January 26, 2012

DVAT- FAQs- Question on Current DST,CST,WCT etc.

Q.1 Is registration under Sales Tax Law obligatory to all dealers carrying out Trade in Delhi ?
A. The registration of dealers is pre-requisite to satisfactory enforcement of the Sales Tax. The DST Act provides that no dealer shall while liable to pay tax, carry on business as the dealer unless he has been registered and produced a certificate of registration.
Q.2 Can the registration be obtained from the business premises which are located ?

a) in residential colonies,
b) non-commercial establishments,
c) on encroached Govt./State land,
d) unauthorized colonies etc.
A. Of late there has been much talk about feasibility of asking for no objection from DDA/Dte. of Estate/Land & Building Department etc. However, neither the sections nur rules confer any right on a third party to file objections at the stage of grant of registration to a dealer. The inquiry that is contemplated under the rules intents to enable the registration authority to find out whether the application submitted for registration is bonafied or not and whether the particulars mentioned therein are correct or not. If registration authority is satisfied with the particulars & bonafied nature of application and has granted registration, it is not open to the third party to question the authority of certificate of registration.
Q.3 In case I am an exporter or Inter-State dealer, if right at the time of commencement of my business I wish to obtain registration under Delhi Sales Tax, which course should I follow ?
A. You should apply at the earliest and not later than 30 days after incurring liability either by effecting an inter-state sales or by making an import and then selling the imported item, thus making yourself compulsorily registered dealer.
Q.4 If I am neither exporter or inter-state dealer, when could I obtain Registration ?
A. In case of local business only whenever your turnover for the financial year exceeds taxable quantum, you should apply within 30 days. You can also obtain voluntary registration after conducting sales work Rs. 25000/- if you so desire.
Q.5 What is the taxable quantum ?
a) In case of exporter or inter-state dealer - as and when the first sale is carried out;
b) In case of manufacturer - Rs. 2 Lakhs
c) Reseller - Rs. 4 Lakhs
Q.6 What immediate benefit could be derived on obtaining registration under Sales Tax ?
A. A registered dealer is allowed to purchase goods on the strength of Rcs without payment of tax on furnishing of statutory declarations within the State and concessional rates of tax along with statutory declarations outside the State.
Q.7 What is understood by the term " Goods required for use in manufacture" ?
A. For goods to be entered in the registration certificate for use in manufacture only those goods which are raw material and converted into finished products are to be allowed. The consumable goods which are not part of the end product are not allowed to be entered in the R.C.
Q.8 What are the circumstances under which refund of sales tax could be claimed ?
A. An application for claim of refund of excess sales tax paid could be made on any of the following circumstances :

a) Any excess amount found paid in assessment proceedings ,
b) Any excess amount declared in an order of appeal,
c) Reimbursement of tax paid in State on declared goods subsequently sold in Inter State sale,
d) Restoration of registration and the paid tax on purchase of goods during the period when first registration was not in operation.
Q.9 While granting a registration, how the quantum of surety prescribed is determined ?
A. In case of a dealer who is required to compulsorily register himself, the quantum of surety should have determined on the nature and size of the business of the dealer. Where the surety is being demanded for proper custody and use of statutory declaration forms, the quantum of surety should be the amount of tax which the dealer is likely to save by the use of forms. In other case, the quantum of surety should not exceed the essential amount of tax payable.
Q.10 What could be the modes by which the dealer may be required to furnish surety ?
A. The assessing authority may require the dealer to furnish the surety in any one or more of the modes and terms specified in ;

1)Promissory notes of stock certificates of any State Govt.
1)Post Office cash certificate, treasury/saving deposits, HSC etc.
1)Post office savings bank pass books
1)Municipal debentures or Post Trust Bonds
1)Bonds or Debentures issues by appropriate bodies.
1)Deposits receipt of any schedules bank
1)Mortgage bond of any immovable property.
1)Back guaranties of Scheduled Banks.
1)Registered Dealers Sureties.
Q.11 What is special registration ?
A. Special registration is for those dealers whole certificates of registration has been canceled due to default in payment of tax, willful withholding of information, failure to furnish security, conviction for offenses under Sales Tax Act. This registration is meant for a defaulting dealer to enable him to continue his business. Dealers holding special registration certificates are not entitled to purchase any goods without payment of tax on the strength of registration certificate.
Q.12 What is a ST-1 form?
A. The Delhi Sales Tax Act provides that a purchasing registered dealer is entitled to exemption from Sales Tax of goods of the class or classes specified in his certificate of registration. It further lays down that a selling dealer claiming deduction in respect of any sales made to another registered dealer has to furnish to the prescribed authority with in prescribed time a declaration containing the prescribed particulars in the prescribed form obtainable from the prescribed authority and duly filled and signed by the purchasing registered dealer. The furnishing of the declaration form issued by the purchasing dealer is a condition for claiming the exemption. The declaration so prescribed to be used in respect of goods or class of goods which are taxable at last point is called Form ST-1.
Q.13 What is ST-35 / ST-35-1 ?
A. In 1986, when the list of Ist point goods was enhanced, the trade felt that it would result in double taxation as the tax would be on inputs as well as on the finished goods. The same feeling was expressed by the inter-state sellers who represented that this would totally disrupt the distributive character of Delhi and dealers will have to pay tax under the Local Act on making purchases and again on the inter-state sales. Similarly the Delhi based exporter will not be competitive in the export market in case he is made liable to pay tax on his purchases. Keeping these factors in view, a provision was made to allow tax free sale of Ist point goods by a first importer or a manufacturer to a registered dealer who requires the goods for the purpose of manufacture, export, inter state sales or for packing of goods on the strength of a prescribed declaration Form ST-35. Similarly ST-35/- is used for making tax free purchases by authorized stockiest selling agent from his principal, for sale of goods in Delhi.
Q.14 What is 'Foot Note' ?
A. A footnote was inserted in the prescribed form ST-35 allowing a Manufacturer/Interstate Seller/Exporter to sell the left over stocks from out of his purchases(against the ST-35 Form), which he could not utilize for use in Manufacture/Interstate Sales/Export, to another registered dealer for the prescribed purposes i.e. further used as raw material/Interstate Sale/Export.
Q.15 What is implication of 'Withdrawal of Footnote' ?
A. Goods purchase against ST-35 forms by an authorized dealer is not allowed to resale the goods further on forms, locally. No local dealer except /interstate seller can purchase those goods on the strength of ST-35 form, where footnote to form ST-35 has withdrawn.
Q.16 What is implication of 'Withdrawal of ST-35 Form' ?
A. Withdrawal of ST-35 implies stoppage of any trading on the strength of local forms. Tax has to be collected by the first point seller.
Q.17 How to obtain the forms from the department?
A. Requisition if to be filed along with the last month / return quarter's of the concerned year.
Q.18 What is Summary Scheme II?
A. All registered dealers whose G.T.O. does exceed Rs.1 Crore p. a. (scheme-II) and GTO mainly consists of:- Sale of tax free goods or sale of specified first point goods; Export out side India; turn over of goods than those specified above does not exceed Rs. 25 lacs.
Are eligible if they have filed all returns in time and paid tax as per return otherwise have paid tax due alongwith interest and where the assessment is not for the first or the last line.
Q.19 What is the taxable quantum in W.C.C.?
A. Rs. 5 lacs as per the explanation inserted by the amendment Act. 2001 w.e.f. 30..402001 the gross turnover of total contract amount received shall be the basis for calculating the taxable quantum
Q.20 Who is liable to pay entry tax?
A. The tax shall be payable and paid by an importer within 15 day from the entry of motor vehicle in Delhi, failure to pay tax liable for payment of interest.
Q.21 What is Work Contract?
A. A works Contract in simple terms is a Contract for carrying out certain work on movable and immovable property of others.
Q.22 What is rate of interest if the return is not submitted in time?
A. Simple interest @ 1% p.m. for the first month of default and after that 1.5% p.m.
1) The application is to be filed in form No. 21/22/24 within 12 months from the date of order giving rise to claim of refund.
2) Within 90 days of receipt of application
(i) By way of refund voucher.
(ii) By way of refund adjustment voucher.
Q.23 What is procedure of filing appeal?
A. Appeal can be filed within 60 days from the date of service of order to be appealed against.
Q.24 What is General rate of Tax?
A. There are 4 Schedules prescribed for rate of tax one @ 4% II nd one is @ 12% & III rd schedule is tax free and IV th Schedule 16@ 20% The item not covered under any of these schedules is General item. Tax rate is 8%.
Q.25 What is Tatkal Scheme for Registration?
A. Under this scheme, Registration Certificate would be issued to dealer immediately on submission of application alongwith all relevant documents alongwith PAN NO. issued by Income tax Deptt.
Q.26 What are the events requiring amendments?
A. (i) Effects any change in name ownership or place of his business.
(ii) Effects godown addition or modification in the description of any goods or class of goods specified in his registration certificate
Q27. Discontinues or more place (s) of business, opening or closing of branch office(s) and warehouse (s)
A. However in case of death of a registered dealer his legal representative shall give information within 60 days from the date of death of such dealer.
Q.28 What are the information required to be submit tax for amendments:
A. In case of addition of items in the registration certificate photocopy of purchase bill.
(i) In case of change of business premises: Rent receipt or proof of ownership of premises and NOC from landlord are to be attached with the application of amendment.
(ii) In case of admission / deletion of partner: Intimation shall be given to the assessing officer within 30 days-a copy of dissolution deed and alongwith NOC from surety form or new partnership deed shall also be filed alongwith intimation application by the existing firm.
(iii) In case of death of a registered dealer his legal representative shall give information within 60 days from date of death of such dealer to the concerned S T O.
Q.29 What are the consignees under which cancellation of R.C. can be applied:-
A. Permanent Closure of business:
If a registered dealer had discontinued his business permanently than he can surrender the R.C. for cancellation .
Q.30. What is tax clearance certificate?
A. Tax clearance Certificate is a certificate issued by the Assessing officer certifying that the dealer has no liability or dues which are in the nature of defaults.
Q.31. What are declared goods ?
A. Declared goods are the goods of special importance in inter state trade or commerce as prescribed under section 14 of the central sale tax act . such as Iron & Steel, Cereals, Jute, Cotton Coal Crude oil hides & Skins and oil Seeds etc.

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