THE MADHYA PRADESH VAT ACT, 2002

No: 20 Dated: Nov, 28 2002

THE MADHYA PRADESH VAT ACT, 2002

(No.20 of 2002)

Incorporating amendments made by-

MP Vat (Amendment) Act, 2003

( No.11 of 2003),

MP Vat (Amendment) Act, 2006

( No.12 of 2006) and

MP Vat (Second Amendment) Act, 2006

( No.22 of 2006)

MP Vat (Amendment) Act, 2007

( No.8 of 2007)

MP Vat (Second Amendment) Act, 2007

( No. 26 of 2007)

Notifications

[ THE MADHYA PRADESH VAT ACT, 2002 (No 20 of 2002 - received the assent of the President on the 12^th November , 2002; assent first published in the “Madhya Pradesh Gazette (Extra Ordinary )” dated the 28^th November. 2002.]

Amended by -

¹ *MP Vat (Amendment) Act, 2003 ( No.11 of 2003)-received the assent of the Governor on the 21st April, 2003; assent first published in the “Madhya Pradesh Gazette(Extra Ordinary )” dated the 26th April, 2003.

² *MP Vat (Amendment) Act, 2006 ( No.12 of 2006) - received the assent of the Governor on the 31st March , 2006; assent first published in the “Madhya Pradesh Gazette (Extra Ordinary )” dated the 31st March , 2006.

³ MP Vat (Amendment) Ordinance, 2006 (No.5 of 2006)- published in the “Madhya Pradesh Gazette (Extra Ordinary )” dated the 2nd June, 2006-

⁴^**MP Vat (Second Amendment) Act, 2006 ( No.22 of 2006) - received the assent of the Governor on the 4th August, 2006; assent first published in the “Madhya Pradesh Gazette (Extra Ordinary )” dated the 8th August, 2006

* The Act and the amendment Acts have come in to force with effect from 1st April, 2006 (Notification No. (9)* dated 14 March, 2006 and (17)* dated 31 March, 2006)

** (i) The amendment Act has been made effective from 1st April, 2006, subject to the condition that the provisions of section 2(ii)(b), section 19(i) (b) relating to "Bulk drugs" and section 19(ii) relating to "Drugs and Medicines" of this amending Act shall come into force from such date as the State Government may, by notification, appoint; and the remaining provisions of this amending Act shall be deemed to have come into force from 1.4.2006 subject to the condition that if the rate of tax prevailing before the date of publication of this Act in the Gazette was higher and the amount of tax collected at such higher rate from 1st April 2006 to the date of publication of this Act in the Gazette,-

(a) has been deposited in the treasury, such amount shall not be refunded; and/ or

(b) has not been deposited in the treasury, such amount shall have to be deposited in

the treasury.

(ii) the provision of section section 19(i) (b) relating to "Bulk drugs" has been made effective from 8.8.2006 - Noti. No. (22)* dated 26.4.2007.

⁵ Notification No.(79) dated 5.12.2006- amendment of Schedule II-part III-entry No.3.

⁶ MP Vat (Amendment) Act, 2007 ( No.8 of 2007) - received the assent of the Governor on the 31st March, 2007; assent first published in the “Madhya Pradesh Gazette (Extra Ordinary )” dated the 1st April, 2007. [The amendment Act has come in to force with effect from 1st April, 2007 -Notification No. (11)* dated 1st April, 2007]

⁷ Notification No.(12) dated 1.04.2007 -insertion of new entry No.14-A-Bidi in Schedule II-part II.

⁸ Notification No.(23) dated 8.05.2007 - insertion of new entry No.50-Bidi in Schedule I & omission of entry No.14-A-Bidi of Schedule II-part II.

⁹ Notification No.(27) dated 5.07.2007 - Amendment of Schedule I & Schedule II .

¹⁰ MP Vat (Second Amendment) Act, 2007 ( No. 26 of 2007) - received the assent of the Governor on the 10th December, 2007; assent first published in the “Madhya Pradesh Gazette (Extra Ordinary )” dated the 11th December, 2007. [The amendment Act has come in to force with effect from 24th December, 2007 -Notification No. (35)* dated 19th December, 2007]

^11. Notification No.(11) dated 29.03.2008 - Amendment of Schedule I & Schedule II .

^12. MP Vat (Amendment) Ordinance, 2008 (No.1 of 2008)- published in the “Madhya Pradesh Gazette (Extra Ordinary )” dated the 12th May, 2008

^13. Notification No.(17) dated 19.05.2008 - Amendment of Schedule II

^14. Notification No.(22) dated 18.06.2008 - Amendment of Schedule II - read with Noti. No. (24)* dated 25.06.2008

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Table of contents

Section		Page
	Chapter I - Preliminary
1	Short title, extent and commencement.	5
2	Definitions.	5
	Chapter II - Taxing Authorities
3	Taxing authorities and other officers.	10
²3-A	Appellate Authority²	11
4	Appellate Board	11
	Chapter III – Incidence of tax
5	Incidence of tax.	11
6	Determination of liability to pay tax.	11
7	Joint and several liability of certain class of dealers..	12
8	Liability of a dealer registered under Central Sales Tax Act, 1956 ( No. 74 of 1956) to pay tax.	12
	Chapter IV - Levy of tax
9	Levy of tax.	12
10	Levy of purchase tax.	13
11	Composition of tax	13
³^/⁴ 11A	Composition of tax by certain registered dealers³^/⁴	14
⁶11B	Payment of lump sum in lieu of tax ⁶	14
12	Dealer not to pass incidence of tax to agriculturists and horticulturists under certain circumstances.	15
13	Rate of tax on container or packing material.	15
14	Rebate of input tax	15
15	Burden of proof.	18
16	Tax free goods.	18
³^/⁴ 16 A	Savings³^/⁴	18
	Chapter V- Registration of dealers
17	Registration of dealers	18
	Chapter VI- Returns, Assessment, Payment and Recovery of Tax
18	Returns	21
19	Tax Audit	23
20	Assessment of tax	24
²20-A	Self assessment²	26
21	Assessment / reassessment of tax in certain circumstances.	26
22	Exclusion of time in assessment proceedings.	27
23	Appearance before taxing authorities.	27
24	Payment and recovery of tax, interest, penalty and other dues.	28
25	Payment of tax in advance of assessment on failure to furnish returns.	31
26		32
¹⁰26 A	Deduction of tax at source in respect of certain goods.¹⁰	34
⁶27	Saving for person responsible for deduction of tax at source⁶	35
28	Special mode of recovery.	35
29	Payment of tax in case of transfer or discontinuance of business and liability of the company in case of amalgamation	36
30	Liability of firms.	37
31	Transfers to defraud revenue void..	37
32	Assessment/re-assessment of legal representatives.& Assessment in special cases	37
33	Tax to be first charge	38
²34	Omitted²
35	Collection of tax by dealers.	38
36	Sales not liable to tax	39
	Chapter VII - Refund of Tax
37	Refunds	40
38	Power to withhold refund in certain cases	41
	Chapter VIII – Accounts and Issue of Bills, invoices or cash memoranda
39	Accounts	41
40	Dealers to issue bills, invoices or cash memoranda	41
	Chapter IX -Certain powers of the Commissioner and delegation by the Commissioner
41	Delegation of Commissioner's powers and duties.	42
42	Transfer of proceedings	42
43	Power of Commissioner and his assistants to take evidence on oath etc.	42
44	Power of Commissioner to call for information in certain cases.	42
45	Power of Commissioner to stay proceedings.	43
	Chapter X- Appeals, Revisions and Rectification
46	Appeal	43
47	Power of revision by Commissioner	45
48	Additional evidence in appeal or revision	45
49	Court fee stamps on memorandum of appeal and application for revision	46
50	Application of Sections 4 and 12 of Limitation Act, 1963	46
51	Extension of period of limitation in certain cases	46
52	Power of Commissioner or Appellate Authority or the Appellate Board to impose penalty in certain circumstances	46
53	Appeal to High Court.	46
54	Rectification of mistakes.	47
	Chapter XI- Detection and prevention of tax evasion
55	Detection and checking evasion of tax by dealers liable to pay tax and power of commissioner to investigate into tax evasion by a dealer	48
¹⁰55 A	Special provision for assessment of cases relating to detection and prevention of tax evasion.¹⁰	51
56	Survey	52
57	Establishment of check-post and inspection of goods while in movement	53
58	Transit of goods by road through the State and issue of transit pass	56
²59	Omitted²
²60	Omitted²
61	Regulation of delivery and carrying goods away from Railway premises	57
62	Control on clearing, forwarding or booking agent and any person transporting goods and furnishing of information by such agent or person	57
²63	Power to call for information from Banking , non-banking financial Companies or insurance companies²	58
	Chapter XII- Offences and Penalties
64	Offences and Penalties	58
	Chapter XIII- Miscellaneous
65	Production of Tax Clearance Certificate	59
66	Bar to Certain Proceedings	59
67	Bar of prosecution in certain cases	59
68	Protection of persons acting in good faith and limitation of suit and prosecution	59
69	Disclosure of information by public servant	60
70	Determination of disputed questions	61
	Chapter XIV -Power to make rules, Repeal and Saving, transitory provisions and power to remove difficulties
⁴ 70A	Power of State Government to amend Schedule I and II⁴	61
71	Power to make rules	61
72	Repeal and savings.	65
73	Transitory provisions.	66
74	Power to remove difficulties.	67
	Schedule I	67
	Schedule I I	71

Schedule III - ²Omitted²

MADHYA PRADESH ACT

No 20 of 2002.

THE MADHYA PRADESH VAT ACT, 2002

An Act to levy tax on sale and purchase of goods in the State of Madhya Pradesh.

Be it enacted by the Madhya Pradesh Legislature in the Fifty third year of the Republic of India as follows: -

CHAPTER - I PRELIMINARY

1. Short Title, Extent and Commencement –

(1) This Act may be called The Madhya Pradesh Vat Act, 2002.

(2) It extends to the whole of Madhya Pradesh .

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

Definitions -In this Act, unless there is anything repugnant in the subject or context, -

(a) "Appellate Board" means the Appellate Board constituted under section 4;

²(b) "Appellate Authority " means an Authority appointed under section 3 A.²

(c)``Assistant Commissioner’’ means an Assistant Commissioner of Commercial Tax appointed under Section 3 and includes an Additional Assistant Commissioner of Commercial Tax;

(d) “Business “ includes, -

(i) 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 gain or profit accrues from such trade, commerce, manufacture, adventure or concern and irrespective of the volume, frequency, continuity or regularity of such trade, commerce, manufacture, adventure or concern; and

(ii) any transaction of sale or purchase of goods in connection with or incidental or ancillary to the trade, commerce, manufacture, adventure or concern referred to in clause (i), that is to say –

(a)

goods whether or not they are in their original form or in the form of second hand goods, unserviceable goods, obsolete or discarded goods, mere scrap or waste material; and

(b)

goods which are obtained as waste products or by-products in the course of manufacture or processing of other goods or mining or generation of or distribution of electrical energy or any other form or power;

³^/⁴ (e) "Canteen stores" means the goods included in part IV of Schedule II, but

excluding such goods as the State Government may by *notification specify;³^/⁴

(f) " Commercial Tax Office " means an office of any Officer appointed under

section 3 of this Act.

(g) “Commercial Tax Officer” means a Commercial Tax Officer appointed under

Section 3 and includes an Additional Commercial Tax Officer;

(h)“Commissioner” means the Commissioner of Commercial Tax appointed under

Section 3;

(i) “Dealer” means any person, who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash, or for deferred payment or for commission, remuneration or other valuable consideration and includes -

(i) a local authority, a company, an undivided Hindu family or any society

(including a co-operative society), club, firm or association which carries on

such business;

(ii) a society (including a co-operative society), club, firm or association which buys goods from, or sells, supplies or distributes goods to its \members;

(iii) a commission agent, broker, a del-credere agent, an 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 the principal;

(iv) any person who transfers the right to use any goods including leasing thereof for any purpose, (whether or not for a specified period) in the course of business to any other person;

Explanation I - Every person who acts as an agent of a non- resident dealer, that

is as an agent on behalf of a dealer residing outside the State and buys, sells, supplies or distributes goods in the State or acts on behalf of such dealer as -

(i) a mercantile agent as defined in the Sale of Goods Act, 1930 (III of 1930); or

(ii) an agent for handling goods or documents of title relating to goods; or

(iii) an agent for the collection or the payment of the sale price of goods or

as a guarantor for such collection or payment, and every local branch of a firm or company situated outside the State,

shall be deemed to be a dealer for the purpose of this Act.

Explanation II - The Central or a State Government or any of their departments or

offices 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 for other valuable consideration, shall be deemed to be a dealer for the purpose of this Act.

Explanation III - Any non-trading, commercial or financial establishment including a

bank, an insurance company, a transport company and the like which whether or not in the course of business buys, sells, supplies or distributes goods, directly or otherwise, for cash or for deferred payment, commission, remuneration or for other valuable consideration, shall be deemed to be a dealer for the purposes of this Act:

(j) The expression “declared goods” shall have the meaning assigned to it in the

Central Sales Tax Act, 1956 (No.74 of 1956);

(k) “Deputy Commissioner” means a Deputy Commissioner of Commercial Tax

appointed under Section 3 and includes an Additional Deputy Commissioner

of Commercial Tax ;

(l) “Document” means title deeds, writings or inscriptions and includes "electronic record"

and "electronic form" as defined in the Information Technology Act, 2000 (No.21 of 2000) and the like that furnishes evidence;

(m) “Goods” means all kinds of movable property including computer software but excluding actionable claims, newspapers, stocks, shares, securities or Government stamps and includes all materials, articles and commodities, whether or not to be used in the construction, fitting out, improvement or repair of movable or immovable property, and also includes all growing crops, grass, trees, plants and things attached to, or forming part of the land which are agreed to be severed before the sale or under the contract of sale;

(n) "Import" means the bringing or causing to be brought of goods in to the State of

Madhya Pradesh from any place outside the State;

(o) ²'' input tax'' means an amount paid or payable by way of tax under section 9 by a registered dealer in respect of the purchase of any goods specified in Schedule II , to a selling registered dealer and who is liable to pay tax under the said section on the sale of such goods; ²

(p) “Manufacture” includes any activity that brings out a change in an article or articles as a result of some process, treatment, labour and results in transformations into a new and different article so understood in commercial parlance having a distinct name, character and use, but does not include such activity of manufacture as may be *notified*;.

(q) “Place of business” means any place where a dealer purchases or sells any goods or stores goods or keeps documents or accounts of his purchases or sales or both and also includes -

(i) the place of business of an agent where a dealer carries on business through an agent;

(ii) any place or building whether any business is carried on therein or not, in which the person carrying on the business, keeps any of his books of accounts, documents, stocks or other things, relating to his business;

(iii) any vehicle or vessel or any other carrier wherein goods are stored or used for transporting goods;

(r) "prescribed" means prescribed by rules made under this Act;

(s) “Purchase price” shall comprise of -

(i) the amount payable by a dealer as valuable consideration for the purchase of goods ‘ simplicitor ’;

Provided that where goods are purchased together with the packing material or container, then notwithstanding anything contained in this Act, the purchase price of such goods shall be inclusive of the price or cost or value of such packing material or container, whether such price or cost or value is paid separately or not as if such packing material or container were the goods purchased;

(ii) transport costs, if any;

(iii) trade commission, if any, by whatever name called;

(iv) forwarding and handling charges, if any;

(v) insurance charges, if any;

(vi) local taxes, if any;

(vii) excise duty, if any, leviable under the Central Excise Act, 1944 (No.1 of

1944);

(viii) cost of packing, if any; and

(ix) any other charges or costs other than those specified above, if incurred or

paid in respect of goods so purchased;

Explanation -For the purpose of this clause “transport cost” includes such expenses as are incurred by the dealer on transportation of goods after taking delivery from the seller;

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

(u) “Sale” with all its grammatical variations and cognate expressions means any transfer of property in goods for cash or deferred payment or for other valuable consideration and includes -

(i) a transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration;

(ii) a transfer of property in goods whether as goods or in some other form,

involved in the execution of works contract;

(iii) a delivery of goods on hire purchase or any system of payment by

instalments ;

(iv) a supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration;

(v) a supply, by way of or as part of any service or in any other manner whatsoever, of goods being food or any other article for human consumption or any drink (whether or not intoxicating) where such supply or service is for cash, deferred payment or other valuable consideration;

(vi) a transfer of the right to use any goods including leasing thereof for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration,

and such transfer, delivery or supply of any goods 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, but does not include a mortgage, hypothecation, charge or pledge;

Explanation - (a) Notwithstanding anything contained in the Sale of Goods Act, 1930 (III

of 1930), where a sale or purchase of goods takes place in pursuance of a contract of sale, such sale or purchase shall be deemed for the purposes of this Act to have taken place in the State of Madhya Pradesh irrespective of the place 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; and

(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;

²(c) Notwithstanding anything to the contrary contained in this Act of 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,

(i) when the goods are transferred from a principal to his selling agent and from the selling agent to the purchaser, or

(ii) when the goods are transferred from the seller to a buying agent and from the buying agent to his principal.²

(v) "Sale price" means the amount or any other consideration payable to a dealer as valuable consideration for the sale of any goods less any sum allowed as ³discount according to ordinary trade practice but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before delivery thereof other than the cost of freight or delivery or the cost of installation when such cost is separately charged.

Explanation - (i) Where goods are sold on hire purchase or

any system of payment by installments, the sale price of such goods shall be exclusive of insurance charges, interest and hire charges and such other charges as may be prescribed.

(ii) Where goods are sold by way of transfer of right to use such goods, the sale price thereof shall be the amount of valuable consideration received or receivable by the transferor for such transfer ;

(iii) ³^/⁴ Discount at the time of sale as evident from the invoice shall be excluded from the sale price but any ex post facto grant of discounts or incentives or rebates or rewards and the like shall not be excluded;

⁴ (iv) The amount of valuable consideration paid or payable to a dealer for sale of drugs and medicines specified in entry 10 of part III of Schedule II shall be the maximum retail price printed on the package containing the drugs and medicines, for the purposes of levy of tax under section 9; ⁴

(w) " Tax "means the tax payable under this Act.

(x) ²“Taxable turnover" in relation to a dealer for any period means that part of dealer's turnover which remains, after deducting therefrom :-

(1 )The sale price of goods declared tax free under Section 16;

(2) The sale price of goods which are in the nature of tax paid goods in the hands of such dealer;

(3) The amount collected by way of tax under Section 9 or

the amount arrived at by applying the following formula :

rate of tax X aggregate of sale prices

100 + rate of tax

Provided that no deductions on the basis of the above formula shall be made if the amount by way of tax collected by a registered dealer, in accordance with the provisions of this Act, has been otherwise deducted from the aggregate of sale prices.

Explanation – Where the turnover of a dealer is taxable at different rates, the aforesaid formula shall be applied separately in respect of such part of the turnover liable to a different rate of tax under section 9 ;²

(y) ² “Tax paid goods” in relation to goods specified in part III of schedule II on which tax is payable under section 9 means any such goods which have been purchased by a dealer from a registered dealer inside the State of Madhya Pradesh within the meaning of section 4 of the central Sales Tax Act, 1956 (No. 74 of 1956).²

(z) ‘Turnover’ in relation to any period means the aggregate of the amount of sale prices received and receivable by a dealer in respect of any sale or supply or distribution of goods made during that period, whether or not the whole or any portion of such turnover is liable to tax but after deducting the amount, if any, refunded by the dealer to a purchaser, in respect of any goods purchased and returned by the purchaser within six months from the date of such sale:

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