Delhi Value Added Tax Act, 2004 | Section 6

Section 6 of Delhi VAT Act, 2004: Sale Exempt from Tax

Section 6 of the Delhi Value Added Tax Act, 2004 (DVAT Act) identifies sales that qualify for exemption from Delhi VAT. It covers specified goods in the First Schedule, specified dealers in the Fifth Schedule, and qualifying sales of capital goods.

Current application: Since 1 July 2017, GST generally governs supplies of goods and services within its scope. The DVAT Act continues to be relevant to goods outside GST, such as specified petroleum products and alcoholic liquor for human consumption, as well as earlier VAT periods. A DVAT exemption should not be treated as an exemption under GST; check the applicable law and current notifications for the transaction date.

Text of Section 6 - Sale Exempt from Tax

Sub-section (1). The sale of goods listed in the First Schedule shall be exempt from tax subject to the conditions and exceptions set out therein.

Sub-section (2). The dealers or class of dealers specified in the Fifth Schedule shall be exempt from payment of tax on all sales of goods effected by them subject to such conditions as may be prescribed.

Sub-section (3). Where a dealer sells capital goods which he has used since the time of purchase exclusively for purposes other than making non-taxed sale of goods, and has not claimed a tax credit in respect of such capital goods under section 9, the sale of such capital goods shall be exempt from tax.

Explanation of the Three Exemptions

1. First Schedule - Exempt goods (Section 6(1))

Goods specifically covered by the First Schedule may be sold without DVAT, but only to the extent that the description, conditions and exceptions in the Schedule are satisfied. Classification and the Schedule as amended on the date of sale are decisive. Exempt status cannot be assumed merely because similar goods were exempt at an earlier date.

2. Fifth Schedule - Exempt dealers (Section 6(2))

The Fifth Schedule concerns dealers or classes of dealers, rather than a general exemption for every seller of particular goods. Eligibility is subject to the applicable prescribed conditions. A dealer claiming this exemption should establish that it falls within the specified class and satisfies any documentary or procedural requirements.

3. Capital goods - Qualifying resale (Section 6(3))

A dealer's sale of used capital goods can be exempt where the statutory conditions are met together: the goods were used since purchase exclusively for purposes other than making non-taxed sales, and no input tax credit was claimed under Section 9 for those capital goods. This exemption is not a blanket exemption for all second-hand assets.

Under Section 5(1)(b), turnover from sales of goods exempt under Section 6 is deducted when determining taxable turnover. Section 7 separately deals with certain sales outside the levy. These provisions should not be confused: an exempt sale and a sale not liable to Delhi VAT may have different statutory grounds and consequences.

Delhi VAT Exemptions After the Introduction of GST

For a present-day transaction, first determine whether the goods are governed by GST or remain within the VAT framework. Where GST applies, exemptions must be evaluated under the Delhi Goods and Services Tax Act, 2017, corresponding central legislation, and applicable exemption notifications, rather than solely under the DVAT First or Fifth Schedule. For retained VAT goods and legacy assessments, consult the DVAT Act, its Schedules and notifications applicable to the relevant date.

Official Law and Notifications

The official DVAT Act compilation (as on 5 March 2014) includes Section 6 and its statutory context; it is a historical consolidation and should be read with subsequent amendments. Check the Delhi Department of Trade and Taxes notifications and the department's official website for later developments and current compliance information. The department also directs users to its new DVAT portal.