Issues related to transfer of goods from one branch to another branch within Delhi or outside Delhi - F. 4(3)/P-II/Noti/VAT/2005/1158 - Delhi Value Added Tax

Issues related to transfer of goods from one branch to another branch within Delhi or outside Delhi

DY. SECRETARY, FINANCE (T&E)

GOVERNMENT OF NATIONALCAPITALTERRITORY OF DELHI

DEPARTMENT OF TRADE AND TAXES

BIKRIKAR BHAWAN, I.P. ESTATE, NEW DELHI.

No.F. 4(3)/P-II/Noti/VAT/2005/1158

Dated: 2, Dec 2005

NOTIFICATION

In exercise of the powers conferred under section 85 of the Delhi Value Added Tax Act, 2004 (hereinafter referred to as "the said Act"), I, R.K. Verma, Commissioner, Value Added Tax, do hereby clarify that:-

1. The scheme of DVAT envisages taxing different stages in the production and distribution chain and allows set off for taxes paid at the earlier stages. Unlike the Central Sales Tax Act 1956 wherein there is provision for transfer of goods by the dealer to his branch or his agent otherwise than by way of sale, in Delhi Value Added Tax 2004 there is no similar provision for intra-state transfer of goods to the branch or an agent without payment of tax. Under the DVAT Act, even an agent to whom goods are transferred on consignment basis are covered under the definition of "dealer" and transfer of goods to an agent for consideration, whether received in advance or subsequently on conclusion of sale of goods shall amount to sale and shall be taxed accordingly. However, the agent shall be eligible to claim input tax credit for taxes paid to the principal. To sum-up all intra-state transfer of goods to an agent within Delhi on consignment without payment of tax is not allowed under the provisions of DVAT Act 2004 and such intra-state transfers are covered under the definition of sale and are liable to tax as per provision contained in DVAT Act, 2004 from the day the DVAT Act came into force.

2. Transfer of goods by a dealer from his one place of business to another place of business within Delhi is not sale and is not to be taxed provided all the places of business of the dealer within Delhi are covered in dealer's single registration under the DVAT Act 2004 and the dealer is filing one single return in one jurisdiction.

3. However, in case the branches are registered as independent dealers, a transfer by one such branch to another branch is transfer by one principal to another principal and such transfers are covered under the definition of sale and to be taxed accordingly.

4. The notification shall be treated as effective from the date the Delhi Value Added Tax Act came into effect.

(R.K. VERMA)

COMMISSIONER, VALUE ADDED TAX