Indian Value Added Tax
The Government of India has excogitated “Value Added Tax (VAT)” on the sale of goods to provide a set-off for the tax already paid through a mechanism of input tax credit. This input tax credit in relation to any period means setting off the input tax by a registered dealer against the amount of his output tax.
In conceptualization of the VAT system the Government aims at the tax is to be paid on value addition at each point of sales to the goods.
The dealer is the person who is liable to pay the Tax under the system. Therefore, before delving into the topic of VAT it is necessary to know the term dealer. As defined in the Central Sales Tax Act, 1956 the term “Dealer” means any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash or for deferred payment, or for commission, remuneration or other valuable consideration.
The term dealer explicitly encompasses but not limited to the following having a variation from state to state:
- an industrial, commercial or trading undertaking of the Government, the Central Government, a State Government, a statutory body, a local authority, company, a Hindu undivided family, a partnership firm, a society, a club or an association which carries on such business;
- a casual trader, a person who has, whether as principal, agent or in any other capacity, carries on occasional transactions of a business nature involving the buying, selling, supply or distribution of goods in the State, whether for cash or for deferred payment, or for commission, remuneration or other valuable consideration;
- a commission agent, a broker or del credere agent or an auctioneer or any other mercantile agent by whatever name called, who carries on the business of buying, selling , supplying or distributing goods on behalf of any principal;
- a non-resident dealer or an agent of a non-resident dealer, a local branch of a firm or company or association situated outside the State ;
- a person who sells goods produced by him by manufacture or otherwise;
- a person engaged in the business of transfer otherwise than in pursuance of a contract of property in any goods for cash deferred payment or other valuable consideration.
- a person engaged in the business of transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract;
- a person engaged in the business of delivery of goods on hire purchase or any system of payment by installments;
- a person engaged in the business of transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration.