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The perusal of Revised DVAT 16 shows that now the dealer in row R3 is required to furnish the ‘Tax contribution’ of the 5 top items dealt with in order of volume of sales for the tax period or till the aggregate of sale or volume reaches at least 80%. The commodity codes were notified under the Delhi Sales Tax Act, 1975 the Circular classifying the commodities is reproduced here below:


NO.9(1)/95/PPR/PF-1 /98-99/224698-25071 Date 18th September,1998

To standardise and simplify the specifications of items of the certificate of  registration or Authorization Certificates, to be issued to the dealers under the provisions of Delhi Sales Tax Act 1975 (No.43of 1975), it is hereby directed that the goods must be specified as per the code Nos. & classification given in the Annexure to this circular .

It is further clarified that this classification has no direct correlation with the tax rate, point of taxation or determination of items etc. and is only for the administrative purposes.


Authorization Certificates are not issued under the Delhi Value Added Tax Act, 2004 or rules, nor the commodities dealt in are required to be specified in the Registration Certificates under the present scheme of taxation of goods under the Local Act. The Delhi Value Added Tax Act, 2004 neither include any Annexure or Schedule providing for Commodity Codes nor has the legislature delegated any power to the rule making authority to notify the Commodity Codes. The schedules do enlist the ‘tax free goods’ and ‘goods taxable @1%, 5% and 20%’ but does not enlist the non-classified goods, the goods classified in the schedules does not match with the commodities shown in row R3 of the DVAT 16, thus are confusing and any dealer without going into the legalities if he still wants to comply with the requirements of Form DVAT 16/ DVAT 17 is exposed to the risk of misreporting and make himself liable for penalty under section 86 of the Delhi Value Added Tax Act, 2004.

No commodity codes have been notified under the Delhi Value Added Tax Act, 2004 or Delhi Value Added Tax Rules, 2005. The source of importing the requirement of reporting commodity code-wise sales in the return forms has not been disclosed so that a dealer may refer to the same for the purpose of information and clarification, if so desired. Section 106 of the Delhi Value Added Tax Act, 2004 only save the previous operation of  “anything done or any action taken including any appointment, notification, notice, order, rule, forms or certificates etc.,” but does not save the circulars issued under the repealed Acts, thus the circulars codifying the commodities have no relevance under the Delhi Value Added Tax Act, 2004.

Without prejudice to what has been stated above, it will not be out of place to cite few ambiguities in the list of Commodity Codes.

‘Machine Tools’ have been assigned two Commodity Codes namely 507500 and 507606.

‘Plastic Raw Material (Primary Plastic) has been assigned Commodity Code 408000 whereas ‘Plastic Waste’ which is also used as raw material has been assigned Commodity Code 408800.

‘Pulses’ has been assigned Commodity Code 101003 whereas ‘Cereals And Pulses’ has been assigned Commodity Code 101000.

‘Paper & Board’ has been assigned Commodity Code 601000 whereas ‘Paper’ has been assigned Commodity Code 601003 and ‘Paper Board Except Packing Material’ has been assigned Commodity Code 601004.

The purchaser reporting purchases under one commodity code and the seller reporting sales under another commodity code will cause mismatch and lead to uneasy consequences for either or both of them.

The Circular specifying the commodity codes under the Delhi Sales Tax Act, 1975 have not been saved under section 106 of the Delhi Value Added Tax Act, 2004. The specification of Codes can’t be made applicable under Section 9(2) of the Central Sales Tax Act, 1956 as they do not have any sanctity under the Local Act.

The term ‘tax contribution’ has not been defined under the Act or rules. No basis of computation of the tax contribution commodity wise has been provided under the Act or Rules. The term ‘tax contribution’ is a vague term and in the absence of any definition or the formula to compute the same the requirement of R3 to report ‘tax contribution’ commodity code wise and ‘Tax Rate’ wise, cannot be complied with, and in the absence of filling the information asked for in row R3 the software provided does not allow a dealer to submit the return. In the absence of clear provisions defining the term ‘tax contribution’ a dealer cannot comply with this requirement in the return form, specially the one who is making generally inter-state sales or export sales and claims refund of VAT paid on local purchases. A taxing statue cannot be based upon the ambiguity and still expose a honest taxpayer to penal consequences.

 In view of the above observations, the Return Form DVAT 16/ DVAT 17 asking the dealers to report the transactions commodity wise/ code wise are misconceived and without any sanctity of law. In the absence of any definition of term ‘tax contribution’ and the rules stating the manner in which to compute ‘tax contribution’ the same cannot be complied with. These requirements are without any authority of law and the dealer cannot proceed with the filing and submission of returns in such scenario, under these circumstances, if a dealer fails to file the return, can’t be held guilty and penalized. This requires a quick review of the amended provisions to safe guard the interests of the revenue.




Published by

Devinder Jain
(Tax Practioner)
Category VAT   Report

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