra

documents,



,(b) to appear, represent, act and plead,

(c) to receive notices and other processes, and

(d) to do all other acts connected with such proceedi

behalf of the Government or any officer appointed u

Act.59. Instructions to Subordinate Authorities.- (1) The G

and the Commissioner may from time to time, issue

instructions and directions to all officers 1[including

Inspectors]1 and persons employed in the execution

deem fit for the administration of this Act, and all suc

shall observe and follow such orders, instructions an

such order or direction in respect of any year



such order or direction in respect of any year(3) Whenever in respect of any proceeding un

prescribed authority ceases to exercise jurisd

another who may exercise that jurisdiction, th

succeeding may continue the proceeding fromproceeding was left by his predecessor.

(4) The person concerned may demand that b

under sub-section (3) is so continued, the pre

thereof be reopened or that before any orderreheard.

1[(6A) (i) In disposing of an appeal before it, the



[( ) ( ) p g pp ,shall not remand the case to make fresh assessm

shall proceed to dispose of the appeal on its mer

necessary by taking additional evidence.

1[(ii) The appellate authority shall pass an order

appeal, within a period of ninety days from the d

the case was concluded.]1


(7) Every order passed on appeal under this Sect

the provisions of Sections 63 to 67, be final.2004: KAR. ACT 32] Value Added Tax 793

make any further order staying proceedings of



y y g p gother amount.]1

1. Substituted by Act 6 of 2005 w.e.f. 19.3.2005

(8) (a) The Appellate Tribunal may, on the appli

appellant or of the respondent, review any orde

(5) on the basis of facts which were not before

order.

(b) No such application under clause (a) shall be

than once in respect of the same order.


(c) The application for review shall be preferred

order thereon as the circumstances of the case j



jenhancing or modifying the assessment, or canc

directing a fresh assessment.

(2) The Commissioner may on his own motion ca

the record of any proceeding under this Act, and

order passed therein by any officer subordinate

Clarification and Advance Rulings constituted un

erroneous in so far as it is prejudicial to the inter


if necessary, stay the operation of such order forfit and after giving the person concerned an opp

being heard, determine the question or questio



g , q qreverse, affirm or amend the order against whi

or remit the matter to the Appellate Tribunal w

Court on the question or questions of law raise

relation to the matter as the High Court thinks


(b) Where the High Court remits the matter to

under clause (a) with its opinion on questions o

amend the order passed by it in conformity wit

(7) Before passing an order under sub-section (

may if it considers necessary so to do remit the

revising authority, as the case may be, has give



g y, y , gconcerned of its intention to do so and has allo

the opportunity of showing cause in writing ag

1[(2-a) Where an application is made by an ass

of any mistake in an order, as being apparent fapplication has not been rejected by the asses


days from the date of receipt of the applicatio

have been amended rectifying such mistake.]


(3) Wh d h b id d d d

per cent of his actual liability to tax, 2[or his actual tax c2004: KAR ACT 32] Value Added Tax 803




may be]2 shall after being given the opportunity of show

against the imposition of a penalty, be liable to a penalty

cent]3 of the amount of such tax under or overstated.

1.Inserted by Act 4 o 2010 w.e.f.1.4.2010.2. Inserted by Act 5 of 2008 w.e.f. 1.8.2008.


(3) A dealer who furnishes a return which is incomplete

in any material particular, 1[as informed in a notice issue

liable to a 2[penalty 4[of]4 3[fifty rupees]3]2 for each da

incomplete or incorrect.

1 Inserted by Act 6 of 2007 w e f 1 4 2007

2. Shall be and shall always be deemed to have bf 1 8 2008



w.e.f. 1.8.2008.

75. Penalties relating to production of records an

information.-Any dealer or person who on dema

authority fails to produce any records or furnish

accordance with the requirements of this Act, af

opportunity of showing cause in writing against t


shall be liable to a 1[penalty not exceeding]1 five

addition, two hundred rupees per day for so as lo1. Substituted by Act 6 of 2005 w.e.f. 19.3.2005.

period not exceeding one year or both].1 S b i d b A 6 f 2005 f 19 3 200



p g y1. Substituted by Act 6 of 2005 w.e.f. 19.3.200

79. Fraudulent evasion of tax.- Without prejud

of Sections 71 to 77, if any person is knowingly

taking of steps with a view to the fraudulent eother person, he shall be liable to a fine of one


amount of the tax evaded, whichever is the gr

minimum term of six months but not exceedin

80. Cognizance of offences.- (1) No Court shall

ff h bl d

pay any tax, fee or other amount so assessed oti d i C i i l C t i



questioned in any Criminal Court in any prosec

whether under this Act or otherwise.

84. Bar and limitation to certain proceedings.-

prosecution or other proceeding shall lie again


Government, for any act done or purported to

the previous sanction of the Government.

(2) No officer or servant of the State Governme

respect of any such act in any civil or criminal p

d i d f ith i th f th ti

escaped assessment;(i) compelling the submission of returns and the pro



(i) compelling the submission of returns and the pro

documents and enforcing the attendance of persons

examining them on oath or affirmation;


(j) securing that returns furnished or accounts or docproduced or evidence of any kind given under this A

prescribed authority or an appeal or revision from a

such authority are kept confidential;

(k) the procedure to be followed and the powers exe

proceedings for recovery under Section 42;

(l) the duties and powers of officers appointed for th

Act, as appear to it to be necessary or expedi1[FIRST SCHEDULE



1[FIRST SCHEDULE

(Goods exempted from tax under sub-section


Serial Number Description of Goods(1) (2)

1. Agricultural implements manually operated

2. Aids and implements used by handicapped

3. All seeds for sowing other than oil seeds.

4. All varieties of textiles and fabrics (produce

40. Pappad.41 P l i l di i l b ili i i



pp41. Petrol including special boiling spirit.

42. 1[XXX]1

43. Salt.

1. Omitted by Act 6 of 2007 w.e.f. 1.4.20044. Semen including frozen semen.

45. Silkworm eggs, silkworm pupae, silkwo

including raw silk yarn, but excluding raw

outside the country.

46 Sl t l t il d h lk

11. Beehive12 B lti l T i i



12. Beltings, namely, Transmission, conveyo

of vulcanized rubber whether combined wit

otherwise.

13. Bicycles, tandem cycles, cycle combinatchildrens tricycles and similar articles and

thereof including their tyres, tubes and flap

14. Biomass briquettes

15. Bitumen 1[and cold tar.]11 Inserted by Act 4 of 2006 w e f 1 4 2006

52. 1[Industrial cables other than copper anbl t i ili t f t



cable upto six square milimetre for use upto

1. Substituted by Act 6 of 2007 w.e.f. 1.4.200

53. IT Products including telecommunication

notified.54. Kerosene lamps and lanterns, petromax,

55. Kerosene oil sold through Public Distribu

56. Khova

57. Kites58. Lignite

(6) Other furnishing articles1[(7) W l b l b d d th lik ]1



1[(7) Woven labels, badges and the like.]1


79. Religious pictures not for use as calenda

80. Renewable energy devices and parts the81. Sacred thread (janivara)

82. Safety matches


83. Sand and grits84 Sewing machines and parts and accesso

GOODS TAXABLE AT TWENTY PER CENT[Section 4(1)(a)(iii)]



[Section 4(1)(a)(iii)]

Serial Number Description of goods

1 2

1. Narcotics2. Molasses

1[3. Denatured anhydrous alcohol

4. Denatured Spirit

5. Ethyl alcohol

11. Programming and providing of computer software12. Providing and laying of steel pipes for purposes oth



g y g p p p p

than for plumbing, drainage and the like.

13. Rewinding of electrical motors.

14. Service and maintenance of IT products including

Telecommunications equipments specified in serialnumber 53 of Third Schedule.

15. Sizing and dyeing of yarn.

16. Supply and erection of electrical transmission towe

17. Supplying and fixing of Shahabad slabs and stones.

18. Supply and installation of centrifugal, monoblock asubmersible pumpsets.

FINANCE SECRETARIATNOTIFICATION



NOTIFICATION

II

No. FD 55 CSL 2005(2), Bangalore, dated 23r

In exercise of the powers conferred by sub-s1 of the Karnataka Value Added Tax Act, 200

the Government of Karnataka hereby appoin

as the date on which all the provisions of the

22 will come into force.

* * *

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