Sales Tax Instructions

Sales Tax Instructions, 2009
I am directed to invite attention to CBR‘s d.o. letter No.4/47-STB/98, dated 25 th
September, 1998 (copy enclosed) and to say that certain queries have been made by
various quarters about this scheme. The clarification is given in the following paragraphs.
2. The exemption threshold of annual turnover of Rs.5 million does not
apply to such suppliers of sales taxable goods and their supply of taxable goods,
irrespective of the annual turnover of the supplier, is liable to sales tax. No
certificate/declaration of annual turnover should be entertained, being of no avail.
3. Prescribed tax invoice has to be issued by the supplier himself against his
own sales tax registration number. Use of tax invoices of persons other than the supplier
himself is not admissible.
4. For contracts entered prior to 1 st July, 1998, the provisions of section 64-
A of the Sales of Goods Act, 1930 (copy enclosed), applies. However, where such
contracts were for a price inclusive of all duties and taxes, the liability shall not be on the
buyers except for non-agricultural insecticides and pesticides which are the only new
goods levied to sales tax in the 1998-99 budget. All other goods were already liable to
sales tax since prior to 1998-99 budget.
5. For contracts made on or after 1 st July, 1998 but prior to 1 st December,
1998, for the rate difference of 2.5% (sales tax rate increasing from 12.5% to 15% w.e.f.
1 st December, 1998), the provisions of section 64-A of the Sale of Goods Act, 1930, shall
again apply and the buyer shall bear the differential so invoiced.
6. It has been learnt that many of the suppliers have not so far got
themselves registered and huge payments of their bills are outstanding in various
Accounts Offices working under your control. It has also been learnt that some of the
Accounts Offices have paid 80% of the bills to the suppliers with the condition that they
will provide proof of payment of sales tax before 20% balance amount is paid to them.
Due to the above situation, on the one hand lot of payment to suppliers are withheld and
on the other lot of sales tax revenue is held up.
7. To resolve this issue (cited in paragraph 6 above), it has been decided
that various Accounts Offices, working under your control, may be advised to deduct
(where the suppliers agree to it in writing) sales tax at the following rates from the bills of
suppliers (except for cases covered by para 5 above, where the principle of para 5 shall
apply) and remit the amount of sales tax, so deducted, through cheques or drafts to the
respective Collector of Sales Tax within whose jurisdiction the said Account Office is
located:-
S.No. Date of supply/bill/invoice Rate of sales tax
(i) 1.7.1998 to 30.11.1998 12.5%
(ii) 1.12.1998 onwards 15%
8. Following information may also be provided to the Sales Tax
Collectorate, invariably with the cheque/draft, in respect of suppliers from whose bills
sales tax is deducted in the manner provided in para 7 above:-
(i)
Name and address of supplier;