Section 105 of Delhi Value Added Tax Act 2004 - Application to Sales and Purchases
Section 105 of the Delhi Value Added Tax Act, 2004 deals with the application of DVAT to specified sales and purchases, the availability of tax credits, treatment of amounts paid or received around the commencement of the Act, and certain transitional works contracts.
Section 105 - Application to sales and purchases
Rules: Rule 7B and Rule 30A | Forms: Form 53 and Form 54.
(1) The tax imposed by section 3 of this Act applies to every -
(a) sale, including an instalment sale and hire purchase of goods, made on and after 1st April, 2005;
(b) sale in the form of the transfer of a right to use goods, to the extent that the right to use goods is exercised after 1st April, 2005.
(2) Tax credits arising under section 9 of this Act shall be allowed only for
(a) a purchase, including a purchase under an instalment sale and hire purchase of goods, made on and after 1st April, 2005; and
(b) a purchase occurring in the form of the acquisition of a right to use goods, to the extent that the right to use goods is exercised after 1st April 2005.
Explanation. This provision does not prevent the person claiming the special tax credit allowed under section 14 of this Act.
(3) Where an amount is paid or received prior to 1st April, 2005 in respect of a sale or purchase occurring after 1st April, 2005, and the person calculates his turnover or turnover of purchases based on amounts paid and received, the amount shall be treated as forming part of the person's turnover or turnover of purchases in the tax period in which the sale occurs.
(4) Where a dealer registered under the repealed Delhi Sales Tax on Works Contract Act, 1999 (Delhi Act 9 of 1999) (hereinafter referred to in this sub-section as "the repealed Act"), is liable to pay tax under this Act, and has at any time prior to the 1st day of April, 2005 entered into any works contract, where the total contract value was inclusive of the tax payable under the repealed Act, and the execution of the said work contract has continued after the 1st day of April, 2005, then the liability of the dealer to pay tax under this Act shall be discharged at the rates applicable under this Act, and the liability so discharged in respect of the said contract shall not exceed the liability which would have accrued under the repealed Act if it had continued to be in force and in the case of a dealer who had opted for composition of tax under the repealed Act, the liability under this Act in respect of a contract where the execution has started before the 1st day of April, 2005 and has continued thereafter shall not exceed the sum which would have been payable by way of composition in respect of the said contract under the repealed Act if it had continued to be in force:
PROVIDED that the provisions of this sub-section shall be valid up to the 31st day of March, 2007:
PROVIDED FURTHER that the provisions of this sub-section shall not apply where the contract value has been changed on account of increased liability under this Act.
What does Section 105 mean?
Section 105 establishes when the tax under section 3 and tax credits under section 9 apply to sales and purchases in the transition to the DVAT regime. It uses 1 April 2005 as the principal commencement date for the transactions covered by subsections (1) and (2).
Application of tax to sales
Subsection (1) covers sales of goods made on or after 1 April 2005, including instalment sales and hire purchase transactions. It also addresses transfers of a right to use goods to the extent that the right is exercised after that date.
Tax credits on purchases
Subsection (2) limits the specified tax credits under section 9 to qualifying purchases made on or after 1 April 2005, including relevant instalment sales, hire purchase transactions and acquisitions of a right to use goods. The statutory Explanation preserves the special tax credit referred to in section 14.
Payments made before 1 April 2005
Subsection (3) provides a turnover treatment where money was paid or received before 1 April 2005 for a sale or purchase occurring after that date and turnover is calculated on the basis of amounts paid and received.
Continuing works contracts
Subsection (4) contains a historical transitional mechanism for specified works contracts entered into before 1 April 2005 under the repealed Delhi Sales Tax on Works Contract Act, 1999 but continuing after the DVAT regime commenced. The provision itself states that this subsection was valid up to 31 March 2007.
Related rules and official source
The official Delhi Trade and Taxes Department publication of the DVAT Act identifies Section 105 as "Application to sales and purchases" and lists Rules 7B and 30A and Forms 53 and 54 against the section. The official Delhi VAT Rules also contain Rule 30A concerning discharge of liability for a continuing works contract under section 105(4).