KVAT Purchase of Taxable Material from URDs and consumed

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klns sarma (Querist)
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13 July 2011 Dear experts

I have a question :
we are the power producers through biomass waste (such as rice Husk ,dray hay ,addiki sippi etc), and sold Electrical energy to Karnata Satate electricty Board .

my question is we are purchasing the material(from reg dealers & Unregister dealers in state of Karnataka) and consuming in our plant for generating the electricty in such case does we need to pay tax on purchases (URD /RD) and their any exemption(as in APVAT Act Sec 4(iii) .
since in karnataka we their is a tax on Rice Husk and tax on agri waste

kindly clarify
thanks

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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13 July 2011 How you are making the purchases on the vouchers or do you get bill for it and make the payment through cheque. Generally on purchases you are to VAT and if you are not charged any VAT then it is the seller who is liable to pay for it as you have paid including tax. On the other hand you are not taking any set off of taxes paid by you. Hence your company is in no manner a defaulter.

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klns sarma

klns sarma (Querist)
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13 July 2011 we are paying by cheque to the seller . my question is whether the material consumed by us in generation of electricty is exempt from tax for the purchase we made from URDs.

MJ Krishnamurthy

MJ Krishnamurthy (Expert)
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16 July 2011 Mr.klns sarma,
In Karnataka, you have to collect tax @14% now on the purchases made by you from URDs u/s3(2) of KVAT Act 2003. This amount you have to pay in your monthly returns.
MJK

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