An Introduction to VAT, DEFINITIONS

1. VAT 2005

2. Definitions- Assessee 2(iv)
 “Assessee” means any person by whom
 tax or any other sum of money is payable
under this Act and
 includes every person in respect of whom any
proceedings under this Act have been taken
for the assessment of tax payable by him;

3. Assessing authority 2(v)
 “Assessing authority” means any person
authorized by the Commissioner
 to perform the functions of an assessing
authority under this Act;

4. 2 (viii) “Books of accounts”
 “Books of accounts” include ledgers, day book,
cash book, account books
 and other records whether kept in the written
form or
 as print outs of data stored in a floppy, disc,
tape or any other forms of electromagnetic
data storage device.”

5. 2 (ix) “Business”
 (ix) “Business” includes –
 (a) any trade, commerce, manufacture or
 any adventure or concern in the nature of trade,
commerce or manufacture,
 whether or not such trade, commerce, manufacture,
adventure or concern is carried on with a motive to make
gain or profit
 and whether or not any profit accrues from such trade
commerce, manufacture, adventure or concern; and
 (b) any transaction in connection with, or incidental or
ancillary to such trade, commerce, manufacture

6. 2 (x) “Capital goods”
 (x) “Capital goods” means plant, machinery,
equipments
 including pollution / quality control, lab and cold
storage equipments used in manufacture,
processing, packing or storage of goods in the
course of business and delivery vehicles
 but shall not include such goods and civil structure
as may be notified by Government.

7. 2 (xi) “Casual trader”
 (xi) “Casual trader” means a person who whether as
principal, agent or in any other capacity,
 has occasional transactions involving buying, selling,
supplying or distributing goods in the State,
 whether for cash or for deferred payment, or for
commission, remuneration, or other valuable
consideration.

8. 2 (xv) dealer
 (xv) “dealer” means any person who carries on the
business of buying, selling, supplying or distributing
goods,
 executing works contract, delivering any goods on
hire-purchase or on any system of payment by
installments;
 transferring the right to use any goods or supplying
by way of or as part of any service, any goods
directly or otherwise,
 whether for cash or for deferred payment, or for
commission, remuneration or other valuable

9. 2 (xv) dealer
 (a) a casual trader;
 (b) a commission agent, a broker or a del credere agent
or an auctioneer or any other mercantile agent, by
whatever name called, of such dealer;
 (c) a non-resident dealer or an agent of a non-resident
dealer, or a
 local branch of a firm or company or association or body
of persons whether incorporated or not situated outside
the State;
 (d) a person who, whether in the course of business or
not, sells
 (i) goods produced by him by manufacture or otherwise;

10. 2 (xv) dealer
 (e) a person who whether in the course of business
or not:
 (i) transfers any goods, including controlled goods
whether in pursuance of a contract or not, for cash or
for deferred payment or for other valuable
consideration;
 (ii) supplies, by way of or as part of any service or in
any other manner whatsoever, goods,
 being food or any other articles for human
consumption or any drink (whether or not
intoxicating), where such supply or service is for

11. 2 (xv) dealer
 Explanation I : - A society (including a co-operative
society, club or firm or an association or body of
persons, whether incorporated or not)
 which whether or not in the course of business,
buys, sells, supplies or distributes goods from or to
its members
 for cash or for deferred payment, or for commission,
remuneration or other valuable consideration, shall
be deemed to be a dealer for the purposes of this
Act;

12. 2 (xv) dealer
 Explanation II :- The Central Government or a State
Government, which
 whether or not in the course of business, buy, sell,
supply or distribute goods, directly or otherwise,
 for cash or for deferred payment, or for commission,
remuneration or other valuable consideration,
 shall be deemed to be a dealer for the purposes of
this Act;

13. 2 (xv) dealer
 (f) a bank or a financing institution, which,
 whether in the course of its business or not
 sells any gold or other valuable article pledged with it
to secure any loan, for the realization of such loan
amount;
 Explanation I:- Bank for the purposes of this clause
includes a Nationalized Bank or a Schedule Bank or
a Co- operative Bank.
 Explanation II: - Financing Institution means a
financing institution other than a bank;

14. 2 (xx) “Goods”
 (xx) “Goods” means all kinds of movable property
 (other than newspapers, actionable claims,
electricity, stocks and shares and securities) and
 includes live stock, all materials, commodities and
articles and every kind of property (whether as
goods or in some other form) involved in the
execution of a works contract,
 and all growing crops, grass or things attached to, or
forming part of the land which are agreed to be
severed before sale or under the contract of sale;

15. 2 (xxiii) “Input Tax”
 (xxiii) “Input Tax” means the tax paid or payable
under this Act by a registered dealer to another
registered dealer on the purchase of goods
 in the course of business and
 includes the tax paid on the purchase of materials for
the research and development in relation to any
goods.

16. 2 (xxxi) Output Tax
 Output Tax” means the tax charged or chargeable
under this Act by a registered dealer for the sale of
goods in the course of business and
 includes reverse tax levied under sub-section (8) of
section 11;

17. 2 xxvi Manufacture
 Manufacture” with its grammatical variations and
cognate expressions means
 producing, making, extracting, altering, ornamenting,
finishing, assembling
 or otherwise processing, treating or adapting any
goods, and
 includes any process incidental or ancillary to such
activities but does not include any process or
 mode of manufacture as may be prescribed

18. 2 (xxviii) “Non-Resident dealer”
 “Non-Resident dealer” means a dealer
 who effects sale or purchase of any goods in the
State,
 but who has no fixed place of business or
 residence in the State;

19. 2 (xxxv) “Place of business”
 (xxxv) “Place of business” means any place where a
dealer carries on the
 business and includes: -
 (a) any warehouse, go down or other place where a
dealer
 stores or processes his goods,
 (b) any place where a dealer produces or
manufactures goods,
 (c) any place where a dealer keeps his books of
accounts,

20. 2 (xxxv) “Place of business”
 (d) in any case where a dealer carries on business
through an agent (by whatever name called), the
place of business of such agent,
 (e) any warehouse, railway station, railway goods
yard, parcel office, steamer station, or any other
place where goods for transportation in the course of
business or otherwise are kept by dealers, and
 (f) any vehicle or vessel or any other carrier wherein
the goods are stored or used for transporting the
goods

21. 2 (xxxiii) “Person”
 (xxxiii) “Person” includes: -
 (a) an individual;
 (b) a joint family;
 (c) a company;
 (d) a firm;
 (e) an association of persons or a body of individuals;
whether incorporated or not;
 (f) the Central Government or the Government of Kerala
or the Government of any other State or any department
thereof or a Union Territory in India;
 (g) a local authority;
 (h) every artificial juridical person not falling under any of
the preceding sub -clauses;

22. 2 (xiii) “Reverse tax”
 (xlii) “Reverse tax” means that portion of input tax of
the goods for which
 credit has been availed but such goods remain
unsold at the closure of business
 or are used subsequently for any purpose other than
resale or manufacture of taxable goods or
 execution of works contract or
 use as containers or packing materials of taxable
goods within the State;

23. 2 (iv) “Works contract”
 (lv) “Works contract” includes any agreement for
carrying out for cash or for deferred payment or
other valuable consideration
 the construction, fitting out, improvement, repair,
manufacture, processing, fabrication, erection,
installation, modification or commissioning of any
movable or immovable property

24. 2 xiv “Contractor
 (xiv) “Contractor” means any person who undertakes
any works contract
 for execution and includes a sub-contractor.

25. 2 vii Awarder
 (vii) “Awarder” means any person who awards any
works contract to a
 contractor for execution

26. 2 (lvii) “Zero rate sale”
 (lvii) “Zero rate sale” means the sale of any goods on
which
 No tax is chargeable
 but in relation to which input tax credit or refund of
input tax paid is admissible.

27. 2 (xliii) “Sale”
 (xliii) “Sale” with all its grammatical variations and
cognate expressions means
 any transfer whether in pursuance of a contract or
not
 of the property in goods by one person to another
 in the course of trade or business
 for cash or for deferred payment or for other valuable
consideration,
 but does not include a mortgage, hypothecation,
charge or pledge;

28. 2 (xliii) “Sale”
 Explanation I :-
 A transfer of property in goods by the Central
Government or a State Government
 for cash or for deferred payment or other valuable
consideration
 whether or not in the course of business
 shall be deemed to be a sale for the purposes of this
Act;

30. 2 (xliii) “Sale”
 Explanation II : -
 The transfer of property involved in the supply or
distribution of goods by
 a society (including a co-operative society), club, firm
or any association or body of persons, whether
incorporated or not,
 to its members,
 for cash or for deferred payment or other valuable
consideration,
 whether or not in the course of business, shall be
deemed to be a sale for the purposes of this Act;

32. 2 (xliii) “Sale”
 Explanation III:-
 A transfer of goods on hire – purchase or other
installment system of payment
 shall, notwithstanding the fact that the seller retains
the title in the goods as security for payment of the
price, be deemed to be a sale
 on the date of delivery of the goods in pursuance of
the agreement of such hire purchase or other system
of payment in installments;

33. Hire Seller Hire Purchaser

34. 2 (xliii) “Sale”
 Explanation IV:-
 A transfer of property in goods (whether as goods or
in some other form)
 involved in the execution of a works contract shall be
deemed to be a sale;

35. Contractor Awarder

36. 2 (xliii) “Sale”
 Explanation V: -
 A transfer of right to use any goods for any purpose
(whether or not for a specified period)
 for cash, deferred payment or other valuable
consideration shall be deemed to be a sale

37. Lesser Lessee

38. 2 (xliii) “Sale”
 Explanation VI:-
 Any supply, by way of or as part of any service or in
any other manner what so ever, of goods,
 being food or any other articles for human
consumption or any drink (whether or not
intoxicating),
 where such supply or service
 is for cash, deferred payment or other valuable
consideration shall be deemed to be a sale;

39. Supplier Receiver

40. 2 (xliii) “Sale”
 Explanation VII: -
 Unless otherwise expressly provided in this Act, any
 transfer, delivery or supply of any goods referred to
in this clause shall be
 deemed to be a sale of those goods
 by the person making the transfer, delivery or supply
and
 purchase of those goods by the person to whom
such transfer, delivery or supply is made;

41. 2 (xliii) “Sale”
 Explanation VIII:-
 (a) The sale or purchase of goods shall be deemed,
 for the purposes of this Act, to have taken place in
the State where the contract of sale or purchase
 might have been made, if the goods are within the
State,-
 (I) in the case of specific or ascertained goods
 at the time the contract of sale or purchase is made;
and

42. 2 (xliii) “Sale”
 (ii) in the case of unascertained or future goods,
 at the time of their appropriation to the contract of
sale or purchase by the seller or by the purchaser,
whether the assent of the other party is prior or
subsequent to such appropriation;
 (b) Where there is a single contract of sale or
purchase of goods situated at more places than one,
 the provisions of clause (a) shall apply as if there
were
 separate contracts in respect of the goods at each of
such places;

43. 2 (xliii) “Sale”
 (c) For the purpose of this Act, the transfer of
property in goods (whether as goods or in some
other form) involved in the execution of a works
contract shall
 be deemed to have taken place in the State, if the
goods are within the State at the time of such
transfer
 irrespective of the place where the agreement of
works contract is made, whether the assent of the
other party to the contract is prior or subsequent to
such transfer;

44. 2 (xliii) “Sale”
 Explanation IX: -
 Notwithstanding anything to the contrary contained
in this Act or any other law for the time being in
force,
 two independent sales or purchases shall, for the
purposes of this Act, be deemed to have taken
place, -
 (a) when the goods are transferred from a principal
to his selling agent and from the selling agent to the
purchaser; or
 (b) when the goods are transferred from the seller to

45. Principal Selling Agent Customer
Principal buying Agent seller

46. 2 (xliii) “Sale”
 the agent is found in either of the cases aforesaid,
 (i) to have sold the goods at one rate and to have
passed on the sale proceeds to his principal, at
another rate; or
 (ii) to have purchased the goods at one rate and to
have passed them on to his principal at another rate;
or
 (iii) not to have accounted to his principal for the
entire collections or deductions made by him in the
sales or purchases effected by him on behalf of his
principal ; or

47. 2 (xliii) “Sale”
 Provided that the deduction or addition, as the case
may be,
 of the commission agreed upon and specified in the
accounts and incidental charges incurred by the
agent
 which are specified in the accounts and which the
assessing authority considers legitimate
 shall not be deemed to be a difference in the rates
referred to
 in sub-clauses (i) and (ii).

48. 2 (xliv) “Sale price”
 (xliv) “Sale price” means the amount of valuable
consideration received or receivable by a dealer for
the sale of any goods
 less any sum allowed as cash discount, according to
the practice normally prevailing in the trade,
 but inclusive of any sum charged for anything done
by the dealer in respect of the goods or
 services at the time of or before delivery thereof,
 excise duty, special excise duty or any other duty or
taxes except the tax imposed under this Act.

49. Vat not included!!!!!
Particulars Amount
Consideration Received xxxx
Service charges xxxx
Excise duty xxxx
Special Excise Duty xxxx
(Cash Discount) (xxxx)
Sale Consideration xxxx

50. 2 (lii) “Turnover
 means the aggregate amount for which goods are
 Either bought or sold, (purch+sale)
 supplied or distributed by a dealer, (distributor inclu)
 either directly or through another,
 on his own account or on account of others,
(agency sale- princi)
 whether for cash or for deferred payment or for other
valuable consideration,

51. 2 (lii) “Turnover
 provided that the proceeds of the sale by a person
(I+HUF) not being
 a Company or
 Firm registered under Indian Partnership Act, or
 society including a co-operative society or association of
individuals
 whether incorporated or not
 of agricultural or horticultural produce
 grown by himself or grown on any land in which he has
an interest
 whether as owner, usufructuary mortgagee, tenant or
otherwise,

52. 2 (lii) “Turnover
 Explanation I: -
 The turnover in respect of delivery of goods on hire
purchase or on any system of payment by
instalments
 shall be the market price of
 such goods at the time of delivery

53. 2 (lii) “Turnover
 Explanation II: -
 The turnover in respect of the transfer of the right to
use any goods shall be
 the aggregate amount received or receivable by the
dealer as consideration for such transfer.

54. 2 (lii) “Turnover
 Explanation II: -
 Any discount on the price allowed in
respect of any sale
 where such discount is shown separately in the
tax invoice and
 the buyer pays only the amount reduced by such
discount; or
 any amount refunded in respect of goods returnedby
customers
 shall not be included in the turnover;

55. 2 (lii) “Turnover
 Explanation III: -
 Subject to such conditions and restrictions, if any, as
may be prescribed in this behalf:
 (i) The amount for which goods are sold shall include
any sums charged for anything done by the dealer in
respect of the goods sold
 at the time of, or
 before, the delivery thereof;

56. 2 (lii) “Turnover
 Explanation III: -
 (iii) Where for accommodating a particular customer,
a dealer(A) obtains goods from another dealer(B)
and immediately disposes of the same to the said
customer,
 The sale in respect of such goods shall be included
in the turnover of the latter dealer(B) but not in that
of the former;

57. 2 (lii) “Turnover
 Explanation IV:-
 “Agricultural or horticultural produce” shall not
include
 such produce as has been subjected to any physical,
chemical or other process for being made fit for
consumption,
 except mere cleaning, grading, sorting, drying or
dehusking;

58. 2 (lii) “Turnover
 Explanation V:
 Where a dealer receives in any return period any
 amount due to price variations
 in respect of any sale effected during any earlier
return period,
 such amount shall be deemed to be the turnover
 relating to the return period in which such amount is
received

59. 2 (lii) “Turnover
 Explanation VII: Where a dealer sells any
goods purchased by him at a
 price lower than that at which it was purchased
and subsequently receives any amount
 from any person towards reimbursement of the
balance of the price,
 the amount so received shall be deemed to be
turnover in respect of such goods.

60. 2 (ii) “Total turnover
 means the aggregate turnover in
 All goods of a dealer
 at all places of business in the State,
 whether or not the whole or any portion of such
turnover is liable to tax,
 including the turnover of purchase or sale in the
course of inter -state trade or commerce or
 In the course of export of the goods out of the
territory of India or
 in the course of import of goods into the territory
of India;

61. 2 (i) Taxable turnover
 means the turnover on which a dealer shall be
 liable to pay tax as determined
 after making such deductions from his total
turnover
 and in such manner as may be prescribed