Hvat&cst act

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 September 2013 A commission agent(kachcha aadti) purchase paddy from farmers and sold to the rice mills against d2 form and the rice miller after procure rice from paddy export the rice. in this case pl. explain the provision of taxation under hr value added tax act2003 & cst act 1956 and declaration farms required & explain the conditions in detail

Querist : Anonymous

Querist : Anonymous (Querist)

07 September 2013 A commission agent(kachcha aadti) purchase paddy from farmers and sold to the rice mills against d2 form and the rice miller after procure rice from paddy export the rice. in this case pl. explain the provision of taxation under hr value added tax act2003 & cst act 1956 and declaration farms required & explain the conditions in detail

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

28 July 2024 In the context of the Haryana Value Added Tax (VAT) Act, 2003, and the Central Sales Tax (CST) Act, 1956, the taxation provisions for transactions involving a commission agent (kachcha aadti) who purchases paddy from farmers and sells it to rice mills, which in turn export the rice, can be intricate. Here’s a detailed explanation of the taxation provisions, declaration forms required, and conditions:

### **1. Haryana VAT Act, 2003**

**1.1 **Taxation of Commission Agents (Kachcha Aadti):**

- **Definition and Taxation:** Under the Haryana VAT Act, 2003, a commission agent is generally treated as an agent who facilitates the sale or purchase of goods but does not take title to the goods. Since a kachcha aadti is primarily a commission agent, they typically earn a commission on the sale of goods but are not directly involved in the sale of goods themselves.

- **VAT Applicability:** In the context of VAT, the commission agent's role does not usually involve the imposition of VAT on the commission itself. Instead, VAT is applied on the sale of goods by the principal (i.e., the rice miller in this case).

- **Form and Compliance:**
- **VAT Registration:** The commission agent needs to be registered under the VAT Act if their turnover exceeds the threshold limit.
- **Invoice and Records:** The commission agent must maintain proper records of transactions and invoices issued. However, VAT on the sale of paddy or rice is not directly applicable to the commission agent’s commission income.

**1.2 **Sale of Paddy to Rice Mill:**

- **VAT on Sale of Paddy:** When the commission agent sells paddy to the rice mill, the sale is subject to VAT. The VAT rate will depend on the specific provisions of the Haryana VAT Act applicable to paddy.

- **D2 Form:** The sale of paddy to the rice mill against Form D2 indicates a sale for export purposes or a sale to a registered dealer who will subsequently export the goods. The D2 form serves as evidence for claiming exemption or lower tax rates on the transaction.

### **2. Central Sales Tax (CST) Act, 1956**

**2.1 **Inter-State Sale of Goods:**

- **Tax Applicability:** The CST Act applies to inter-state sales of goods. If the commission agent sells paddy to a rice miller who is located in another state, the transaction is subject to CST.

- **Form C:** For inter-state sales, the buyer (rice miller) typically provides Form C to the seller (commission agent). This form allows the buyer to claim a concessional rate of CST (generally 2%) instead of the standard rate.

**2.2 **Export Sales:**

- **Exemption on Export Sales:** If the rice miller exports the rice, the sale of paddy to the rice mill can qualify for export-related exemptions. Export sales are generally zero-rated under both VAT and CST, which means that no tax is levied on the sale, but the seller can claim a refund on any tax paid on inputs.

- **Form H:** For claiming zero-rating on export sales, the rice miller will need to furnish Form H to the seller (the commission agent). This form certifies that the goods are intended for export.

### **3. Declaration Forms and Conditions**

**3.1 **Forms Required:**

- **D2 Form:** Used for claiming tax benefits on sales made to dealers who will export the goods. This form is typically filled out by the seller and provided to the buyer.

- **C Form:** Used for concessional CST on inter-state sales. This form is issued by the buyer to the seller.

- **H Form:** Required for claiming zero-rated tax on export sales. This form is issued by the exporter to the supplier.

**3.2 **Conditions to Fulfill:**

- **For VAT:**
- **Proper Documentation:** Maintain accurate records of transactions and ensure proper invoicing.
- **Compliance with VAT Rules:** Ensure compliance with Haryana VAT rules, including registration, filing returns, and maintaining records.

- **For CST:**
- **Issuance and Receipt of Forms:** Ensure that Form C or H is received and issued as required to benefit from concessional rates or zero-rating.
- **Documentation of Export:** Maintain evidence that the goods have been exported, including shipping documents and export invoices.

### **Summary**

1. **Haryana VAT Act, 2003:**
- Commission agents do not directly pay VAT on their commission income.
- VAT applies to the sale of paddy to rice mills.
- The D2 form is used for transactions intended for export.

2. **CST Act, 1956:**
- CST applies to inter-state sales and is subject to concessional rates with Form C.
- Export sales are zero-rated with the requirement of Form H for claiming benefits.

3. **Forms and Compliance:**
- Use the appropriate forms (D2, C, H) for claiming exemptions and concessional rates.
- Ensure compliance with all VAT and CST regulations, including proper documentation and record-keeping.

For specific cases and further assistance, consulting with a tax advisor or professional specializing in VAT and CST regulations would be beneficial.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now