Rule 54(d) of MVAT Act

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Varsha (Querist)
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02 January 2010 I am not able to get the correct interpretaion of Rule 54D for Non Admissibility of Set off. Can any body tell me whether the dealer principally engaged in Job work are liable to get the set off of Consumables?

CA Deepak P. Agrawal

CA Deepak P. Agrawal (Expert)
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04 January 2010 As per Rule 54D of MVAT Act, no setoff under any rule shall be available i.r.o. ANY purchase of consumables OR of goods treated as CAPITAL assets by the claimant dealer where the dealer is principally (FULLY)engaged in doing job work or labour work and is not engaged in the business of manufacturing of goods for sale by him.
Hence dealer principally engaged in Job work cannot take set off on any purchases

Varsha

Varsha (Querist)
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05 January 2010 Is rule 54D applied for the dealer who is 80% engaged in Job Work & 20% in manufacturing activities? & do the dealer will be able to claim set off?

CA Deepak P. Agrawal

CA Deepak P. Agrawal (Expert)
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05 January 2010 In that case you have to refer Rule 53(6) which states that, If out of the gross receipts of a dealer in any year, receipts on account of sale are less than fifty per cent of the total receipts then the dealer shall be entitled to claim set-off only on those purchases effected in that year where the corresponding goods are sold or resold within six months of the date of purchase. Further he shall be entitled to claim set-off on his purchases of plant and machinery which are treated as capital assets and purchases of parts, components and accessories thereof, and on purchases of consumables, stores and packing materials in respect of a period of three (3) years starting from the date of effect of the certificate of registration.
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