VAT on re-sale

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Suresh (Querist)

18 December 2007 Ours is a software company from Bangalore. We intend to purchase few furniture and ACs from the existing software company. Whether the seller has to collect VAT on re-sale? if so what are the rates?

We are registered under VAT & CST Act. The selling company is not registered under VAT at karnataka, but billing will be done from Gurgoan, but materialise the transfer of goods within Karnataka.

Regards
Suresh

CA. O.P. Agarwalla

CA. O.P. Agarwalla (Expert)

21 December 2007 Mr. S.S.
Quriest's question is more or less clear. A compnay having its business at Bangalore wants to sell its used fixed assets through its Gurgaon Office.

In this regard, I would like to submit followings for your and other experts' valuable comments:-

01. Though the seller Company is billing the sale from other State, it will be a intra-stat sales, as because at the time of sale, goods were in the State of Karnataka. No question of CST.
02. The question, which arises is whether VAT under Karnataka VAT Act will be applicable?
To find the answer, we will have to find, whether the selling company (Bangalore unit) will fall under the category of "Dealer"?
Actually, in most of the state (Except Delhi, and......), the question regarding taxabilty of sale of used capital assets have been left unanswered.
Let us discuss it on few assumtions:-
a) The Company had imported said goods from other State and the Karnataka Govt did not get any VAT. Why should the State be debarred from collection of VAT on its subsequent sales?
b) The Compnay had purchased goods from within the State and availed the benefit of Input VAT Credit. Why should the State be debarred from collection of VAT on its subsequent sales?
c)The Compnay had purchased goods from within the State and not availed the benefit of Input VAT Credit. Why the Company should be liable for ouble taxation?

Please give your opinion.

Suresh

Suresh (Querist)

21 December 2007 Thanks for Mr.Agarwalla and Mr.Srinivasaraghavan:

Further details for more clarity on above:

These assets were procured within karnataka under Sales Tax regime. The question of availing input vat doesn't arise at that point of time.

I want to know
1. If seller is a dealer in karnataka under VAT Act, is he liable to collect the tax again?
2. If seller is not registrered in Karnataka under VAT Act, can be bill it from outside karnataka.

CA. O.P. Agarwalla

CA. O.P. Agarwalla (Expert)

21 December 2007 01. As regards applicability of VAT on such sales, if seller is dealer or ought to be dealer, you will have to go through the Karnataka VAT Act. In Delhi, sale of used capital assets are outside the ambit of taxable turnover.

02. Applicability of Sales Taxes will no depend upon the fact that from where the sale bill is raised.

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