VAT Guide to Value Added Tax - sri lanka inland revenue ...

(i.e the lottery organizer) on which turnover tax was charged prior to the
introduction of GST, but no turnover tax is payable on the sale value of the
sweep ticket because there is neither a retail or wholesale business nor a sale of
goods or commodities which are pre-requisites for charging turnover tax on the
total sale proceeds. Even when Department was implementing the turnover tax
on retail and wholesale sales prior to 1991 the sale of sweep tickets was not
treated as a sale liable to turnover tax but only the commission or discount was
treated as liable. As stated earlier the legal provisions leading to the tax
treatment applicable to the facts of this case did not change although the taxing
authority has changed. Therefore the question of Provincial turnover tax does
not arise and the agent should register for VAT if the total commission or the
margin exceeds the taxable threshold. The agent should issue a tax invoice to
the lottery organizer and charge VAT which he should declare as output tax.
Otherwise 1/6 of the commission/margin is treated as output tax.
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Layby Sales - In the case of layby sales the customer deposits some money
(sometimes the deposits may be made from time to time) with a view to purchase
some goods but no transaction occurs until the customer finally purchase the
goods and takes possession of the goods. This is different from an advance
because an advance is paid when a transaction is concluded. Layby deposits
are refundable and the transaction is not concluded at the time of the deposit.
The time of supply of goods is the time at which the transaction is concluded
usually by taking possession of the goods. The layby deposit is not treated as a
consideration for any supply. But if the customer changes his mind and request
for a refund of the deposit the layby seller may sometimes forfeits a part of the
deposit. If he forfeits part of the deposit that part is treated as a consideration for
supply of a service.
3. Local Government authorities
Local government authorities and provincial councils are frequently engaged in taxable
activities and are liable to be registered and required to charge and collect VAT on the
(taxable) supplies made by them.
i. Exemptions
The following supplies made by them are exempt from VAT and they are not
required to charge and collect VAT on such levies.
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