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THE KERALA VALUE ADDED TAX ACT, 2003

{UPDATION UPTO FINANCE ACT 2009}

An Act to consolidate and amend the law relating to the levy of tax

on the sale or purchase of goods based on the concept of Value Added Tax

in the State of Kerala.

Preamble. - Whereas it is expedient to consolidate and amend the law

relating to the levy of tax on the sale or purchase of goods based on the

concept of value added tax in the State of Kerala:

Be it enacted in the Fifty-fourth Year of the Republic of India as follows: -

CHAPTER - I

PRELIMINARY

1. Short title, extent and commencement. –

(1) This Act may be called the Kerala Value Added Tax Act, 2003.

(2) It extends to the whole of the State of Kerala.

(3) It shall come into force on such date as the Government may, by

notification in the Gazette, appoint.

2. Definitions.- In this Act, unless the context otherwise requires, -

(i)“Agriculture” with all its grammatical variations cognate expressions, includes

floriculture, horticulture, the raisin of crops, grass or garden

produce, and also grazing; but does not include dairy

farming, poultry farming, stock breeding, the mere cutting

of wood or grass, gathering of fruit, raising of man made forest

or rearing of seedlings or plants;

(ii) “Agriculturist” means a person (not being a company or a firm) or

society including a co-operative society or association of

individuals whether incorporated or not, who cultivates land

personally, for the purpose of agriculture.

(iii) “Appellate Tribunal” means the Appellate Tribunal appointed under section 4;

(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;

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(v) “Assessing authority” means any person authorized by the Commissioner

to perform the functions of an assessing authority under this Act;

(vi)“Assistant Commissioner” means any person appointed to be an

Assistant Commissioner of Commercial Taxes under subsection

(3) of section 3;

(vii) “Awarder” means any person who awards any works contract to a

contractor for execution”

(viii) “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.”

(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 adventure or concern;

(x) “Capital goods” means plant, machinery, equipments including pollution /

quality control, lab and cold storage equipments used in

manufacture, processing, excluding for job works or rendering of

services, 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.

(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.

(xii) “Commissioner” means the Commissioner of Commercial Taxes

appointed as such by the Government;

(xiii) “Commercial Tax Officer” means any person appointed to be a Commercial

Tax Officer under sub-section (3) of section 3;

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(xiv) “Contractor” means any person who undertakes any works contract for

execution and includes a sub-contractor.

(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 consideration not being an agriculturist and

includes: -

(a) a casual trader;

(b) a commission agent, a broker or a delcredere 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; or

(ii) trees which grow spontaneously and which are

agreed to be severed before sale or under the contract of

sale;

(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 cash, deferred payment or other valuable

consideration;

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

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deferred payment, or for commission, remuneration or other

valuable consideration, shall be deemed to be a dealer for the purposes of

this Act;

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;

(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;

(xva) ‘declared goods’ mean goods declared by section 14 of the Central

Sales Tax Act, 1956 (Central Act 74 of 1956) to be of

special importance in inter-state trade or commerce;

(xvi) “Deputy Commissioner” means any person appointed to be a Deputy

Commissioner of Commercial Taxes under sub-section (3) of

section 3;

(xvii) “Omitted”

(xviii) “Document” includes written or printed records of any sort, title deeds

and electronic records as defined in Clause (t) of sub-section

(1) of Sec.2 of the Information Technology Act, 2000 (21 of

2000);

(xviii A) “Empowered Committee” means the Empowered committee of State

Finance Ministers constituted by the Ministry of

Finance, Government of India on the basis of the

resolution adopted in the conference of the Chief Ministers

on 16th November, 1999.

(xix) “Foreign liquor” means and includes wine, brandy, champagne, sherry,

rum, gin, whisky, beer, cider, cocoa brandy and all other

distilled or spirituous preparations other than arrack and

medicines and drugs;

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(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;

(xxi) “Government” means the Government of Kerala;

(xxii) “Importer” means any person who obtains or brings any taxable goods

from any place outside the state or country whether as a

result of purchase or otherwise for the purpose of business.

(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 paidon

the purchase of materials for the research and

development in relation to any goods.

(xxiv) “Joint Commissioner” means any person appointed to be a Joint

Commissioner under sub-section (3) of section 3;

(xxv) “Local authority” means a Panchayat constituted at any level under

the Kerala Panchayat Raj Act, 1994 (13 of 1994), or a

Town Panchayat, a Municipal Council, or a Municipal

Corporation, constituted under the Kerala Municipality

Act,1994 (20 of 1994) or a Cantonment declared under the

Cantonments Act, 1924 (Central Act 2 of 1924);

(xxvi) “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;

(xxvii) “Motor spirit” means any substance which, by itself or in

admixture with other substances is ordinarily used directly

or indirectly to provide reasonably efficient fuel for

automotive or stationary internal combustion engines and

includes petrol, diesel oil and other internal combustion oils, but

does not include kerosene, furnace oil, coal or charcoal;

(xxviii) “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;

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(xxix) “Notification” means a notification issued by the Government,

under the provisions of this Act and published in the Gazette;

(xxx) “Notified goods” means coffee, rubber, cardamom, pepper, arecanut,

other than tender arecanut, cashewnut, ironand steel, cement,

timber, plywood, glass, tread rubber and any other goods

notified by the Government from time to time.

(xxxi) “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

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(xxxii) “Permit” means a permit granted under section 19 or under section 46;

(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;

(xxxiv) “Petrol” means dangerous petroleum having its flashing point below

24.4 degree centigrade,

(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,

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(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;

(xxxvi) “Prescribed” means prescribed by rules made under this Act;

(xxxviA) “ Prevailing market price” means the wholesale price of any

goods in force in the market as published by the

Economics and Statistics Department of the State or any

other authorised agency or in the news paper and in cases

where no such published whole sale price is available, the price

at which goods of the kind or quality is sold by the Kerala

State Civil Supplies Corporation or any other similar agency on

the date of sale of such goods.

(xxxvii) “Purchase” with all its grammatical variations and cognate expressions

shall be construed from the word “sale”;

(xxxviii) “Purchase price” shall be construed from the words “sale price”;

(xxxix) “Registered dealer” means a dealer registered under this Act;

(xl) “Registering authority” means the officer designated, by notification

in the Gazette, as registering authority;

(xli) “Return period” means and includes a calendar month or a quarter of an

year or an year;

(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;

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(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;

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;

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;

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;

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;

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;

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;

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;

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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

(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;

(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;

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 a

buying agent and from the buying agent to his principal,

if 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

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(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

(iv) to have acted for a fictitious or non-existent principal:

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).

(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.

(xlv) “Settlement Commission” means the Settlement Commission appointed

under Section 5;

(xlvi)“Smuggling” means transportation of notified goods exceeding such

value as may be prescribed, into or out of the State,

without the documents prescribed by sub-section (3)

of section 46 or under cover of a document which

is bogus or forged or where the consignor or consignee,

as the case may be in the State, as shown in the

document accompanying the goods, is non-existent or

bogus.

(xlvii) “State” means the State of Kerala;

(xlviii) “Tax” means the tax payable under this Act;

(xlix) “Tax invoice” includes a bill of sale containing such particulars as

may be prescribed.

(l) “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;

(li) “Total turnover” means the aggregate turnover in all goods of a dealer

at all places of business in the State, whether or not the

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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;

(lii) “Turnover” means the aggregate amount for which goods are either

bought or sold, supplied or distributed by a dealer, either

directly or through another, on his own account or on

account of others, whether for cash or for deferred payment or

for other valuable consideration, provided that the proceeds of

the sale by a person not being a Company or Firm registered

under the Companies Act, 1956 (Central Act 1 of 1956)

and Indian Partnership Act, 1932 (Central Act 9 of 1932) 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, shall be excluded from his turnover.

Explanation I: - The turnover in respect of delivery of goods on hire

purchase or on any system of payment by installments shall be the market

price of such goods at the time of delivery.

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.

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;

(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 returned by customers shall not be included in the

turnover

(iii) Where for accommodating a particular customer, a

dealer obtains goods from another dealer 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 but not in that of the

former;

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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, save mere cleaning, grading,

sorting, drying or de-husking;

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.

Explanation VI: The turnover in respect of rubber shall be

deemed to include any cess leviable under the Rubber Act, 1947

irrespective of whether the payment of cess is deferred till the

rubber is consumed by the manufacturer of rubber goods or not:

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.

(liiA) “Used Motor vehicle” means a motor vehicle purchased and

registered under the provisions of the Motor Vehicles Act, 1988

(Central Act 59 of 1988) and used for a minimum period of

fifteen months subsequent to the registration;”

(liii) “Vehicle” includes every wheeled conveyance used for the carriage of

goods solely or in addition to passengers;

(liv) “Vessel” includes any ship, barge, boat, raft, timber, bamboos or floating

materials propelled in any manner;

(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;

(lvi) “Year” means the financial year.

(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.

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CHAPTER - II

AUTHORITIES, APPELLATE TRIBUNAL AND

SETTLEMENT COMMISSION

3. Commercial Tax Authorities. - (1) The Commissioner shall have and

exercise all the powers and shall perform all the duties conferred or

imposed upon him by or under this Act.

Provided that the Commissioner may, by an order in

writing, delegate any power vested in him to any officer appointed

under sub-section (3).

(2) The Commissioner shall have superintendence over all officers

and persons employed in the execution of this Act and the

Commissioner may, -

(a) call for returns from such officers and persons;

(b) make and issue general rules and prescribe

forms for regulating the practice and proceedings

of such officers and persons;

(c) issue such orders, instructions and directions to

such officers and persons as it may deem fit, for

the proper administration of this Act.

(3) The Government shall appoint as many Joint Commissioners, Deputy

Commissioners, Assistant Commissioners, Commercial Tax Officers and

such other officers as they think fit for the purpose of performing the

functions respectively assigned to them by or under this Act. Such

officers shall perform the said functions within such local limits as the

Commissioner may assign to them.

(4) All officers and persons employed for the execution of this Act shall

observe and follow the orders, instructions and directions of the

officers superior to them:

(5) The Commissioner or the Deputy Commissioner may by order in

writing. -

(a) transfer any case or cases relating to any assessee or

class of assesses pending before an assessing authority

to another assessing authority having jurisdiction to

deal with such case or cases; or

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(b) specify one of the assessing authorities having jurisdiction

over an area, which shall deal with any case or cases

relating to any assessee or class of assessees.

(6) Where any case is transferred to an assessing authority under

clause (a) of sub-section (5), such assessing authority may deal with

the case either de novo or from the stage at which it was transferred.

4. Appellate Tribunal. - (1) The Government shall appoint an Appellate

Tribunal consisting of a Chairman and as many other members as

they think fit and such additional Appellate Tribunals, as they

think fit, with such members to perform the functions assigned to

the Appellate Tribunal by or under this Act.

(2) The Chairman shall be a person who is or has been a Judicial

Officer not below the rank of a District Judge and the other

members shall possess such qualifications as may be prescribed.

(3) Any vacancy in the office of a member of the Appellate Tribunal

shall be filled by the Government.

(4) The functions of the Appellate Tribunal may be performed,

(i) by a Bench consisting of the Chairman and any other

member; or

(ii) by a Bench consisting of the Chairman and two other

members; or

(iii) by a Bench consisting of two or more members other

than the Chairman

(5) In any case which comes up before a Bench of which

the Chairman is not a member, involves a question of law,

the bench may, in its discretion, reserve such case for decision by

the Chairman or by a Bench to be constituted under subsection

(6), of which the Chairman shall be a member.

(6) The Bench or Benches of the Appellate Tribunal shall be

constituted by the Chairman in accordance with the provisions of this Act

and the rules made there under.

(7) If the members of a Bench differ in opinion on any point, the

point shall be decided according to the opinion of the

majority, if there is a majority but if the members are equally

divided, they shall state the point or points on which they differ,

and such point or points shall be heard –

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(i) When the Chairman is not a member of that Bench,

either by the Chairman or by the Chairman and any

other member or members as the Chairman may direct; and

(ii) When the Chairman is a member of that Bench, by

any other member or members to whom the case is

referred by the Chairman; and such point or points

shall be decided according to the opinion of the

majority of the members of the Tribunal who have

heard the case, including those who first heard it.

(8) Any member who has previously dealt with any case coming up

before the Appellate Tribunal in any other capacity or is personally

interested in any case coming up before the Appellate Tribunal

shall be disqualified to hear that case.

(9) Where any case is heard by a Bench consisting of two

members and the members are divided in their opinion on any

point and the other member or members of the Tribunal are

disqualified under sub-section (8) to hear the case, the Government

may appoint a person qualified to be appointed as a member of the

Appellate Tribunal as an additional member of the Tribunal and

the point shall be decided in accordance with the opinion of the

majority of the members of the Tribunal who have heard the case,

including those who first heard it.

(10) The additional member appointed under sub-section (9) shall cease

to hold office on the disposal of the case for which he was appointed.

(11) The appellate Tribunal shall, with the previous sanction of the

Government make regulations consistent with the provisions of this

Act and the rules made there under for regulating its procedure and

the disposal of its business.

(12) The regulations made under sub-section (11) shall be published in

the Gazette.

5. Settlement Commission.- (1) The Government may appoint a Settlement

Commission consisting of a Chairman and as many other

members as they think fit, to perform the functions assigned to

the Settlement Commission by or under this Act. The Chairman

shall be a person who is a judicial Officer not below the rank of

a District judge and the other members shall possess such qualifications

as may be prescribed;

(2) Any vacancy in the office of the members of the Settlement

Commission shall be filled by the Government.

(3) The functions of the Settlement Commission may be performed –

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(i) by a bench consisting of the Chairman and any other

member; or

(ii) by a bench consisting of the Chairman and two other

members; or

(iii) by a bench consisting of two or more members other than the

Chairman.

(4) Any member who has previously dealt with any case coming

up before the Commission in any other capacity or is personally interested

in any such case shall be disqualified to hear such case.

(5) The Commission may, with the previous sanction of the Government,

make regulations consistent with the provisions of this Act and the rules

made there under for regulating its procedure and the disposal of its

business.

(6)The regulations made under sub-section (5) shall be published in the

Gazette.

CHAPTER – III

INCIDENCE AND LEVY OF TAX

6. Levy of tax on sale or purchase of goods. - (1) Every dealer whose

total turnover for a year is not less than ten lakh rupees and

every importer or casual trader or agent of a non-resident dealer, or

dealer in jewellery of gold, silver and platinum group metals or silver

articles or contractor or any State Government, Central Government

or Government of any Union Territory or any department thereof or any

local authority or any autonomous body whatever be his total turnover

for the year, shall be liable to pay tax on his sales or purchases of

goods as provided in this Act. The liability to pay tax shall be on the

taxable turnover, -

(a) in the case of goods specified in the Second and

Third Schedules at the rates specified therein and at all

points of sale of such goods within the State and in

the case of aerated branded soft drinks excluding

soda at the rate of twenty per cent at all points of sale

within the State.

(b) Omitted.

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(c) in the case of transfer of the right to use any goods for

any purpose whether or not for a specified period, at

the rate of four percent at all points of such transfer;

(d) in the case of goods not falling under clauses (a) or (c)

at the rate of 12.5% at all points of sale of such

goods within the State. Government may notify a list of

goods taxable at the rate of 12.5%;

(e) in the case of transfer of goods involved in the execution of

works contract where transfer is in the form of goods, at

the rates specified for such goods in clauses (a) or

(d) above, as the case may be;

(f) In the case of transfer of goods involved in execution of

works contract, where the transfer is not in the form of

goods, but in some other form, at the rate of 12.5 per

cent and when the transfer is in the form of goods at

the rates prescribed under the respective Schedules.

Provided that where the sale is to the

Administrator, Union Territory of Lakshadweep,

Laccadive Co-operative Marketing Federation, Kozhikode

or the Lakshadweep Harbour Works and registered

dealers certified by the Administrator, Union Territory of

Lakshadweep, the tax payable under clause (d) shall be

at the rate of four per cent, subject to such

conditions as may be prescribed:

Provided further that a bar attached hotel, as defined

under explanation to clause (c) of section 8 or a dealer in

petroleum products shall be liable to pay tax under this

sub-section if his total turnover under this Act and the

total turnover under the Kerala General Sales Tax Act,

1963 (15 of 1963) together is not less than the limit

specified under this sub-section:

Provided also that where the total turnover of a

dealer, other than an importer or casual trader or

agent of a non-resident dealer or dealer in jewellery of

gold, silver and platinum group metals and silver articles

or contractor, exceeds ten lakh rupees for the first

time during the course of an year, such dealer shall be

liable to pay tax under this sub- section only on the

turnover in excess of ten lakh rupees; but he shall be

liable to pay tax irrespective of the total turnover in any

subsequent year :

18

Provided also that in respect of works

contracts executed under the Sampurna Gramin

Rosghar Yojana or the beneficiary committees using

the Member of Parliament / Member of Legislative

Assembly Funds or Natural Calamity Relief Funds or

Sarva Siksha Abhiyan Funds, or funds of Local Authorities

or Command Area Development Authority or execution of

work under Jalanidhi Project (KRWSA) and OFD Works

through Beneficiary Farmers’ Associations or Karshaka

Samithy where the total amount in respect of individual

contract does not exceed ten lakhs rupees, the tax

payable under clause (f) above shall be four per cent

and the beneficiary committees shall be entitled to receive

payment even without taking registration under the Act.

Provided also that where the sale is to or by

Military, Naval, Air Force or NCC Canteen, Indian

Naval Canteen Service and Canteen Stores Department,

the tax payable under clauses (a) or (d) above shall

subject to such conditions and restrictions, as may be

prescribed, be at half the rate applicable to such goods.

Provided also that in respect of sale of fuel and

lubricants to foreign-going vessels, other than fishing

vessels, the tax payable under clause (a) or (d) above

shall, subject to conditions and restrictions as may

be prescribed, be half per cent:

Provided also that where sale of goods other than

petroleum products, manufactured in the State is to

Railways, Kerala State Electricity Board, Kerala State

Road Transport Corporation or Kerala Water Authority,

the tax payable under clause (d) above shall, subject to

such conditions and restrictions as may be prescribed,

be at four per cent.;

Provided also that sculptural statues of national

leaders and social reformers shall be exempted from

tax payable under clauses (e) and (f) of sub-section (1) of

section 6:

Provided also that the tax payable under clause (f ),

in respect of transfer of declared goods not in the form

of goods but in some other form, shall be at the rate

prescribed under the respective Schedules:

Provided also that the rate of tax on the

sale of used motor vehicles shall be at 0.5 per cent and

that no tax is payable under sub-section (2):

19

Provided also that, in respect of

cinematographic films, turnover relating to sale of

“copyright” under clause (a) and transfer of right to use

under clause (c) shall be exempted.;

(1A) Notwithstanding anything contained in sub-section (1), —

(a) where a dealer whose total turnover for a year is below

the limit specified in sub-section (1) collects tax

under section 30 on his sales, he shall, whatever be

his total turnover for the year, be liable to pay tax

under sub-section (1) on the taxable turnover for the year.

(b) where the sale of any goods is exempted at the point of

sale by any dealer, such dealer may, at his option, pay

tax in respect of the sale of such goods and

thereupon he shall, whatever be his total turnover, be

liable to pay tax on the taxable turnover for the year.

(2) Notwithstanding anything contained in sub-section (1), —

(a) every dealer who purchases taxable goods from any

person other than a registered dealer shall pay tax on the

purchase turnover of goods at the rates specified under

sub- section (1).

(b) every dealer who purchases taxable goods from any

registered dealer other than a dealer liable to tax under

this Act and despatches the goods to any place outside the

state otherwise than by way of sale in the course of

interstate trade or export shall pay tax on the purchase

turnover of the goods at the rates specified under subsection

(1), provided that the maximum rate leviable under

this clause shall not exceed four per cent:

Provided that a dealer, other than an

importer, casual trader, agent of non-resident dealer,

dealer in jewellery of gold, silver and platinum group

metals or silver articles or contractor or any State

Government, Central Government or Government of any

Union Territory or any department thereof or any local

authority or autonomous body shall not be liable to tax

under this sub-section if his total turnover is less than

five lakh rupees.

(c) every awarder, not being a Government department

or Local Authority, who purchases taxable goods from

any person, other than a registered dealer, within the

State for execution of works contract and issues the

20

same for incorporation in the work, without including

its value in the gross contract amount, shall pay

tax on the purchase turnover of such goods at the

rates specified under sub-section (1), if the cost of the

work including the value of materials supplied by the

awarder exceeds one crore rupees.

(3) Omitted.

(4) Goods specified in the First Schedule shall be exempted from tax.

(5) Notwithstanding anything contained in sub-section (1), but subject to

sub-section (2), any registered dealer not being,

(a) an importer; or

(b) a dealer making any sale in the course of interstate

trade or commerce or export; or

(c) a dealer registered under the Central Sales Tax Act,

1956 (Central Act 74 of 1956); or

(d) a dealer effecting first taxable sale of goods within the

State; or

(e) a dealer covered by sub-section (1A); or

(f) a contractor, whose total turnover for a year is below

fifty lakh rupees, may, at his option, pay tax at the rate

of half per cent of the turnover of sale of taxable goods

as presumptive tax instead of paying tax under subsection

(1):

Provided that a dealer holding stock of goods

purchased in the course of interstate trade on the date

of coming into force of the Act, will have the option to

pay tax under this sub-section from the beginning of the

quarter following the quarter in which he has sold such

goods in the state and paid tax under sub- section

(1) of section 6 and his registration under the Central

Sales Tax Act, 1956 (Central Act 74 of 1956) is cancelled:

Provided further that any dealer covered by subsection

(1A) may, at his option pay tax under this subsection

from such period as may be prescribed:

Provided also that a dealer shall not be eligible

to opt for payment of tax under this sub-section if his

total turnover in respect of goods to which this Act

21

applies, whether under this Act or under the Kerala

General Sales Tax Act, 1963 (15 of 1963) had exceeded

fifty lakh rupees during the year preceding the year to

which such option relates.

Provided also that a dealer shall not be liable to pay

presumptive tax under this sub section, if his total

turnover is less than ten lakh rupees.

Provided also that dealers covered under his subsection

whose total turnover for a year is below rupees

twenty lakhs, may pay a lump sum amount of rupees

three thousand annually as presumptive tax, and the

payment shall be at the rate of rupees seven hundred

and fifty per quarter along with a statement as may be

prescribed. Such dealers shall also file an annual

declaration as may be prescribed.

Explanation: “First taxable sale” for the purpose of this subsection

shall mean the sale of taxable goods effected by a

registered dealer immediately after the import of such goods into

the State or its manufacture in the State as the case may be, but

shall not include the sale of goods in respect of which tax under

section 5 or under sub- section (4) of section 59 of the Kerala General

Sales Tax Act 1963 (15 of 1963) had been paid and which are held

as opening stock on the date of coming into force of the Act.

(6) Notwithstanding anything contained in sub-section (1), where goods

sold are contained in containers or are packed in any packing

materials, the rate of tax and the point of levy applicable to such

containers or packing materials, as the case may be, shall, whether

the price of the containers or the packing materials is charged

separately or not be the same as those applicable to goods

contained or packed, and in determining turnover of the goods, the

turnover in respect of the containers or packing materials shall be

included therein:

Provided that where the sale or purchase of goods contained

in any containers or packed in any packing materials is exempt

from tax, then, the sale or purchase of such containers or packing

materials shall also be exempt from tax.

Explanation:- For the purposes of sub-section (6), the word

“containers” includes gunny bags, tins, bottles or any other containers.

(7) Notwithstanding anything contained in sub-section (1),

(a) any authorised retail or wholesale distributor

dealing in rationed articles namely, rice, wheat and

kerosene under the Kerala Rationing Order, 1966 shall

not be liable to pay tax on the turnover of such goods;

22

(b) sale of any building materials, industrial inputs, plant

and machinery including components, spares, tools and

consumables in relation thereto to any developer or

industrial unit or establishments situated in any

Special Economic Zone in the State for setting up the

unit or use in the manufacture of other goods shall,

subject to such conditions or restrictions, as may be

prescribed, be exempted from tax.

Explanation: For the purpose of this sub-section, Special Economic Zone

shall mean a Special Economic Zone approved and notified as such

by the Central Government and includes an existing Special

Economic Zone.

(c) sale of medicines and drugs falling under the Third

Schedule, in respect of which tax had been paid

under the Kerala General Sales Tax Act, 1963 (15 of

1963) and which are held as opening stock on the

1st day of April, 2005 shall, subject to conditions and

restrictions, as may be prescribed, be exempted from tax.

(8) The Rules of Interpretation of the Schedules of this Act shall be as set

out in the Appendix.

7. Trade discount etc. deemed to be sale in certain cases:

Notwithstanding anything contained in any other provisions of this

Act, where a dealer4 allows any trade discount or in terms of

quantity in goods in relation to any sale effected by him, the

quantity so allowed as trade discount or incentive, shall be

deemed to be a he dealer, who allows such trade discount or

incentive and a purchase by the dealer who receives such trade

discount or incentive and such sale shall form part of the sale in

relation to which such trade discount or incentive is allowed.

8. Payment of tax at compounded rates:- Notwithstanding anything

contained in section 6-

(a) (i) any works contractor not being a dealer registered

under the provisions of the Central Sales Tax Act, 1956

(Central Act74 of 1956), and who is not an importer

may, at his option, instead of paying tax in accordance

with the provisions of the said section, pay tax at three

per cent of the whole contract amount;

(ii) any works contractor not falling under clause (i) above

may, at his option, instead of paying tax in accordance

with the provisions of the said section, shall pay tax at

three per cent of the contract amount after deducting

the purchase value of goods excluding freight and gross

profit element consigned into the State on stock transfer

23

or purchased from outside the State and for the

purchase value of goods so deducted shall pay tax at

the scheduled rate applicable to such goods.

Provided that notwithstanding anything contained

in sub-clause (ii) above, the compounded tax payable by

any works contractor under this clause in respect of works

contracts awarded by Government of Kerala, Kerala Water

Authority or Local Authorities shall be four per cent of

the whole contract amount:

Provided further that the provisions of this clause

shall not apply to any works contract in which the

transfer of material is in the form of goods:

Provided also that notwithstanding anything

contained elsewhere in this Act, a works contractor who

intends to pay tax at compounded rate in accordance

with this clause in respect of all works undertaken by

him during a year, may, instead of filing separate

application for compounding for individual works, file

a single option for payment of tax under this

clause before 30th day of April of the year to which

the option relates, subject to eligibility:

Provided also that in the case of any work covered

under the above provisos which remains unexecuted

fully or partly at the end of the year, the contractor

shall continue to pay tax in respect of such works in

accordance with the provisions of this clause.

Provided also that notwithstanding anything contained

in this Act, in cases of works which commenced prior to

1st April, 2008 and which remains partly unexecuted as

on 1st April, 2008, the contractor shall pay tax at the rates

as it existed prior to 1st April, 2008 till the completion of

work, or up to 31st March, 2009, whichever is earlier:

Provided also that notwithstanding anything contained

in this Act, contractors who have opted for payment of tax

under sub-clause (ii) of clause (a) of section 8 during the

previous years shall continue to pay tax on that portion of the

works remaining unexecuted as on 1st April, 2009, at the

rates applicable as on 1st April, 2009.

Explanation.1:- For the purpose of this clause “whole contract amount”

shall not include the amount paid to sub-contractors for execution of the

portion of works contract if the sub-contractor is a registered

dealer liable to tax under sub-section (1) or sub-section (lA) of

24

section 6, and the contractor claiming deduction in respect of such

amount furnishes certificates in such form as may be prescribed.;

Explanation 2.—Notwithstanding anything contained in any other Act,

a dealer who had surrendered his registration and unused declaration

forms under the Central Sales Tax Act, 1956 (74 of 1956), before the

assessing authority on or before 31st March, 2008 and who does not

have any closing stock of materials purchased interstate as on 31st

March, 2008 or who pays tax on such closing stock at scheduled

rates, shall be eligible for paying compounded tax under sub-clause

(i) of this clause, for the year 2008-2009.”;

(b) Any dealer producing granite metals with the aid of

mechanized crushing machine may, at his option,

instead of paying tax in accordance with the provisions

of the said sections, pay tax at the following rates, namely:-

(i) for each crushing machine of size not exceeding

30.48 cm x 22.86 cm = Rs.40,000 per annum;

ii) for the each crushing machine of size exceeding 30.48 cm

x 22.86 cm but not exceeding 40.64 cm and 25.40 cm =

Rs.1,50,000 per annum;

(iii) for the each crushing machine of size exceeding 40.64 cm

x 25.40 cm = Rs.3,00,000 per annum;

(iv) for each cone crusher Rs.10,00,000 per annum.

Provided that in the case of dealers, who opted to pay

compounded tax under this clause, no separate

assessment shall be made in respect of m-sand produced by

them.

Provided further that notwithstanding anything

contained in this clause, dealers with a single crushing

machine of size not exceeding 30.48 cm. × 22.86 cm. shall

pay rupees twenty five thousand only per annum as tax

under this clause.”;

Explanation.—For the purpose of this clause, primary crushers shall

also be reckoned for the purpose of computation of compounded tax,

and the rate applicable to primary crushers shall be at fifty per cent

of the aggregate of the tax payable on secondary crushers.

(c) (i) Any dealer in cooked food and beverages, including

beverages prepared by him, other than a dealer supplying

cooked food or beverages to any airline service

company or institution or shipping company for

25

serving in air craft, ships or steamer or served in air

craft, ship, steamer, bar attached hotel or star hotel

may, at his option, instead of paying tax in

accordance with the provisions of sub-section (1) of

section 6 but subject to payment of tax, if any,

payable under sub- section (2) thereof, pay tax at half

per cent of the turnover of cooked food and beverages

prepared by him and also on the turnover of other

goods in respect of which he is not the dealer effecting

first taxable sale, as defined in the explanation

under sub- section (5) of section 6.

Explanation: —Cooked food for the purpose of this clause shall

include sweets and fresh fruit juice prepared and served in the

restaurants and hotels.

(ii) Any bar attached hotel, not being a star hotel of

and above three star or a club or a heritage hotel may,

at its option, instead of paying tax in accordance with

the provisions of section 6, but subject to such

conditions and restrictions as may be prescribed, pay tax

at one hundred and twenty five per cent of the tax

paid or payable under this Act, in respect of the

highest turnover of cooked food and beverages prepared by

them, and packaged water, aerated water, cigarettes, soft

drinks and other goods purchased from registered dealers,

for the previous three consecutive years, immediately

preceding the year to which the option relates:

Provided that the dealers who have paid

compounded tax during the previous year shall pay tax

at one hundred and fifteen per cent of the

compounded tax paid and one hundred and fifteen per

cent of the tax paid on packaged water, aerated water,

cigarettes and soft drinks purchased from registered

dealers.

Explanation:—For the purpose of this clause “bar attached hotel”

shall mean a hotel or restaurant or club or any other place,

which is licensed under the Foreign Liquor Rules to serve foreign

liquor falling under Serial Number 2 of the Fourth Schedule,

but shall not include any hotel or restaurant, not being a star

hotel, which is licensed to serve only beer.

(d) Any dealer who transfers the right to use Video

Cassette or Compact Disc may, instead of paying tax in

accordance with the provisions of section 6, pay tax at

the rate of one thousand rupees per year for every main

or branch shop situated in any place within the limits of

26

any Municipal Corporation or Municipality and rupees five

hundred per year for any main or branch shop situated

in any other place or places.

(e) Any dealer, who is an importer or a manufacturer who

is not entitled to any deferment of tax under

section 32, of medicines and drugs falling under the

Third schedule may, at his option, pay, in such manner

and subject to such conditions and restrictions as

may be prescribed, in lieu of the tax payable by him on

such goods under sub- section (1) of section 6, tax at

the rate of 4 per cent of the maximum retail price of such

goods.

Explanation: For the purpose of this clause, maximum retail price in

respect of the goods mentioned means the maximum price printed on

the package of any goods at which such goods may be sold to the

ultimate consumer and in respect of supplies to Government of

Kerala, where such price is not so printed on the package, the price

charged on the sales to Government:

Provided that where a registered dealer has purchased

any goods,

(a) from an importer or a manufacturer who has

opted for payment of tax under this clause; or

(b) from another registered dealer where the tax

on the maximum retail price of such goods was

paid in the state on an earlier sale, such

dealer shall, notwithstanding anything contained

elsewhere in the Act, but subject to such

conditions and restrictions as may be

prescribed, be exempt from payment of tax

under sub-section (1) of section 6 in respect of the

sale of such goods and be entitled to recover from

the buyers the amount of tax paid by him at the

time of purchase of such goods and the turnover

of such goods shall not be included in the total

turnover for the purpose of sub-section.

Provided further that a dealer who opts

payment of tax under this clause shall not allow

any trade discount or incentive in terms of quantity of

goods in relation to any sale of goods covered under

the clause, effected by him, for the purpose of

calculating his tax liability.

27

(f) (i) any dealer in ornaments or wares or articles of

gold, silver or platinum group metals including

diamond may at his option, instead of paying tax in

respect of such goods in accordance with the

provisions of section 6, pay tax at,—

(a) one hundred and fifteen per cent, in case their

annual turnover for the above goods for the

preceding year was rupees ten lakhs or below;

(b) one hundred and twenty per cent, in case their

annual turnover for the above goods for the

preceding year was above rupees ten lakhs and up

to rupees forty lakhs;

(c) one hundred and thirty five per cent; in case

their annual turnover for the above goods for the

preceding year was above rupees forty lakhs and

up to rupees one crore; and at

(d) one hundred and fifty per cent; in case their

annual turnover for the above goods for the

preceding year exceeded rupees one crore;

of the highest tax payable by him as conceded in

the return or accounts, or tax paid by him under this

Act, whichever is higher, for a year during any of the

three consecutive years preceding that to which such

option relates.

Explanation 1:— Where a dealer had not transacted any business

for the last three years consecutively, the highest tax paid or

payable for the year during the year or years he transacted

business shall be considered for the above purpose.

Explanation 2:— Where during any such preceding year, the

dealer had not transacted business for any period in that financial

year, the tax payable for the twelve months shall be calculated

proportionately on the basis of the tax payable or the turnover

conceded, as the case may be, for the period during which such

dealer had transacted business.

Explanation 3:— Dealers opting for payment of tax under this

clause shall pay compounded tax in respect of all their branches

existing in the year to which the option relates.

Explanation 4:— Where a dealer has not opted to pay

compounded tax with respect to a new branch opened in 2008-09, the

compounded tax payable for such branch for the year 2008-09

28

shall be notionally fixed as the average of the compounded tax

paid for the principal place and branches in that year and if the

new branch opened is the first branch, the compounded tax

payable for it shall be the same as that payable for the principal

place of business.

Explanation 5:— Where a dealer opens a new branch in the

current year, the additional compounded tax payable under this

clause in respect of such branch shall be the average of the

tax payable by him in respect of his principal place of

business and all branches.

Explanation 6:— Where a dealer has opted for payment of tax under

this clause for the first time in 2009-10 and has commenced business

only in 2008-09 and the tax payable as per return or account during

2008-09 is less than the output tax payable, then the tax payable for

2008-09 shall be notionally re-determined on the basis of output tax

for determining the tax liability for 2009-10.

Explanation 7:—Tax payable as conceded in the accounts

includes the tax payable on suppressed turnover subsequently

detected also.

Provided that a dealer who opts for payment of tax

under this clause may collect tax on the sales at the rate not

exceeding the rate prescribed for the commodity under this

Act, but where the tax so collected during the year is in

excess of the tax payable for the year under this clause, the

tax collected in excess shall be paid over to Government in

addition to the tax payable under this clause

(ii) The assessing authority, for valid and sufficient

reasons, such as shifting of place of business, holding

of stock exceeding double the quantity held in the

previous year, furnishing of false information,

suppression of relevant information, failure to furnish

such information demanded, may refuse permission to

pay tax under this section and cancel the permission if

any granted:

Provided that no orders under this sub-clause shall

be issued without giving the dealer an opportunity of being

heard and without prior approval of the District Deputy

Commissioner.

(iii) Notwithstanding anything contained in sections 55 or

60 of this Act, orders under sub - clause (ii) shall be

appealable only to the Appellate Tribunals.

29

(iv) In case where permission has been cancelled, the

amount, if any paid based on the permission, shall be

apportioned against the output tax due of the dealer.

(v) Where a dealer had paid tax under this clause for the previous

year, the tax payable for the succeeding year under this clause

shall be one hundred and fifteen per cent of such tax paid

during the previous year and in case of dealers covered under

Explanation 6 of this clause, one hundred and fifteen per cent of

the tax so re- determined.

9. Burden of proof.- The burden of proving that any transaction of a dealer

is not liable to tax under this Act shall lie on such dealer.

10. Deduction of tax at source .- (1) Every awarder shall deduct from

every payment, including advance payment, made by him to any

works contractor liable to pay tax under section 6, in relation to

any works contract awarded, the tax payable by the contractor in

respect of such contract under that section, whether the transfer of

goods involved in the execution of works contract is in the form of

goods or not, and remit it to Government, in the prescribed manner,

on or before the fifth day of the month succeeding the month in

which such deduction is made. Every such awarder shall also file such

return as may be prescribed.

Provided that in respect of works contract executed under

the Sampurna Gramin Rozgar Yojana or the Beneficiary

Committees using the Member of Parliament / Member of

Legislative Assembly Funds or Natural Calamity Relief Funds of

Sarva Siksha Abhiyan Funds, where the total amount in

respect of individual contract does not exceed ten lakh rupees, the

maximum amount deductable under this section shall not

exceed four per cent of the whole contract amount.

( 2 ) For the purpose of sub - section (1), the contractor may produce a

liability certificate in relation to such works contracts from the

assessing authority showing the tax liability or tax remittance, as

the case may be, of the contractor in relation to the work.

(2A) In cases where a liability certificate has been produced as per

sub-section (2), payment shall be effected to a works contractor, on

the basis of the said certificate; and,—

(i) in case of work awarded by Government of

Kerala, Kerala Water Authority or Local

Authorities, after deducting four per cent of

the amount paid as per the works contract; and .

(ii) in other cases—

30

(a) after deducting eight per cent of the amount paid as

per the works contract in the case of contractors

registered under this Act.

(b) after deducting ten per cent of the amount paid as per

the works contract in the case of other contractors:

Provided that the awarder shall not insist from the

contractor, not being a dealer registered under the provisions of

the Central Sales Tax Act, 1956 (Central Act 74 of 1956)

any certificate issued by the assessing authority showing the

tax liability or tax remittances, as the case may be, of the

contractor, in relation to the contract, if he has opted for

payment of tax in accordance with the proviso to sub-clause (i)

of clause (a) of section 8.;

(3) If any awarder effects any payment without deduction of the

taxes provided under sub-section (1) or after making such deductions,

fails to remit the same to Government within the time limit specified

under the said sub-section, the awarder and any person or

persons responsible for such deduction on behalf of the awarder,

including a Director, Manager, Secretary or other officer of a comp

any, shall be jointly and severally liable for payment of such amounts

to the Government forthwith as if it were a tax due from him.

Explanation. - For the purposes of this section:

(1) “Company’” means any body corporate and includes a firm

or other association of individuals, or a Co-operative society;

and

(2) “Director” in relation to a firm, means partner in the firm.

11. Input Tax Credit : - (1) Subject to the other provisions of this

section, any registered dealer, liable to tax under sub- section

(1) of section 6, shall be eligible for input tax credit.

(2) In respect of capital goods purchased by a dealer, the value of

which exceeds such limit as may be prescribed, input tax credit

shall be allowed over a period of three years from the date of

commencement of commercial production or from the date from

which the capital goods are put to use, whichever is later, in such

manner and subject to such conditions as may be prescribed.

Provided that input tax credit on capital goods for industrial

units including those which have undertaken expansion,

diversification or modernization shall be allowed over a period

twelve months from the date of commencement of commercial

31

production or from the date from which the capital goods are

put to use, whichever is earlier from 1st day of April, 2006.

Provided further that no input tax credit shall be

allowed with respect to capital goods used exclusively for the

manufacture of goods having no taxable consequence under this

Act or the Central Sales Tax Act, other than zero rated sales and in

cases where it is only partly used for such purposes, input tax

credit shall be proportionately disallowed to that extent.

(3) Subject to the provisions of sub – section (4) to (13), input tax

credit shall be allowed to a registered dealer in respect of a return

period against the output tax payable by him for such period

and the dealer shall pay to Government, the balance of the output tax in

excess of the input tax credited in the manner prescribed.

Provided that no input tax credit shall be allowed to

any amount illegally collected by way of tax as specified

in sub- Section (3) (a) of Section 30 of the Act.

Provided also that where any goods purchased in the state

are subsequently sold at subsidized price, the input tax allowable

under the sub-section in respect of such goods shall not

exceed the out put tax payable on such goods.

Provided also that where any goods purchased in

the State are subsequently sent to outside the State or used in

the manufacture of goods and the same are sent out side the

State otherwise than by way of sale in the course of inter-

State trade or export or where the sale in the course of inter-

State trade is exempted from tax, input tax credit under this

section shall be limited to the amount of input tax paid in

excess of four per cent on the purchase turnover of such goods

sent outside the State:

Provided also that where it is found that the dealer

claiming input tax credit under this section has charged

tax under section 6 on the turnover of goods, without making any

deduction in respect of the tax paid under this Act, for

which input tax credit is allowed to him under this section,

the input tax credit availed of by him shall be disallowed:

Provided also that input tax credit shall not be available

in respect of the tax paid on the turnover subsequently allowed

as discount, and shall be disallowed where it is found that

the dealer has claimed input tax credit under this section on

such turnover or of such goods used in the manufacture of goods

sent outside but the amount covered under credit notes issued

by a supplier that do not affect the input tax credit already availed

32

of or on account of reimbursement of any expenses incurred by

the dealer shall not be reckoned for the purpose of assessment

under this Act.

Provided also that no input tax credit shall be allowed

where any dealer, with a view to evade payment of tax or in

order to claim any inflated input tax credit or refunds under

this Act, purchases goods from a sister concern of the dealer and

where the sale consideration in respect of which has been

influenced by such relationship, and there has been no

physical transfer of the goods covered by the invoice:

Provided also that the purchase in respect of which

input tax credit availed is made from a sister concern of the

dealer and there is actual physical transfer of the goods

involved, and the dealer availing input tax credit sells such

goods at a price lower than the price for which it was purchased,

the input tax credit allowable in respect of such goods

shall not exceed the output tax due on such goods.

Explanation.— For the purpose of above provisos, ‘sister concern’ means

a business run by a proprietorship or partnership, association of

persons or a company which is controlled by the dealer, or by

a person whom the dealer controls, or by a person who is controlled

by the same person who controls the dealer:

Provided also that notwithstanding anything contained

elsewhere in this Act, planters including companies or firms or

society, including a co-operative society or association of individuals,

whether incorporated or not, shall not be entitled to input tax credit

on purchases of fertilizers, pesticides etc.;

(4) Unregistered dealers or dealers paying presumptive tax under

sub-section (5) of section 6 or dealers paying compounded tax under

section 8 or dealers who transfer the right to use goods under

clause (c) of sub-section (1) of section 6 shall not be eligible for

input tax credit.

Provided that where a dealer has opted to pay tax

under section 8 in respect of certain transactions and is liable

to pay tax under sub- section (1) of section 6 in respect of

others, he shall be eligible for input tax credit only on the

purchases of taxable goods made in relation to the sales in

respect of which he pays tax under sub-section (1) of section 6:

Provided further that notwithstanding anything contained

elsewhere in the Act, manufacturers of medicine who have opted

for payment of compounded tax under clause (e) of section 8

shall be eligible with effect from 1st April, 2005 for input

33

tax credit, for the tax paid under this Act, under the Kerala

Tax on Entry of Goods into Local Areas Act, 1994, on

purchase of raw materials, packing materials and capital

goods used exclusively for the manufacture of own taxable goods.

(5) No input tax credit shall be allowed for the purchases, -

(a) from an unregistered dealer or from a dealer not

liable to tax under section 6 or from a dealer

whose registration has been cancelled;

(b) from a dealer paying presumptive tax under

sub- section (5) of section 6;

(c) from a dealer paying compounded tax under Section 8.

(d) of goods from outside the State in the course of

inter State trade or commerce or otherwise in

respect of tax paid on such purchase;

(e) of goods which are used in the manufacture,

processing or packing of goods specified in the

First Schedule and the Fourth Schedule;

(f) of goods specified in the Fourth Schedule;

(g) of goods, which are used, as fuel in motor

vehicles or vessels or stores;

(h) of motor vehicles where such motor vehicle is

sold as a used motor vehicle except where such

motor vehicle is purchased as a used motor vehicle.

Explanation: For the purpose of clause (g) “stores” shall not include

spare parts or tools in relation to any goods to which the provisions

of this section applies

(i) (Omitted)

(j) which relates to goods sold by a principal

through his agent in respect of which the principal

has claimed input tax credit or vice versa;

(k) of goods remaining unsold at the time of closure

of business;

(l) of goods which are used in the manufacture,

processing or packing of goods, where such

34

manufactured, processed or packed goods remain

unsold at the time of closure of business;

(m) of goods where tax invoice in the prescribed

form is not available with the dealer or there is

evidence that the same has not been issued by the

selling dealer;

(n) by a dealer who is exempted from payment of tax; (o)

of goods notified under clause (x) of section 2.

Provided that where a dealer remits differential tax in

accordance with the provisions of the Act, he may, for

the period up to 30th June, 2009, issue debit note for the

tax amount subsequently remitted, to the purchasing dealer to

claim input tax credit to the extent of the tax covered in

the debit note subject to such condition as may be prescribed.

(6) If the input tax of a dealer for a return period is more than the

out put tax of that return period, the difference between the

input tax and the out put tax shall be first adjusted against any

interest, tax or any other amount due or demanded under this Act,

from the dealer for any previous return period(s) and then to the tax

payable by the dealer on the sales in the course of inter-state trade

and the balance, if any, shall be carried forward to the next

return period for the purpose of allowing input tax credit in the

succeeding return period.

Provided that where the excess input tax so carried forward

cannot be fully adjusted during the last return period of that

year, the excess input tax credit so remaining unadjusted shall

be refunded to the dealer as if it were a refund accrued under

section 13.

(7) If goods in respect of which input tax credit has been availed of

are subsequently used, fully or partly, for purposes in relation to which

no input tax credit is allowable under the section, the input tax

credit availed of in respect of such goods shall be reverse tax.

(8) The reverse tax as determined under sub-section (7), shall be deemed

to be an amount due under this Act.

(9) Any dealer who claims input tax credit under this section in

respect of any purchase shall keep the original tax invoice for such

purchase (duly filled in and signed and issued by the selling

dealer) wherein the input tax has been separately charged, and

produce for verification as and when required by any authority

empowered under this Act.

35

(10) Notwithstanding anything contained in any other

provisions of this Act, a dealer who purchases goods from

another dealer whose Certificate of Registration is suspended,

shall not be eligible for input tax credit on such purchases of

goods, made during the period of suspension of the Certificate of

Registration.

(11) Notwithstanding anything contained in any other provisions of

this Act, a dealer whose Certificate of Registration is suspended

shall not be entitled to claim any input tax credit during the period

of suspension of the Certificate of Registration.

(12) A registered dealer who intends to claim input tax credit

under this section shall, for the purpose of determining the amount

of input tax credit, maintain the accounts and such other records

as may be prescribed, in respect of purchases, supplies and

sales effected by him in the State.

(13). Subject to the provisions of sub-sections (4) to (7) and subsections

(10) to (12), input tax credit shall be allowed to a

registered dealer in respect of the tax paid under the Kerala

General Sales Tax Act, 1963 (15 of 1963) where the tax paid by the

dealer who sold the goods to such registered dealer or by any

pervious seller, or the Kerala Tax on Entry of Goods into Local Areas

Act, 1994 (15 of 1994), in respect of goods purchased by him during

a period of one year immediately preceding the date of commencement

of this Act, subject to such conditions and restrictions as may be

prescribed, where such goods are—

(i) held as opening stock on such date and sold or used

in the manufacture of taxable goods or used in the

execution of works contract or used as containers or

packing materials for the packing of taxable goods in the

state for sale thereafter; or

(ii) used in the manufacture of taxable goods or as packing

materials for the packing of taxable goods and such

manufactured or packed goods are held as opening

stock on such date; or

(iii) used in the manufacture of taxable goods and are held

as opening stock on such date as work in process.

Provided that the assessing authority may adjust any

amount accruing to a dealer as input tax credit under this

sub- section towards any tax or other amount due from the

dealer, under this Act or under the provisions of the Kerala

General Sales Tax Act, 1963 (15 of 1963) or the Central Sales

36

Tax Act, 1956 (Central Act 74 of 1956) or The Kerala Tax

on Entry of Goods into Local Areas Act, 1994 (15 of 1994).

Provided further that where it is found on audit

that the dealer claiming input tax credit under this subsection

has charged tax under section 6 on the turnover of such

goods without making any deduction in respect of the tax

paid under the Kerala General Sales Tax Act, 1963 (15 of

1963) for which input tax credit is allowed to him under

this sub-section, the input tax credit availed of by him shall

be liable to be disallowed to that extent and the input

tax credit so disallowed shall be deemed to be reverse tax due

under sub-section (7).

Explanation: - For the purposes of this sub-section “input tax”

means tax paid by one registered dealer under the Kerala

General Sales Tax Act, 1963 (15 of 1963) to another such dealer or,

where the goods are liable to tax under the Kerala General Sales Tax

Act, 1963 (15 of 1963) at the point of first purchase or last purchase

or under section 5A, as the case may be, the tax paid by the

dealer claiming input tax credit under this sub- section on the

purchase or tax paid by such dealer under the Kerala Tax on

Entry of Goods into Local Areas Act, 1994 ( 15 of 1994).

Provided also that no input tax credit under this

sub- section shall be allowed in respect of tax paid under the

Kerala General Sales Tax Act, 1963 (15 of 1963) on

medicines and drugs falling under the Third Schedule to this

Act and turnover of sale of such medicines and drugs shall

not be included in the taxable turnover of any dealer

effecting sales of such medicines and drugs, subject to such

conditions and restrictions as may be prescribed.

12. Special rebating in certain cases: - (1) In calculating the net tax

payable by a dealer for a return period there shall be deducted

from the tax payable for the return period, a sum equal to –

(a) the tax paid under sub-section (2) of section 6; and

(b) the tax paid under section 3 of the Tax on Entry of Goods

into Local Areas Act, 1994 (15 of 1994) on the import

of any goods, other than those included in the fourth

schedule; where such goods are intended for re-sale or for

use in the manufacture of taxable goods or for use in

the execution of works contract or for use as containers

or packing materials for the packing of taxable goods in the

state:

37

Provided that where the special rebate is in respect of

capital goods, the same shall be allowed over a period of

three years and all the conditions and restrictions

applicable to input tax credit under sub- section (2) of section

11 shall apply to the special rebate under this section also:

Provided also that where the goods in respect of which

tax is payable under sub-section (2) of section 6 is sold in the

State or in the course of interstate trade or used in the

course of manufacture of taxable goods in the month in which it

is purchased, the special rebate allowable in respect of such

goods resold or sold in the course of interstate trade or

used in the manufacture of goods liable to pay tax under

this Act or Central Sales Tax Act, 1956 may be availed in the

month itself.

Provided also that where the goods in respect of which

tax under sub-section (2) of section 6 or under section 3 of

the Kerala Tax on Entry of Goods into Local Areas Act, 1994

has been paid, are sent outside the State or used in the

manufacture of goods and the same are sent outside the

State, otherwise than by way of sale in the course of interstate

trade or export or where the sale in the course of interstate

trade is exempted from tax, the special rebate under

this section shall be limited to the amount of such tax paid

in excess of four percent :

Provided also that where the goods in respect of which

tax under sub-section (2) of section 6 or under section 3 of

the Kerala Tax on Entry of Goods in to Local Areas Act, 1994

has been paid and where such goods are resold in the State

at reduced rate or a part of which has been resold and the

balance disposed in the state otherwise than by way of sale or

used in the manufacture of taxable goods, then the special

rebate under this section shall not exceed the output tax

payable in respect of such goods or goods manufactured out

of such goods.

(2) Unregistered dealers or dealer paying presumptive tax under subsection

(5) of section 6 or dealer paying compounded tax under section 8

shall not be eligible for rebate under sub-section (1).

(3) If the rebate allowed under sub-section (1) and the input tax

credit allowed under section 11 is more than the output tax for

that return period, the amount by which the sum of the input tax

credit and rebate under sub-section (1) is in excess of the

output tax for the return period shall be in the same manner

as input tax under sub-section (6) of section 11, as if such rebate

were also input tax credit accrued under that section.

38

(4) Where rebate is claimed under sub-section (1) in respect of any goods

during a return period and the goods are subsequently used, fully

or partly for purposes other than those specified in the said subsection,

or has remained as unsold at the time of closure of

business, in relation to such goods, the rebate claimed on such

goods used otherwise or remained as unsold at the time of closure

shall be the reverse tax for that return period which may be

determined in the same manner as if it were a re verse tax accrued

under sub-section (7) of section11.

13. Refund of input tax in the case of export or interstate sale:

(1) Every sale in the course of export shall be a zero rate sale.

(2)Where input tax has been paid in respect of the purchase of any

goods including capital goods, except those goods coming under

the Fourth Schedule, and such goods are either,-

(i) sold in the course of export; or

(ii) sold in the course of inter-State trade or commerce; or

(iii) sent to outside the State otherwise than by way of sale

in the course of inter- State trade; or

(iv) (a) used or consumed in the manufacture of goods,

other than those falling under the Fourth Schedule, or

used as containers or as packing materials for such

goods and such manufactured goods are sold in the course

of export; or

(b) used or consumed in the manufacture of taxable

goods or used as containers or as packing materials of

such goods manufactured and such manufactured goods are

sent outside the State either by way of sale in the

course of inter- state trade or commerce or otherwise; or

(v) used as Capital goods; the input tax paid on

such goods shall be refunded to the person making

such sales in the course of export or in thecourse of inter-

State trade or commerce or sending such goods to

outside the State, as the case may be, in such manner

and subject to such conditions as may be prescribed:

Provided that the dealer claiming such refund shall not

claim input tax credit on such purchases for any return period:

Provided further that where the goods are sent to

outside the State otherwise than by way of sale in the course

of inter- State trade or export or where the sale in the course of

39

interstate trade is exempted from tax, the refund under this

section shall be limited to the amount of input tax paid

in excess of four per cent on the purchase turnover of such

goods sent outside the State, re-sold or used in the manufacture,

as the case may be:

Provided also that in the case of capital goods, the refund

of input tax will be allowed in such installments as may be

prescribed.

Explanation: For the removal of doubt it is hereby clarified that

where input tax is paid on the purchase of Duty Entitlement Pass

Book or any similar licence for the import of any goods and goods so

imported are used, consumed or disposed of in the manner specified in

this sub-section, the input tax paid on the purchase of such Duty

Entitlement Pass Book or any similar licence shall for the purpose

of this section and section 11, be deemed to be the input tax paid

on the goods imported.

(3) Nothing contained in sub-section (2) shall be construed as preventing

the assessing authority from adjusting any amount due as refund

under sub-section (1) towards any tax or other amount due from

the dealer, under this Act or under the provisions of the Kerala

General Sales Tax Act, 1963 (15 of 1963) or the Central Sales Tax Act,

1956 (Central Act 74 of 1956) or The Kerala Tax on Entry of Goods into

Local Areas Act, 1994 (15 of 1994).

4) The provisions of this section shall apply to goods purchased by a

dealer during a period of one year immediately preceding the date

of commencement of the Act and held by such dealers as opening

stock on such date.

Explanation: For the purpose of this section—

(a) sale in the course of export means a sale falling under

sub- section (1) or sub- section (3) of section 5 of the Central

Sales Tax Act 1956 (Central Act 74 of 1956).

(b) input tax includes tax paid under sub-section (2) of

section 6, input tax covered by the explanation to subsection

(13) of section 11 and the tax paid under the Tax on

Entry of Goods into Local Areas Act, 1994 (15 of 1994)

on any taxable goods.

14. Reimbursement of tax: - Where tax has been collected by any

dealer in the State on any sale effected under this Act to any

official or personnel of, –

(a) any foreign diplomatic mission or consulate in India ; or

40

(b) the United Nations or any other similar international

body, entitled to privileges under any convention to

which India is a party or under any law for the time being

in force; or

(c) any consular or diplomatic agent of any mission, the

United Nations or other body the tax so collected shall

be reimbursed to such person, mission, United Nations

or other body in such manner as may be prescribed.

CHAPTER – IV

REGISTRATION AND PERMIT

15. Registration of dealers : - (1) Every dealer whose total turnover in

any year is not less than five lakh rupees shall, and any other dealer

may, get himself registered under this Act.

(2) Notwithstanding anything contained in sub-section (1)

(i) every casual trader;

(ii) every dealer, registered under the Kerala General

Sales Tax Act, 1963 (15 of 1963) immediately before the

date of commencement of this Act, whose total

turnover under the said Act for the year preceding such

date was not less than the limit specified under subsection

(1);

(iii) every dealer registered under sub-section (3) of section 7

of the Central Sales Tax Act, 1956 (Central Act 74 of

1956);

(iv) every dealer who in the course of his business obtains

or brings goods from outside the State or effect export

of goods out of the territory of India;

(v) every dealer in bullion or specie or in jewellery of gold,

silver or platinum group of metals,

(vi) every dealer residing outside the State, but carrying on

business in the State,

(vii) every agent of a non-resident dealer

41

(viii) every commission agent, broker, delcredere agent, auctioneer

or any other mercantile agent, by whatever name called, who

carries on the business of buying, selling, supplying or

distributing goods on behalf of any principal;

(ix) any contractor, and

(x) any State Government, Central Government, or Government

of any Union Territory or any department thereof or

any local authority/autonomous body, shall get himself

registered under this Act, irrespective of the quantum of

his total turnover.

(xi) any hallmarking unit.

(3) Notwithstanding anything contained in the foregoing sub- sections, an

authorized retail or wholesale distributor dealing exclusively in rationed

articles under the Kerala Rationing Order, 1966 shall not be liable to get

himself registered under this Act.

(4) The burden of proving that a dealer is not liable to be registered under

this Act shall lie on that dealer.

15A. Compulsory Registration.- Where a dealer liable to be registered under

this Act has failed to inform the registering authority of his liability to be

registered, the registering authority, after conducting such survey,

inspection or enquiry, as may be prescribed, proceed to register such

person as a dealer under this Act and thereupon all the provisions of

this Act and the Rules made there under, shall be binding on such

person however, such dealer shall not be entitled to any benefits accruing

from such registration.

15B. Special drive for registration: — Notwithstanding anything contained

anywhere in this Act, dealers who had voluntarily applied for

registration under the Act for the period from 15th December,

2007 to 31st March, 2008 would be entitled to,—

(a) get registration with effect from the date of

commencement of business irrespective of the date of

application;

(b) claim input tax credit on their purchases covered under

bills / invoices of registered dealers within the State from

the date of commencement of business; and

( c) pay tax under sub – section ( 5 ) of section 6, subject to

eligibility, or pay tax under section 8 for the relevant

years subject to eligibility and filing application for

compounding along with the registration application:

42

Provided that such dealers shall be liable to pay

interest on all dues and will not be entitled for any

refund relating to the period prior to filing of registration

application.

15C. Registration of industrial Units: - (1) Any person who intends to

establish an industrial unit may get himself registered under this

section.

(2) Every application for registration of an Industrial Unit shall

be supported by a certificate in the prescribed form issued by

the Director of Industries and Commerce, the Kerala State Industrial

Development Corporation or the Kerala Financial Corporation.

(3) A provisional registration certificate shall be issued to the

applicant within seven days from the date of application.

( 4) The form of application, form of provisional registration certificate,

the fee for registration, the conditions and the authority empowered to

issue such certificates shall be such as may be prescribed.

(5) The provisional registration certificate issued under this section

shall facilitate the holder for procurement of all materials for

construction and establishment of the Industrial Unit, including raw

materials for trial production in such quantity as may be specified in

such certificate.

(6) Every holder of a provisional registration certificate, shall before

starting commercial production in the Industrial Unit, get himself

registered under section 15.

16. Procedure for registration: - (1) An application for registration shall

be made to such authority, in such manner and within such

period as may be prescribed and shall be accompanied by a fee as

specified in the table below: -

Provided that a dealer getting registered under clause

(ii) of sub- section (2) of section 15 shall not be required to

pay the registration fee specified in this sub-section; but only the

fee for renewal of registration specified under sub-section (7):

Provided further that where the dealer is an authorized

retail or wholesale distributor of rationed articles under the

Kerala Rationing Order, 1966, his total turnover for the purpose

of this sub- section shall not include the turnover in respect

of such goods:

Provided also that in the case of casual trader, the

minimum registration fee to be paid shall be two thousand

43

five hundred rupees per month and the maximum period of

validity of registration certificate shall be three months from

the date of issue of certificate.

Provided also that where a dealer liable to get registered

under sub-section (1) of section 15 is also liable to get registered

under the provisions of the Kerala General Sales Tax Act, 1963

(15 of 1963), notwithstanding anything contained in the said

Act, he shall not be required to pay the fee prescribed under

the provisions of the said Act for the year if he has paid the

fee specified under this section for the said year for the total

turnover both under this Act and also under the said Act.

Provided also that a person shall not be entitled for

more than one registration under this Act.

(2) If the prescribed authority after making such enquiries as it may

consider necessary, is satisfied that the application is in order and

that the particulars furnished therein are correct, it shall register

the applicant and issue to him a certificate of registration in the

prescribed form.

Provided that registration shall be deemed to have been

granted with effect from the date of commencement of business

irrespective of the date of application for the purpose of, -

(a) paying tax under sub-section (5) of section 6,

subject to eligibility, and

(b) opting for payment of tax under section 8 for the

relevant years subject to eligibility:

Provided further that new dealers applying for

registration and existing dealers having registration may avail

this benefit subject to the condition that they shall pay tax

under the respective provisions along with interest and will

not be entitled for any refunds relating to the period prior to

filing of application for registration:

Provided also that in the case of dealers against whom an

offence has been detected under section 67 of the Act before

filing application for registration, registration shall be granted

under this sub-section subject to the finalization of the

proceedings in respect of the offence so detected.

(3) The registering authority shall dispose of the application for registration

received under sub-section (1), within thirty days from the date of receipt

of the application.

(4) Where a dealer has more than one place of business, the

registration certificate shall cover all such place of business.

44

The registering authority shall issue such number of certified copies

of the registration certificate to the dealer for exhibition at each of

his places of business and the dealer shall pay a fee of one

hundred and fifty rupees for each of such certified copy.

(5) No fee specified above shall be payable by any State Government,

Central Government or Government of any Union Territory or any

department thereof or any local authority.

(6) The dealer shall exhibit the certificate of registration granted

under sub-section (2) at the place of business mentioned therein.

Where the dealer has more than one place of business, he shall

exhibit the certificate of registration at the principal place of

business mentioned therein and a certified copy thereof granted

under sub- section (4) at every other place of business within the

State mentioned in the certificate of registration.

(7) A certificate of registration issued under sub-section (2) shall be

valid for a year and shall be renewed from year to year on payment

of the fee specified below:

(a) dealer who is not an importer: Five hundred rupees

(b) others : One thousand five hundred rupees.

(8) A dealer registered under sub-section (1) of section 15 shall be

entitled to have his registration cancelled if he is able to prove to

the satisfaction of the registering authority that his turnover in

each of the two consecutive years immediately preceding the application

was less than the limits mentioned in that sub-section.

(9) If any dealer registered under this Act has committed the offence

of evasion of tax for more than once during an year, the

registering authority may, for the reasons to be recorded in

writing, cancel the registration of such dealer.

(10) Notwithstanding anything contained in sub section (9) the registering

authority shall have power, for good and sufficient reasons, to cancel,

modify or amend any registration certificate issued by it.

(11) No application for registration nor renewal under this

section shall be refused and no order under sub-section (9) or

(10) shall be made, unless the dealer concerned has been given

an opportunity of being heard.

(12) When a dealer has ceased to do business in any year,

and gives notice of that fact to the registering authority, he shall not

be liable to pay any registration fee from the commencement of the

following year unless he resumes business.

45

(13) (i) Any dealer conducting exhibitions, exchange melas

or any prize schemes for sales promotion, shall obtain a

written permission from the assessing authority, with

whom he is registered as a dealer on payment of a fee

of five hundred rupees. The assessing authority may issue

such permission in such form and subject to such

conditions as may be prescribed. The dealer to whom

the permission is issued shall exhibit the same at a

conspicuous place where the exhibition or exchange mela

or prize scheme is conducted.

(ii) The owner of the premises (not being the regular

business place of the dealer) where the exhibition, exchange

mela or any prize schemes for sales promotion are

conducted shall obtain a copy of the permission issued by

the assessing authority under clause (i) and intimate the

assessing authority concerned the particulars regarding

the period during which the mela is conducted, the dealer

conducting the mela and the conditions subject to which

the premises are leased out for the conduct of such

exhibition, exchange mela or prize schemes and any other

relevant information. Where the owner of the premises

fails to do so, he shall be jointly and severally

liable for any tax that may become due on the sales of

goods made in such exhibition, exchange mela or any prize

schemes.”

(14) Every registered dealer shall be issued an electronic identity card

on payment of five hundred rupees and subject to such conditions

as may be prescribed. Add on cards may be issued to a dealer

on payment of two hundred and fifty rupees per card. The maximum

number of add-on cards that may be issued to a dealer shall not exceed

three.

(15) Where a certificate of registration or an electronic identity card

issued under this section is lost, a duplicate certificate may be issued

on payment of One hundred rupees in the case of registration certificate

and two hundred and fifty rupees in the case of electronic identity

card, subject to such conditions as may be prescribed.

17. Security to be furnished in certain cases: - (1) Where the registering

authority has reasons to believe that a dealer is likely to make

default in payment of tax or other amount due under this Act, he

may, by order in writing, demand security from the dealer for an

amount not exceeding one half of the tax, payable on the turnover of

the dealer for the year as estimated by the registering authority.

(2) Notwithstanding anything contained in sub-section (1), the registering

authority may, at the time of registration, demand security by order in

46

writing, from every dealer effecting first sale of goods within the

State, an amount not exceeding one half of the tax payable on the

turnover of the dealer for the year as estimated by the registering

authority.

Provided that the registering authority shall have

the power to demand at any time additional security if such

authority has reason to believe that the turnover estimated under

sub- sections (1) or (2) was too low.

Provided further that no security or additional security

shall be demanded under this sub-section from a dealer falling

under clause (ii) of sub-section (2) of section 15.

(3)The dealer from whom security or additional security is demanded

shall furnish it within the prescribed time and in the prescribed

manner.

(4) Where a dealer getting registered under section 15 had furnished

any security in accordance with the provisions of the Kerala

General Sales Tax Act, 1963 (15 of 1963) notwithstanding anything to the

contrary contained in this Act the security furnished under the

provision of the said Act shall be deemed to have been furnished under

the provisions of this Act.

18. Suspension of registration in certain cases :.- (1) Notwithstanding

anything contained in any other provisions of this Act, the Deputy

Commissioner may, if he is satisfied that any dealer has violated

the condition of a registration certificate issued to such dealer or that

he has violated any of the provisions of this Act or the rules made

there under or has prevented or obstructed or abetted the prevention or

obstruction of any survey, inspection, entry, search or seizure by

an officer empowered under this Act, without prejudice to any other

action that may be taken against him under this Act, by order,

suspend the registration of such dealer for such period not

exceeding six months as may be specified in the order.

(2) Notwithstanding anything contained in sub-section (1) where a

dealer registered under this Act has evaded tax exceeding one lakh rupees

during an year, the Deputy Commissioner may, without prejudice to

any other action that may be taken against him under this Act,

by an order in writing, suspend, in the manner as may be

prescribed, the Certificate of Registration for a period not less than

six months but not exceeding one year.

(3) Any dealer who continues the business during the period of

suspension of the registration shall be guilty of an offence under this Act.

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19. Issue of permits: -(1) Every registered dealer who transacts business

at places other than his registered place or places of business or

employs a traveling salesman or representative to transact business as

aforesaid, shall obtain a permit issued under this Act authorizing

himself or permitting him to authorize, the traveling salesman or

representative so to do.

(2) The entire turnover of business carried on under the permit shall

be included and accounted for by the registered dealer in his

accounts and returns and shall be dealt with as if it were the

turnover of business done by the registered dealer himself at the

registered place of business.

(3) Every permit holder shall carry the permit with him and

shall produce it on demand by any officer of the Commercial Tax

Department empowered by the Government in this behalf. He shall

maintain and produce on demand to any such officer a true

and correct account of all the transactions carried on under the

permit and a stock book showing the quantities of goods held by

him, the quantities disposed of from day to day by sale or otherwise

and the balance on hand at the end of each day.

(4) An application for the permit referred to in sub-section (1) shall

be made to registering authority, in such manner and within such

period, as may be prescribed, and shall be accompanied by a fee of

one hundred and fifty rupees.

Explanation: - A dealer may make a single application for all the

permits required by him together with the fee for each permit applied

for.

(5) If the registering authority is satisfied that the application is in

order, and that the particulars furnished therein are correct, it shall

issue the permit in the prescribed form.

(6) A permit issued under sub-section (5) shall be valid for a

period of one year and shall be renewed from year to year on

receipt of an application from the registered dealer, accompanied

by a fee of one hundred and fifty rupees;

(7) The registering authority shall cancel a permit,-

(a) on requisition made in writing by the registered dealer, or

(b) on the cancellation of the certificate of registration.

(8) The registering authority may cancel a permit if the permit

holder has contravened any of the terms or conditions of the permit

or any of the provisions of this Act or the rules made there under.

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(9) No permit shall be cancelled under sub-section (8) unless the person

affected has been given a reasonable opportunity of being heard.

19A. Issue of Green Card : - Every registered dealer satisfying the criteria,

as may be prescribed, may be issued a Green Card for such

speeding up clearances of his consignments at the check posts

and such other purposes as may be prescribed.

CHAPTER - V

ASSESSMENT, RECOVERY OF TAX AND PENALTY

20. Filing of returns :- (1) Every registered dealer and every dealer liable

to be registered under this Act shall submit to the assessing

authority such return or returns before such dates and in such

manner and accompanied by such documents as may be prescribed.

(2) In case of a dealer having more than one place of business, the

aggregate turnover of all such places of business shall, subject to

the provisions of sub-section (3), be taken as the turnover of the

business for the purposes of this Act.

(2A). Every dealer registered under this Act and every others

required to file their returns under this Act shall file their returns as

well as purchase and sale list through electronic filing in addition to

the hard copy to be filed along with the returns:

Provided that the Commissioner may, in the interest of

tax administration, exempt such class or classes of dealers or

others as may be prescribed, from electronic filing of returns

and the stipulation regarding hard copy of returns prescribed

under this sub-section.

(3) The Commissioner may, on application by the dealer, treat

each of such places of business as a separate unit for the purposes

of levy, assessment and collection of tax, and thereupon all the

provisions of this Act regarding registration, filing of returns, assessment

and collection of tax shall apply, as if each of such places of business

were a separate unit except for considering the eligibility for

payment of tax under sub- section (5) of section 6.

(4) Where any order is passed by the Commissioner under subsection

(3), the turnover of each of such places of business shall

be liable to tax irrespective of such turnover being below the

minimum turnover mentioned in section 6 provided that the

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total turnover in respect of all such places of business together

shall not be less than the minimum turnover mentioned in section 6.

20A. Condonation of Delay : - The Deputy Commissioners having

jurisdiction over the area may, for valid and sufficient reasons,

to be recorded in writing, condone delay,— .

(a) in applying for any refund under this Act and

Rules made there under,

(b ) in filing options under section 8 of this Act up to 31st

December, 2008 for the years 2005-06, 2006-07 and 2007-

08:

Provided that the time limit for completion of any

assessment under this Act shall be extended by a further

period of three years from the date of condoning such delay,

under this section.

21. Self assessment : - Where the return submitted under sub- section

(1) of section 20 is in the prescribed manner and accompanied

by the prescribed documents, the assessment relating to the return

period shall, subject to the provisions of sections 22, 24 and

section 25, be deemed to have been completed on the receipt of

such return.

22. Assessment in case of non-filing of return and filing of defective

return : - (1) Where the return submitted under sub- section (1) of

section 20 is not in the prescribed manner or not accompanied by

the prescribed documents or with incorrect particulars, the assessing

authority shall, after recording its reasons, reject the return with due

notice to the dealer.

Provided that the payment of any tax declared as