CHAPTER - I : PRELIMINARY : Punjab Vat Act 2005
CHAPTER - I : PRELIMINARY
Short title and commencement.
1. (1) This Act may be called the Punjab Value Added Tax Act, 2005.
(2) It shall come into force from the 1st day of April, 2005.
Definitions
2. In this Act, unless the context otherwise requires,
(a) account books means record of business transactions and includes accounts, registers and documents maintained in any manner including electronic medium;
(b) appointed day means the date on which this Act comes into force;
© business includes -
(i) any trade, commerce, manufacture, adventure or concern whether or not such trade, commerce, manufacture, adventure or concern is carried on with a motive to make profit and whether or not any profit accrues there from; and
(ii) any transaction in connection with or ancillary or incidental to such trade, commerce, manufacture, adventure or concern;
(d) capital goods means any plant, machinery or equipment including equipment for pollution control, quality control, laboratory and cold storage, used in manufacturing, processing and packing of taxable goods for sale;
(e) carrier of goods includes a person or a transport company or a booking agency, who transports, receives or delivers goods;
(f) casual trader means a person other than a taxable person or registered person, who whether as principal, agent or in any other capacity, undertakes occasional transactions in the nature of business involving purchase, sale, supply or distribution of goods or conducting any exhibition-cum-sale in the State, whether for cash, deferred payment, commission, remuneration or other valuable consideration;
(g) Commissioner means the Excise and Taxation Commissioner, appointed by the State Government under sub-section (1) of section 3;
(h) declared goods means goods declared under section 14 of the Central Sales Tax Act, 1956, to be of special importance in inter- State trade or commerce;
(i) designated officer means an officer appointed under section 3 and conferred with the powers to carry out any of the purposes of this Act by a notification issued by the State Government;
(j) document means title deeds, writing or inscription and includes electronic data, computer programs, computer tapes, computer discs, photographs, video tapes and the like that provides evidence;
(k) goods means all kinds of movable property, whether tangible or intangible, other than newspapers, actionable claims, money, stocks, shares and securities and includes livestock, growing crops, grass, trees, plants attached to or forming part of the land, which are agreed to be severed before the sale or under the contract of sale;
(l) goods vehicle includes
(i) any mechanically propelled vehicle adapted for use upon roads whether the power of propulsion is transmitted thereto from an external or internal source and includes a chassis to which a body has not been attached and a trailer constructed or adapted for use for the carriage of goods and any vehicle not so constructed or adapted when used for the carriage of goods solely or in addition to passengers, but does not include a vehicle running upon fixed rails or a vehicle of a special type adapted for use only in a factory or any other enclosed premises; and
(ii) any animal - driven or man - driven vehicle used for the carriage of goods solely or with passengers;
(m) gross turnover includes the aggregate of the amounts of sales and/or purchases made by any person during the given period, including any sum, charged on account of freight, storage, demurrage, insurance and for anything done by the person in respect of the goods at the time of or before the delivery thereof;
Explanations
(1) The proceeds of any sale made outside the State by a person, who carries on business both inside and outside the State, shall not be included in the gross turnover.
(2) The sum receivable or received from any person in respect of transaction of forward contract, in which goods are actually not delivered, shall not be included in the gross turnover.
(3) In respect of transactions of delivery of goods on hire-purchase or any system of payment by instalments , the amount to be included in the gross turnover shall be the total sum payable by the hirer under a hire-purchase agreement in order to complete the purchase of or the acquisition of property in the goods to which the agreement relates and includes any sum as payable by the hirer under the hire-purchase agreement by way of deposit or other initial payment or credited or to be credited to him under such agreement on account of any such deposit or payment whether that sum is to be or has been paid to the owner or to any person or is to be or has been discharged by payment of money or by transfer or delivery of goods or by any other means, but does not include any sum payable as a penalty or interest or compensation or damages for breach of the agreement.
(4) The amount to be included in the gross turnover in respect of movable goods, agreed to be sold under a works contract, shall be its sale price;
(n) import means bringing of goods into the State from any place outside the territorial jurisdiction of the State;
(o) input tax in relation to a taxable person means value added tax (VAT), paid or payable under this Act by a person on the purchase of taxable goods for resale or for use by him in the manufacture or processing or packing of taxable goods in the State;
(p) input tax credit means credit of input tax (in short referred to as ITC) available to a taxable person under this Act;
(q) 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 transformation into a new and different article so understood in commercial parlance having a distinct name, character, use, but does not include such activity of manufacture as may be notified otherwise;
® offence means any act or omission made punishable under this Act;
(s) output tax in relation to a taxable person means the tax charged or chargeable or payable in respect of sale and/or purchase of goods, as the case may be, under this Act;
(t) person includes a sole proprietor, a partnership, a Hindu undivided family, a company, a society, a trust, a club, an institution, an association, a local authority, a department of any State Government, Union territory Government or Central Government, a Government enterprise, a statutory body or other body corporate, who whether or not in the normal course of business, purchases, sells, supplies or distributes any goods in the State, irrespective of the fact that the main place of business of such person is outside the State and where the main place of business of any such person is not in the State, person includes the local manager or agent of such person in the State in respect of such business and also includes a person engaged in the business of -
(i) transfer, otherwise than in pursuance of a contract of property in any goods for cash, deferred payment or other valuable consideration;
(ii) transfer of property in goods (whether as goods or in some other form) involved in the execution of works contract;
(iii) delivery of goods on hire-purchase or any system of payment by instalments;
(iv)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; and
(v) 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:
Provided that an agriculturist or a member of his family, who sells within the State exclusively the agricultural produce, grown on any land inside the State in which he has an interest, whether as owner, mortgagee, tenant or otherwise, shall not be deemed to be a person;
Explanations
(1) A co-operative society or a club or an association which sells or supplies goods to its members is a person within the meaning of this clause.
(2) A factor, a broker, a commission agent, a persons agent, an auctioneer or any other mercantile agent by whatever name called and whether of the same description as here-in-before mentioned or not, who carries on the business of selling, supplying or purchasing goods and who has in the customary course of business, authority to sell goods belonging to the principals or to purchase goods on their behalf, is a person within the meaning of this clause.
(3) For the purpose of this clause, Government will include the Government of India or the Government of any State or the Union of India or the Union Territories.
(4) Each of the following persons or bodies, who dispose of any goods including unclaimed or confiscated or as unserviceable or scrap surplus, old or obsolete goods or discarded material or waste products whether by auction or otherwise directly or through an agent for cash or for deferred payment or for any other valuable consideration, notwithstanding anything contained in this Act, irrespective of the fact whether such disposal was in the course of business or not, shall be deemed to be a person for the purposes of this Act to the extent of such disposals, namely:–
(i) Municipal Corporations, Municipal Councils and other local authorities constituted under any law for the time being in force;
(ii) Railways Administration as defined under the Railways Act, 1989;
(iii) Transport and construction companies;
(iv) Any person holding permit for the transport vehicles granted under the Motor Vehicles Act, 1988, which are used or adapted to be used for hire;
(v) the State Road Transport Corporations;
(vi) Customs Department of the Government of India administering the Customs Act, 1962;
(vii) Insurance and Financial Corporations or companies and banks included in the Second Schedule to the Reserve Bank of India Act, 1934;
(viii) advertising agencies; and
(ix) any other corporation, company, body or authority, owned or set up by, or subject to the administrative control of the Central Government or any State Government ;
(u) place of business means any place where a person purchases or sells goods and includes the place where such person stores, processes, produces or manufactures goods or keeps books of accounts or documents or any other place where business activity is conducted;
(v) prescribed means prescribed by rules made under this Act;
(w) purchase with all its grammatical or cognate expressions means the acquisition of goods for cash or deferred payment or other valuable consideration otherwise than under a mortgage, hypothecation, charge or pledge and includes,
(i) transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration;
(ii) transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract;
(iii) delivery of goods on hire-purchase or any system of payment by instalments;
(iv) transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration;
(v) 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,
and such transfer, delivery or supply of any goods shall be deemed to be a purchase of these goods from the person making the transfer, delivery or supply to a person to whom such transfer, delivery or supply is made ;
(x) purchase price means the amount of valuable consideration paid or payable by a person for any purchase made, including any sum charged on account of freight, storage, demurrage, insurance and any other sum charged for anything done by a person in respect of the goods at the time of or before delivery thereof;
Explanation
(1) Purchase price shall not include the tax paid or payable under this Act by a person in respect of such purchase.
(2) In respect of the goods listed in Schedule H, any tax, duty, cess or fee paid or payable under the Punjab Agricultural Produce Markets Act, 1961 (Punjab Act No. 23 of 1961) or the Punjab Rural Development Act, 1987 (Punjab Act No. 6 of 1987) or the Punjab Infrastructure (Development and Regulation) Act, 2002 (Punjab Act No. 8 of 2002) by or on behalf of the seller or the purchaser, shall also form part of purchase price.
(y) quarter means a period consisting of three months, commencing from the first day of April, July, October and January of a calendar year;
(z) registered person means a person, who is registered for the purpose of paying turn-over tax under this Act;
(za) repealed Act means the Punjab General Sales Tax Act, 1948;
(zb) retail invoice means an invoice issued to the purchaser by a taxable or registered person or a casual trader, listing therein the goods, sold, with price, quantity and value;
(zc) return means a true and correct account of business pertaining to the return period in the prescribed form;
(zd) return period means the period for which returns are to be furnished by a person;
(ze) reverse input tax credit means an amount of input tax credit, which is required to be reversed by a taxable person on account of-
(i) credit note for output tax received from seller of goods on purchases in respect of which input tax credit is claimed;
(ii) goods, returned subsequent to availing the input tax credit;
(iii) goods, subsequently not used in accordance with the conditions prescribed for availing input tax credit; and
(iv) having availed the credit required to reverse the same in accordance with the provisions of sub-sections (8) and (9) of section 13;
(zf) sale with all its grammatical or cognate expressions means any transfer of property in goods for cash, deferred payment or other valuable consideration and includes -
(i) transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration;
(ii) transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract;
(iii) delivery of goods on hire-purchase or any system of payment by instalments;
(iv) transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration;
(v) supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration;
(vi) 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; and
(vii) every disposal of goods referred to in Explanation (4) to clause (t) of this section;
and such transfer, delivery or supply of any goods shall be deemed to be a sale of these goods by the person making the transfer, delivery or supply to a person to whom such transfer, delivery or supply is made, but does not include a mortgage, hypothecation, charge or pledge.
(zg) sale price means the amount of valuable consideration received or receivable by a person for any sale made including any sum charged on account of freight, storage, demurrage, insurance and any sum charged for anything done by the person in respect of the goods at the time of or before the delivery thereof;
Explana tion
(1) In relation to the transfer of property in goods (whether as goods or in some other form) involved in the execution of works contract, sale price means such amount as is arrived at by deducting from the amount of valuable consideration paid or payable to a person for the execution of such works contract, the amount representing labour and other charges incurred and profit accrued other than in connection with transfer of property in goods for such execution. Where such labour and other charges are not quantifiable, the sale price shall be the cost of acquisition of the goods and the margin of profit on them plus the cost of transferring the property in the goods and all other expenses in relation thereto till the property in such goods, whether as such or in any other form, passes to the contractee and where the property passes in a different form, it shall include the cost of conversion.
(2) In relation to the delivery of goods on hire purchase or any system of payment by instalments, the amount of valuable consideration payable to a person for such delivery.
(3) In relation to the transfer of right to use any goods for any purpose (whether or not for a specified period), the valuable consideration received or receivable for such transfer.
(4) The amount of duties levied or leviable on goods under the Central Excise and Salt Act, 1944 (1 of 1944), or the Customs Act, 1962 (52 of 1962), or the Punjab Excise Act, 1914 (1 of 1914), shall be deemed to be part of the sale price of such goods, whether such duties are paid or payable by or on behalf of the seller or the purchaser or any other person.
(5) Sale price shall not include tax paid or payable to a person in respect of such sale.
(zh) Schedule means the Schedule appended to this Act;
(zi) section means a section of this Act ;
(zj) State means the State of Punjab;
(zk) State Government means the Government of the State of Punjab;
(zl) taxable goods means the goods, other than the goods declared tax free under section 16 of this Act;
(zm) tax period means a period for which a person is required to pay tax under this Act or the rules made thereunder;
(zn) taxable person means a person, who is registered for the purpose of paying value added tax under this Act;
(zo) taxable turnover means that part of gross turnover of sales or purchases, as may be determined after making such deductions from the gross turnover of sales or purchases, as are admissible under this Act or as may be prescribed, on which a person shall be liable to pay tax;
(zp) Tribunal means the Tribunal constituted under section 4 of this Act;
(zq) Turnover tax (in short referred to as TOT) means a tax, leviable on the taxable turnover of a registered person as per the provisions of this Act;
(zr) Value added tax (in short referred to as VAT) means a tax leviable on the taxable turnover of a person, other than a registered person, under this Act;
(zs) VAT invoice means an invoice issued by a taxable person, other than an exempted unit, to another taxable person listing therein the goods supplied, with the price, quantity, value and VAT charged;
(zt) vessel includes any ship, barge, boat, raft, timber, bamboos or floating materials propelled in any manner;
(zu) works contract includes any agreement for carrying out, for cash, deferred payment or other valuable consideration, building ,construction, manufacturing, processing, fabrication, erection, installation, fitting out, improvement, modification, repairs or commissioning of any movable or immovable property; and
(zv) year means the financial year beginning from the first day of April, and ending with the 31st day of March.
Commissioner and other officers
3. (1) For carrying out the purposes of this Act, the State Government may appoint an officer to be the Commissioner and such other officers to assist him as it may deem fit.
(2) The Commissioner shall have jurisdiction over the whole of the State and shall have all the powers and perform all the duties conferred or imposed upon him by or under this Act. All other officers appointed, under sub-section (1), shall exercise such powers as may be conferred upon them by the State Government.
(3) Every officer appointed under sub-section (1), to assist the Commissioner, shall exercise his powers, subject to the general superintendence and control of the Commissioner.
(4) The officers appointed under sub-section (1), shall be deemed to be public servants within the meaning of section 21 of the Indian Penal Code (Central Act 45 of 1860).
Constitution of Tribunal
4. (1) The State Government shall, by notification in the Official Gazette, constitute a Tribunal to exercise the powers and discharge the functions conferred on it under this Act.
(2) The Tribunal shall consist of a Chairman and three other members to be appointed by the State Government.
(3) The Chairman shall either be a retired Judge of the High Court or a retired or serving officer of the rank of Chief Secretary to the State Government or Secretary to Government of India.
(4) The members appointed under sub-section (2), shall have the following qualifications and experience, namely:-
(a) should be a law graduate and should have at least fifteen years experience of practising in the High Court or the Supreme Court of India in tax matters; or
(b) should be a retired or a serving Officer of the Excise and Taxation Department of the State with at least two years experience of the post of Additional Excise and Taxation Commissioner; or
© should have at least fifteen years experience of practicing as a Chartered Accountant under the Chartered Accountant Act, 1949 (Central Act 38 of 1949), or should be eligible for appointment as a member of the Customs, Excise and Service Tax Appellate Tribunal constituted by the Union Government :
Provided that one member of the Tribunal shall be appointed from each of the aforesaid categories.
(5) The State Government may appoint one of the members, to be a Vice-Chairman of the Tribunal.
(6) The Vice-Chairman shall exercise such powers and perform such functions of the Chairman, as may be delegated to him by the Chairman by a general or special order in writing. In the absence of the Chairman, the Vice-Chairman shall act as Chairman.
(7) The Chairman or a member of the Tribunal shall hold office for a term of three years from the date he assumes charge of his office and he shall not be eligible for re-appointment.
(8) No person shall be appointed or continue as Chairman or Member of the Tribunal, if he has attained the age of sixty-seven years.
(9) The Chairman, Vice-Chairman and other members of the Tribunal shall be entitled to such salaries and allowances and shall be governed by such conditions of service, as may be specified by the State Government.
(10) The Chairman, the Vice-Chairman or a member of the Tribunal may be removed from the office by the State Government, if
(a) he is adjudged an insolvent; or
(b) he takes up employment outside the duties of his office; or
© he has become incapable of performing his duties on account of unsoundness of mind or any other reason; or
(d) he is guilty of such misconduct as would render him unfit to continue as Chairman or Vice-Chairman or member of the Tribunal; or
(e) he is convicted of an offence involving moral turpitude.
(11) The Chairman, the Vice-Chairman or a member, as the case may be, may at any time by writing under his hand addressed to the State Government, resign his office, but his resignation shall take effect from the date on which it is accepted.
(12) The Chairman, the Vice-Chairman and members of the Tribunal shall be deemed to be public servants within the meaning of section 21 of the Indian Penal Code (Act 45 of 1860).
(13) No order made or act done, or proceedings taken under this Act by or before the Tribunal, shall be called in question in any manner on the ground of merely of any defect in the constitution of the Tribunal.
(14) The Tribunal shall have power to award costs. The arrears of such costs shall be recoverable as arrears of land revenue.
(15) Subject to the previous sanction of the State Government, the Tribunal shall for the purpose of regulating its procedure, make regulations in conformity with the provisions of this Act and the rules made there under.
(16) Subject to the directions given by the State Government, the Tribunal shall sit at such place or places, as it may deem fit.
(17) The State Government may, appoint such officers or officials, as may be considered necessary to enable the Tribunal to carry out its functions under this Act.
(18) The administrative expenditure of the Tribunal including salaries, allowances and pensions, if any, payable to the Chairman, Vice-Chairman, members, officers and officials of the Tribunal, shall be charged upon the Consolidated Fund of the State.
Procedure of the Tribunal
5. (1) The powers and functions of the Tribunal may be exercised and discharged by Benches constituted by the Chairman from amongst the members thereof
(a) by a Bench consisting of three members;
(b) by a Bench consisting of two members; and
© by a single member .
(2) The single member referred to in clause © of sub-section (1), may either be the Chairman or any other member:
Provided that, if any case which comes up before a single member, who is not the Chairman or a Bench of which the Chairman is not a member, involves a question of law, such single member or Bench, as the case may be, may, in his or its discretion, reserve such case for decision by a Bench of which the Chairman shall be a member.
(3) Where an appeal or application is heard by a Bench consisting of three members, and the members differ in opinion on any point, then that point shall be decided in accordance with the opinion of the majority.
(4) Where an appeal or application is heard by a Bench, consisting of two members, and the members are divided in their opinion on any point, then that point shall be referred for decision to a Bench, consisting of three members, of whom, one shall be the Chairman.
(5) In case there are diverse judgments on an issue from the Tribunal or different Benches of the Tribunal, the Chairman, on a reference from the Commissioner, shall constitute a multi-member bench of the Tribunal, comprising himself and at least two other members, to decide that issue. Such a Bench may recall the earlier decisions and proceed to decide the issue afresh. The order or the rule laid down by such a Bench, shall override all previous orders or rules on the matter, and shall be binding on the parties.