Section 7 DVAT Act - Certain Sales Not Liable to Tax
Section 7 identifies sales on which Delhi VAT cannot be imposed because the transaction is interstate, occurs outside Delhi, involves import or export, or meets the statutory conditions for specified foreign aircraft fuel and lubricants.
Meaning and scope of Section 7
Section 7 is a restriction on Delhi's VAT charging power. It does not, by itself, establish that every transaction described below is free from all taxes. For example, interstate sales of goods governed by the Central Sales Tax Act, 1956 may be taxable under that separate law, while transactions governed by GST require analysis under the applicable GST legislation.
Section 7 - Statutory provisions explained
Opening provision. Nothing in the Delhi Value Added Tax Act, 2004 or the rules made under it authorises Delhi VAT on a sale taking place in the circumstances specified below.
Clause (a): Interstate trade or commerce. A sale taking place in the course of interstate trade or commerce is not liable to Delhi VAT under this Act.
Clause (b): Sale outside Delhi. A sale taking place outside Delhi cannot be subjected to Delhi VAT merely because a dealer has a connection with Delhi.
Clause (c): Import or export. A sale taking place in the course of importing goods into India or exporting goods out of India is not chargeable under the DVAT Act.
Explanation. Sections 3, 4 and 5 of the Central Sales Tax Act, 1956 determine whether a sale falls into clause (a), (b) or (c).
Clause (d): Specified foreign aircraft. In accordance with a Central Government notification issued under section 3 of the Foreign Aircraft (Exemption from Taxes and Duties on Fuel) Act, 2002, tax is not levied on qualifying sales of fuel and lubricants filled into receptacles forming part of an aircraft registered outside India, subject to all three conditions: (i) the country of registration is party to the Convention on International Civil Aviation, 1944; (ii) it has an Air Services Agreement with India; and (iii) the aircraft operates a scheduled or non-scheduled service to or from India.
How interstate, outside-Delhi and import-export sales are determined
Section 3, Central Sales Tax Act - Interstate sale
A sale is in the course of interstate trade or commerce if it occasions movement of goods from one State to another, or is effected by transfer of documents of title during that movement, subject to the statutory conditions.
Section 4, Central Sales Tax Act - Sale outside a State
Section 4 sets out the principles for determining when a sale is inside or outside a State, including the location of specific or ascertained goods at the relevant time and the appropriation of unascertained or future goods to the contract.
Section 5, Central Sales Tax Act - Import and export
Section 5 provides the tests for sales in the course of export or import, including qualifying transactions occasioning export or import and transfers of documents of title during the relevant movement. Its additional provisions and conditions must be considered where applicable.
Practical application
If a sale of goods covered by the remaining DVAT regime occurs wholly in Delhi, Section 7 ordinarily does not exclude it simply because the purchaser resides elsewhere. Conversely, if the sale occasions interstate movement, or qualifies as an import or export under the CST Act tests, it falls outside the Delhi VAT levy under Section 7. Contracts, invoices, transport records and documents of title can be material to the classification.
For goods and supplies covered by GST, the Delhi GST legislation and the IGST framework should be consulted instead. Special treatment of petroleum products and other goods outside GST should be checked against the law and current Delhi notifications.
Official legal sources and updates
Refer to the Delhi Value Added Tax Act, 2004 on India Code, the Department of Trade and Taxes, Government of NCT of Delhi, and the department's notifications for amendments and current implementation. The department also identifies the new DVAT portal. For the applicable period, verify notifications, amendments and judicial decisions.