Dear Sir or Madam,
I need a clarification to make some calculations.
According to VAT rules (As posted below) if we receive an order for an item X, and then we import that item X specifically for that order, then VAT is not applicable. We show catalogues to our clients and when they place an order we import those items from foreign countries. We import it and deliver to the customer. In this case VAT should not be applicable to us.
Below are the VAT provisions for this. Please go through it and confirm.
What are the `sales' not liable to tax under the VAT Act?
Since the VAT Act applies only to sales within a State, the following sales shall not be governed by the VAT Act:
a) sale in the course of inter-State trade or commerce which shall continue to be liable to tax under the Central Sales Tax Act, 1956;
b) sale which takes place outside the State; and
c) sales in the course of export or import.
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What is "Sale in the course of export or import"
5. Section 5(2) of the CST Act reads as under :
"A sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India."
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(See slide 8)
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MAHARASHTRA VALUE ADDED SALES TAX ACT, 2002
CHAPTER II
INCIDENCE AND LEVY OF TAX 3.
INCIDENCE AND LEVY OF TAX 3.
8. Certain sales and purchases and not to be liable to tax
(1) Nothing in this Act or the rules or the notifications shall be deemed to impose or authorise the imposition of a tax or deduction of tax at source on any sale or purchase of any goods, where such sale or purchase takes place,--
(a) (i) outside the State ; or
(ii) in the course of the import of the goods into the territory of India, or the export of the goods out of such territory ; or(b) in the course of inter-State trade or commerce and the provisions of this Act and the said rules and notifications shall be read and construed accordingly.
(1) Nothing in this Act or the rules or the notifications shall be deemed to impose or authorise the imposition of a tax or deduction of tax at source on any sale or purchase of any goods, where such sale or purchase takes place,--
(a) (i) outside the State ; or
(ii) in the course of the import of the goods into the territory of India, or the export of the goods out of such territory ; or(b) in the course of inter-State trade or commerce and the provisions of this Act and the said rules and notifications shall be read and construed accordingly.
Thanks alot. And thank you to caclubindia.com too.
Regards,
Arjun Chugh
CAclubindia
