Untitled Document

Levy of tax on sales or purchases of goods

*(1) Save as otherwise provided in this Act, every dealer shall pay a tax under this Act for each year on every rupee of his turnover of sales or purchases of goods in each year irrespective of the quantum of his turnover at the rates of tax and at the points of levy specified in the Schedules.

See: Rules 5(2),6-A & 17G Forms F-2, I , J&K

*Subs. by Act No.4 of 1989 w.e.f.30.3.1989 for sub-sections(1) and (2)
Note: The Draftsman has omitted to renumber sub-sectoins (3) and (4) and sub sections (2) and (3)

(3) For the purpose of this section and the other provisions of this Act, the turnover which a dealer shall be liable to pay tax shall be determined after making such deductions from his total turnover, and in such manner as may be prescribed.

See:Rules 5(3)

(4) The taxes under this section shall be assessed, levied and collected in such manner, as may be prescribed:

Provided that-
(i) in respect of the same transaction, the buyer or the seller but not both, as determined by such rules as may be prescribed, shall be taxed;

(ii) where a dealer has been taxed in respect of the purchase of any goods, in accordance with the rules referred to in clause(i)of this proviso, he shall not be taxed again in respect of any sale of such goods effected by him."
The earlier section read as under:

"(1) Every dealer other than a casual trader and an agent of a non-resident dealer, whose total turnover for the year,shall pay a tax for each year,at the rate of five paise on every rupee of his turnover.Every casual trader shall pay a tax at the rate of five paise on every rupee of his turnover.

Provided that a dealer in jaggery shall pay a tax at the rate of two paise on every rupee upto the 31st March,1966 and at the rate of 3 paise on every rupee on and from the 1st April, 1966,of his turnover irrespective of the quantum of turnover.

(2) Notwithstanding anything contained in sub-section (1),the tax under this Act shall be levied:-

(a) in the case of the goods mentioned in the First Schedule at the rates and only at the point of the sale specified as applicable thereto effected in the State by the dealer selling them,on his turnover of sales in each year relating to such goods irrespective of the quantum of turnover.

(b) in the case of the goods mentioned in the Second Schedule,at the rates and only at the point of the purchase as specified as applicable thereto,effected in the State by the dealers purchasing them,on his turover of purchase in each year relating to such goods irrespective of the quantum of turnover.

(c) in the case of the goods mentioned in the Fifth Schedule, at the rates and at the points specified as applicable thereto,on the turnover of the dealer in each year relating to such goods irrespective of the quantum of turnover.

(d) in the case of the goods mentioned in the Sixth Schedule at the rates and at the points specified as applicable thereto, on the turnover of the dealer in each year relatiing to such goods irrespective on the quantum of turnover."

1[5A.Levy of tax on turnover:
(1) Notwithstanding anything contained in this Act, tax shall be levied at the rate of one paise in every rupee of turnover of a dealer whose turnover in a year exceeds rupees ten lakhs;

Provided that the tax shall not be levied under this section on that part of the turnover of any dealer on which the dealer is liable to pay tax at the point of levy specified in the First Schedule, Second Schedule, Fifth Schedule and Seventh Schedule to the Act:

Provided further that no tax under this section shall be payable on that part of turnover which relates to;

(i)sale or purchase of goods specified in Third Schedule;

(ii)sale or purchase of goods specified in Fourth Schedule;

(iii)sale or purchase of goods specified in Sixth Schedule;

(iv)sale or purchase of goods in the course of inter-State trade or commerce;

(v) sale or purchase of goods in the course of export out of the territory of India or sale or purchase in the course of import into the territory of India;

(vi) sale or purchase of goods exempt from tax generally under sub-section (1) of section 9 of the said Act;

(vii) all amounts collected by way of tax under the provisions of the Central Sales Tax Act, 1956.

(2) For the purpose of this section the turnover which a dealer shall be liable to pay tax shall be determined after making such deductions from his total turnover, and in such manner as may be prescribed.

1.Section 5A was Inst. by Act No.27 of 1996 w.e.f.1.8.1996. By G.o.Ms.No.639 Rev.dt.2.8.1996 exemption from the said levy in respect of Petrol ,Diesel,Engine Oil,Lubricating Oil,Greases,Brake Fluids,Kerosene and Fertilisers w.e.f.1.8.1996 was granted.By G.O.Ms.No.784 Rev. dt.19.9.1996 second and subsequent sales of Pesticides,Insecticides,fungicides,herbicides,weedicides and other plant protection equipment and accessories thereof mentioned in Entry against Sl.No.78 of First Schedule exempt from Turnover Tax w.e.f.1.8.1996.

Note: Section 5-A as subs. by Act No. 19 of 1986 (From 1.8.1986 to 12.9.1988)

5A.Levy of additional tax on turnover:
Every dealer who is liable to pay tax under section 5,5-C,5-E,6,6-A and shall, in addition to the tax payable under those sections pay for each year a tax on his turnover liable to tax at the rate of-

(a) one paise on every rupee where the total turnover for the years fifty lakh rupees or more but less than fifty lakh rupees; and

(b) one paise on every rupee where total turnover is fifty lakh rupees or more. (From 13.9.1988 to 17.7.1993) By Act No.29 of 1988 (i) in clause

(a) the word 'a' was omitted and clause (b) was subs. and clause(c) was added as under:

(b) one paise on every rupee where the total turnover for the year is fifty lakh rupees or       more but less than one crore rupees; and

(c) one and half paise on every rupee where the total turnover for the year is one crore rupees or more.

Provided that in respect of declared goods the total rate of tax together with the rate of tax together with the rate of additional tax specified in this section shall not exceed four percent. (From 18.7.1993 to 30.6.1994)

(5A. Levy of turnover tax.

(1) Every delaer whose total turnover in a year is not less than ten lakh rupees whether or not the whole or any portion of such turnover is liable to tax under any other provisions of this Act,shall be liable to pay tax at the rate of,-

(a) one half paise on every rupee where the total turnover is ten lakh rupees or more but less than fifty lakh rupees in a year;

(b) one paise on every rupee where the total turnover is fifty lakh rupees or more but less than one crore rupees in a year; and

(c) two paise on every rupee where the total turnover is one crore rupees or more in a year; provided taht the turnover tax under this sub-section on petrol,diesel,engine oils,lubricating oils,greases and brake fluids, shall be payable at two paise on every rupee of turnover and on liquid petroleum gas and kerosene at one paisa on every rupee of turnover,irrespective of the quantum of annual turnover;

(Provided futher that no tax under this sub-section shall be payable on taht part of such turnover which relates to, -
(i) sale or purchase of goods specified in the Third and Fourth Schedules;
(ii)sale or purchase of goods in the course of inter-State Trade or commerce;
(iii)sale or purchase of goods in the course of export out of the territory of India or sale or purchase in the course of import into the territory of India;
(iv) all amounts collected by way of tax under the provisions of the Central Sales Tax Act, 1956;
(v) all amounts allowed as discount,provided that such discount is allowed in accordance with the regular practice of the dealer or is in accordance with the terms of a contract  or agreement entered into in a particular case and provided also that the accounts show that the purchaser has paid only the sum originally charged less the discount;
(vi) (a) any amount refunded to the purchaser in respect of goods returned by him to the   dealer,when the goods are taxable on sales,provided that the goods were returned within a period if six months from the date of delivery of the goods and theaccounts show the date on which the goods were returned and the date on which the amount was refunded;
(b) any amount refunded by the seller in respect of goods returned to him by the dealer,when the goods are taxable on the purchase value, provided that the goods were returned within a period of six months from the date of delivery of the goods and the accounts show the date on which the goods were returned and the date on which the amount was refunded;

Provided that the claim for deduction on account of such refund shall be admissible if it is preferred within a period of six months from the date on which the goods sold have been received or the goods purchased have been retuned as the case may be:

Provided further that save as otherwise provided in this sub-section, no other deduction shall be made from the total turnover of a dealer for the purposes of this section.

(2) The provisions of this Act and the rules made thereunder shall,so far as may be,apply in relation to the assessment, collection or refund of the turnover tax, as they apply in   relation to the assessment,collection or refund of tax under the provisions of this Act.")
1The earlier Section 5-A was replaced by Ordinance No.4 of 1993 w.e.f.18.7.1993 which was replaced by Act No.13 of 1993 w.e.f.18.7.1993. The first proviso to sub-section 1 dealing with petroleum products was not there in the Ordinance but was inserted in the Act.See (1993) APSTJ 15(Stattue) and also para 80:3 of Notifications.

                     (From 1.7.1994 to 31.3.1995)
(5A.Levy of Additional Tax on Turnover: Every dealer who is liable to pay tax under Section 5,5-C,5-E,6,6-A, and 6-C shall, in addition to the tax payable under these sections pay for each year a tax on his turnover liable to tax at the rate of,-
(a) one half paisa on every rupee where the total turnover for the year is three lakh rupees or more but less than fifty lakh rupees; and
(b) one paise on every rupee where the total turnover for the year is fifty lakh rupees or more rupees; and
(c) one and a half paise on every rupee where the total turnover for the year is one crore rupees or more :
Provided that in respect of declared goods the total rate of tax together with the rate of tax additional tax specified in this section shall not exceed four percent:
Provided further that there shall be no additional tax and surcharge on item 23 of the First Schedule.
1(Section 5A was subs. by A.P.Ordinance No. 8 of 1994 w.e.f.1.7.1994 vide G.O.Ms.No.623 Rev. Dt.30.6.1994 and again by Ord.No.10 of 1994 which was repealed by Act No. 8 of 1995.
(From 1.4.1995 to 31.7.1996) Section 5A was omitted by Act No. 22 of 1995.

15AA.Levy of tax on the trade mark holder :
Notwithstanding anything contained in this Act whenever a dealer , who holds the trade mark or the patent thereof, sells goods other than the declared goods at any point of sale other than first point of sale, he shall be deemed to be the first seller in the State and shall be liable to pay tax accordingly and for determining the tax due to be paid by him, the tax levied and collected at the preceding point ofsale if any, on the same goods shall be deducted from the tax payable by him at that point of sale.
                      1. Inst. by Act No.27 of 1996 w.e.f.1.8.1996.
4(5-B.Levy of concessional tax in respect of component parts:
(1) Notwithstanding anything contained in this Act, every dealer shall pay tax at the rate of 4 paise in the rupee or at the rates specified in section 5 in respect of goods other than declared goods, or under section 6 in respect of declared goods, whichever is lower, on the turnover relating to such sale in the following circumstances, namely :-

See:Rule30-A, Forms G & H

(a) when a dealer sells any goods to another dealer for use by the latter as raw material, component part, sub-assembly part, intermediate part and packing material in the manufacture or processing of goods inside the State:

(b) when a dealer sells to another dealer any goods (other than those falling under clause (a) which are notified by the Government from time to time for use by the latter in the manufacture or processing of the goods inside the State. The Government may also notify the goods which are not eligible of concessional rate of tax under this section.

Provided that the provisions of this section shall not apply to any sale unless the dealer selling the goods furnished to the assessing authority in the prescribed manner a declaration duly filled in and signed by the dealer to whom the goods are sold containing the prescribed particulars in the prescribed form obtained from the prescribed authority on payment of prescribed fee.)
4. The Section was subs. by A.P.Act No.4 of 1989 w.e.f.21.1.1989. Sub-section (1) was subs.by Act No.27 of 1996 w.e.f.1.8.1996.

The earlier sub-section read as under:-

(1) Notwithstanding anything in this Act, every dealer shall pay,in respect of any sale of goods to another dealer for use by the latter as raw material, component part, sub-assembly part, intermediate part, consumables and packing material of any other goods which he intends to
manufacture inside the State, a tax at the rate of four paise in the rupee or the rates specified in 5[Section 5] in respect of goods other than declared goods, or 5[Section 6] in respect of declared goods,whichever is lower on the turnover relating to such sale:
5. The Section was subs.for the expression "Sections 5,5A and 6B" AND "Sections 6, 5A, and 6B" respectively by Act No. 22 of 1995 w.e.f.1.4.1995.

Note: By G.O.Ms.No.739 Rev. dt.17.10.2000 the concessional rate of 4 paise in the rupee is extended to machinery,plant,equipment,tools,stores,accessories,fuel or lubricants in the manufacture or processing of the goods inside the State or in mining or in the generation or distribution of electricity. By Notification-II of the same G.O.petrol; H.S.D. (High Speed Diesel Oil), Bottled LPG,Natural Gas and Beedi leaves were made ineligible for the concessional rate.

This GO was given retrospective effect from 1.1.2000.

(2) If any dealer,-

(i) not having his manufacturing unit within the State purchases any goods by furnishing a declaration under the proviso to sub-section(1); or

(ii)having his manufacturing unit within the State and having purchased goods by furnishing a declaration under the proviso to sub-section (1) sells such goods contrary to such declaration, the assessing authority, may after giving such dealer a reasonable opportunity of being heard, by order in writing, impose upon him by way of penalty a sum which shall not be less than three times but which may extend to five times the amount of tax leviable on the sale of such goods so purchased.

(3) (a) Every dealer who, during the course of the year purchases goods by furnishing a declaration under the proviso to sub-section (1) shall maintain, -

(i) an account of the receipt and issue of such declaration forms in the prescribed manner;

(ii) a separate stock account for each of the goods purchased by him showing such particulars as may be prescribed.

(b) if any dealer , fails to maintain in true and complete accounts in accordance with clause (a) and the rules made thereunder, the assessing authority may, after giving such dealer a reasonable opportunity of being heard, by order in writing --

(i) disentitle such dealer from making use of any declaration forms prescribed under the proviso to sub-section (1) and require him to surrender forthwith the declaration forms already issued to him, if any, and

(ii) impose upon him by way of penalty a sum which shall not be less than three times but which may extend to five times the amount of tax leviable on the turnover of the goods purchased by him on the basis of the declaration forms furnished by him under the proviso to sub-section (1), upto the date of surrender by him of the unused forms;

(c) If any dealer , in respect of whom an order has been passed under clause (b) of this sub-section pays the penalty and complies with such conditions as the assessing authority may deem fit to impose in this behalf, the assessing authority may in his discretion permit such dealer to obtain the prescribed declaration forms afresh and make use of the same for the purchase of goods in the State at the concessional rate of tax.

Explanation :- For the purpose of this section, -

(i) the words "raw material" means any material from which another product can be made through the process of manufacture either by itself or in combination with other raw materials;
(ii) the words "component part", "sub-assembly part" and "intermediate part" mean the article which forms an identifiable constituent of the finished product and which along with other goods make up the finished product".

15C.2[Tax in respect of supply of articles of food or drinks in restaurants or catering houses or hotels :Notwithstanding anything contained in section 5 or section 6, every dealer running any restaurant or eating house, or hotel, (by whatever name called), who supplies, by way of or as part of any service or in any other manner whatsoever of goods, being food or any other article for human consumption or any drink (whether or not intoxicating) and whether or not such goods have suffered tax under this Act, where such supply or service is for cash, deferred payment or other valuable consideration shall on the total amount charged by the said dealer for such supply, pay a tax at the rate of eight paise on every rupee on the aggregate of such amount realised or realisable by him during the year:

Provided that no such tax shall be levied if the total turnover of the dealer including such aggregate during the year is less than Rs. 2,00,000.
1. Ins. by Ord. No. 18 of 1985 w.e.f.2.2.1983. But the proviso was subs. by Act.19 of 1986 w.e.f. 1.8.1986.

2.      Subs. by Ord. No.10 of 1999 w.e.f31.12.1999 published in A.P.Gazette, Part-IV-B Extrodinary No.31 dt.31.12.1999. The said Ordinance was repealed by Act No.19 of 2000. The old Section read as under:-

[5-C. Tax in respect of supply of articles of food or drink in restaurants or catering houses or hotels:Every dealer running any restaurant or eating house or hotel(by whatever name called), who supplies,by way of or as part of any service or in any other manner whatsoever of goods, being food or any other article for human consumption or any drink(whether or not introxicating) where such supply or service is for cash,deferred payment or other valuable consideration shall on the total amount charged by the said dealer for such supply, pay a tax at the rate of five paise on every rupee on the aggregate of such amount realised or realisable by him during the year.

Provided that no such tax shall be levied if the total turnover of the delar including such aggregate during the year is less than Rs.2,00,000.
3. By G.O.Ms. No.914 Rev.dt.31.12.1999 exempted turnover tax on turnover taxable under Section 5C w.e.f.3..1.2000.

1[5-D.Assessment and Re-assessment in certain cases: (1) Notwithstanding anything in any judgement, decree or order of any Court or any other authority, the assessing authority may assess or reassess the amount of tax payable by-

(a) any dealer running a restaurant or any eating house or hotel (by whatever name called) in the course of business at any time on or after the 7th day of September, 1978 and before the 2nd February, 1983; or

(b) any dealer running an establishment not being a restaurant or an eating house or a hotel (by whatever name called) at any time on or after the 4th day of January, 1972 and before the 2nd February, 1983;
on this turnover relating to the supply of food or any other article for human consumption or any drink (whether or not intoxicating) in accordance with the principal Act as amended by the Andhra Pradesh General Sales Tax (Amendment) Act, 1985.
           1. Ins. by Act 18 of 1985 w.e.f.2.2.1983

(2) Notwithstanding the expiry of any period of limitation specified in Section 14 or Section 24-A an assessment or reassessment under sub-section (1) may be made within a period of four years from the 2nd February, 1983.
                 Note: See Section 38(3) of Act No. 18 of 1985 and the note there under.
1[5-E.Tax on the amount realised in respect of any right to use goods: Notwithstanding anything contained in this Act; -

(a) Every dealer who transfers the right to use any goods for any purpose, whatsoever, whether or not for a specified period, to any lessee or licencee for cash, deferred payment or other valuable consideration, in the course of his business shall, on the total amount realised or realisable by him by way of payment in cash or otherwise on such transfer or transfers of the right to use such goods from the lessee or licencee. [pay a tax at the rate of eight paise on every rupee]of the aggregate of such amount realised or realisable by him during the year;

(b) the transfer of right to use any such goods entered into by any dealer, shall be deemed to have taken place in this State whenever the goods are used within the State, irrespective of the place where the agreement whether written or oral for such transfer of right is made.
Provided that no such tax shall be levied of the total turnover of the dealer including such aggregate is less than Rs. two lakhs.
1. Subs. by Act No.22 of 1995 w.e.f.1.4.1995. The proviso was added by Act No.27 of 1996 w.e.f.1.8.1996. The A.P. High Court in the case of M/s. ITC Classic Finance and Services Vs. Commissioner of Commercial Taxes(1995)20 APSTJ 150 held that goods that had suffered tax under Section 5 cannot be subjected to tax under Section 5E.In order to get over the said decision the section was subs. as above. The earlier section inserted by Act No. 18 of 1985 w.e.f.1.7.1985 read as under:
"5E. Tax on the amount realised in respect of any right on use goods :Every dealer who transfers the right to use any goods of any purpose, whatsoever,whether or not for a specified period, to any lessee of licencee for cash,deferred payment or other valuable consideration,in the course of his business shall,on the total amount realised or realisable by him by way of payment in cash or otherwise on such transfer or transfers of the right to such amount realised or realisable by him during the year; Provided that no such tax shall be levied if the total turnover of the dealer including such aggregate is less than Rs. 1,100,000/-.

2. Bracketed words were subs. by Ordinance No. 10 of 1999 w.e.f.31.12.1999 for the words "pay a tax at the rate of five paise in every rupee". The said Ordinance was repealed by Act No.19 of 2000.

3. By G.O.Ms.No.914Rev.dt.31.12.1999 exempted turnover tax on turnover taxable under Section 5E w.e.f.3.1.2000.

Note:
(i) By G.O.Ms.No.1388 Rev.dt.20.12.1985, dealers who transfer the right to use any goods were exempted form the tax payable by them w.e.f.1.7.1985 provided such goods had suffered tax in the State under the A.P.G.S.T. Act,1957.Also see Govt. Memo No. 659/SI/86-1 d 10.3.86.
(ii) By G.O.Ms.No.1394 Rev.dt.24.12.1985 the amounts realised or realisable in respect of transfer of any right to use films was exempted w.e.f.1.7.85 provided such films are subjected to tax under the A.P.E.T.Act.
(iii) By G.O.Ms.606 Rev. CT-II dt.3RD july, 1993, the above notifications issued in G.O.Ms.No.1388 Rev. dt.23.12.1985 and G.O.Ms.No.1394 Rev. dt.24.12.1985 were rescinded w.e.f.7th july, 1993 the date of publication in A.P.Gazette Part I Extra Ordinary.
(iv) By Govt. Memo No.74314/CT-II(2)/1993-94 dt.19.1.1994 and by G.O.Ms.No.234 Rev.dt.6.3.1996 ordered that the collection of tax in accordance with orders issued in G.O.Ms.No.1394 Rev. dt.24.12.1985 pertaining to levy of tax on the transfer of right to use the films shall not be effected until further orders:

15F.Levy of tax on transfer of property in goods involved in the execution of works contract : Notwithstanding anything contained in Section 5 or Section 6, every dealer shall pay a tax under this Act for each year, on his turnover of transfer of property in goods whether as goods or in some other form, involved in the execution of works contract, 2[at the rate of eight paise on every rupee of his turnover:]

Provided that tax shall be paid at the rate of four paise on every rupee of his turnover pertaining to declared goods, if the goods have not suffered tax earlier, and no tax shall be payable on the turnover pertaining to declared goods, if such goods have suffered tax earlier under this Act and are transferred from the contractor to the contractee in the same form in which they were purchased the contractor:

Provided further that no tax shall be levied on the turnover of transfer of property in goods, specified in the Fourth Schedule to the Act, involved in the execution of works contract, if such goods are transferred from the contract to the contractee In the same form in which they were purchased by the contractor:

Provided also that no such tax shall be leviable on the turnover of transfer of property in goods whether as goods or in some other form involved in the execution of works contract, if such transfer from the contractor to the contractee constitutes a sale in the course of inter-State trade or commerce under Section 3 or an outside the State sale under Section 4, or a sale in the course of import or export under Section 5 of the Central Sales Tax Act, 1956 but does not include the goods either obtained or purchased from other States and used in the execution of works contract :

Provided also that no tax shall be payable under this section on the turnover relating to the amounts paid to a sub-contractor as consideration for the execution of works contract whether wholly or partly subject to the production of proof that such sub-contractor is a registered dealer liable to tax under the Act and that the turnover of such amount is included in the return of turnover filed by such sub-contractor.

See Rule:6(2)(3), 45(1-C)

1. Ins. by Act No.22 of 1995 w.e.f.1.4.1995.

2.Subs. by Ordinance No.10 of 1999 for the words "at a rate of six paise on every rupee ofhis turnover". The said Ordinance was repealed by Act No. 19 of 2000.

3.By G.O.Ms.No.914 Rev.dt.31.12.1999 exempted turnover tax on turnover taxable under Section 5F w.e.f.3.1.2000.

Note: The A.P. High Court in Gannon Dunkerley and Others Vs. State of A.P. (1996) 23APSTJ 195 declared
(i) as void and struck down the words " in the same form in which they were purchased bythe contractor" in the first and second provisos;
(ii) as well as in sub-rules (i)(j) and (k) of Rule6(2) to read the words "but does not include the goods either obtained or purchased form other States and used in the execution ofworks contract" in the third proviso as not applicable to such transactions which are assessed to the Central Sales Tax Act in the other States and in respect of which 'C' forms have been issued by the contractee;
(iii) struck down as unreasonable the words "and that the turnover of such assessment is included in the returns of turnover filled by such sub-contractor" in the last proviso as well as sub-rule (b) of Rule 6(2).

1[5G.Composition of tax payable under Section 5F :(1) Subject to such conditions and in such circumstances as may be prescribed if a dealer , who executes any works contract other than the category of contracts notified by the Government under sub-section (2), so opts, the assessing authority of the area may accept, in lieu of the amount of tax payable by him under the Act during the year, by way of composition, 3[an amount at the rate of four paise on every rupee] of the total amount paid or payable to the dealer towards execution of the works contract:

Provided that no tax shall be payable under this section on the turnover relating to the amounts paid to a sub-contractor as consideration for the execution of the works contract whether wholly or partly subject to the production of proof that such sub-contractor is a registered dealer liable to tax under the Act and that the turnover of such amounts is included in the return of the turnover filed by such sub-contractor.

2[Provided further that if a dealer who executes a works contract of construction of apartments or buildings, so opts, the assessing authority of the area may accept, by way of composition an amount calculated at the rate of rupees 4/-(Rupees four only) per square foot of the constructed area.

2. Added by Act No.2 of 1998 published in the A.P.Gazette part IV B Extra-ord. No.2dt.3.1.1998.
3.Subs. by Ordinance No.10 of 1999 w.e.f.31.12.1999 for the words " an amount at the rate of two paise on every rupee". The said Ordinance was repealed by Act No.19 of 2000.
4. By G.O.Ms.No.914 Rev.dt.31.12.1999 turnover tax exempted on turnover taxable underSection 5G W.E.F.3.1.2000.


(2) The Government may notify from time to time the category of works contract for which the scheme of payment of tax by composition under sub-section (1) does not apply.

(3) Every dealer who elects to pay tax under sub-section (1) shall apply in the prescribed form to the assessing authority to be permitted to pay the amount of tax under sub-section (1), and on being so permitted, in the prescribed form, he shall pay tax as specified under Section 13 and 15 of the Act.]

See Rule 6(4),6B Form L, L-1

1. Section 5G was inserted by Act No.22 of 1995 w.e.f.1.4.1995 and was subs. by Act No.27 of 1996 w.e.f.1.8.1996. The earlier section read as under:
*5G. Composition of tax payable under Section 5F :(1) Subject to such conditions and in such circumstances as may be prescribed, the assessing authority of the area may, if a dealer,liable to pay tax under section 5F, so elects, accept in lieu of the amount of tax payable by him under the said section during the year, by way of composition an amount at the rate of four percent of his total turnover:
Provided that no tax shall be payable under this section on the turnover relating to the amounts paid to a sub-contractor as consideration for the execution of works contract whether wholly or partly subject to the production of proof that such sub-contractor is a registered dealer liable to tax under the Act and that the turnover of such amounts is included in the return of turnover filled by such sub-contractor.

(2).Every dealer who elects to pay tax under sub-section (1) shall apply in the prescribed form to the assessing authority to be permitted to pay the amount of tax under sub-section (1) and, on being so permitted, in the prescribed form, he shall pay tax as specified under Sections 13 and 15 of the Act. The Division Bench while declaring the section as subs. by Act No.27 of 1996 as valid observed that the expression "total turnover" in hte earlier Section 5G(1) has been substituted by the words "total amount paid or payable to the dealer towards execution of the works contract" thereby clarifying the meaning of total turnover referred in the section earlier". Referring to the omission of sub-rule (4) of Rule 6, which excluded certain items not liable to tax from the turnover in respect of which compounding was to be made, the Court held that only where the composition is of benefit to the assessee that he would opt for the same and "he will be estopped from questioning the validity of that composition for which is paid in lieu of the actual tax payable under Section 5F."

1[5H.Deduction of tax at Source :(1) Notwithstanding anything contained in this Act the Central Government or the State Government or an industrial, commercial or trading undertaking of the Central Government or of the State Government or a local authority or a statutory body, or a company registered under Companies Act, 1956 or any other person which the Government may notify from time to time, shall deduct from out of the amounts payable by them to a dealer in respect of works contract executed for them, 2[an amount calculated at such rate as may be prescribed , but not exceeding four percent of the total turnover;]

(2) The tax deducted under sub-section (1) shall be remitted to Government in such manner and within such time, as may be prescribed.]

(3) The authority making deduction under sub-section (1) shall furnish to the dealer from whom such deduction is made, a certificate, containing such particulars as may be prescribed.

(4) If any such authority defaults to deduct the tax specified under sub-section (1) or defaults to remit the amount so deducted or any portion thereof as required under sub-section (2), it shall be liable to pay, in addition to the amount so deducted, interest at the rates specified in sub-section (3) of Section 16 of the Act on the amount with respect to which the default has taken place from the date of default to the date on which such amounts is remitted.

(5) Payment by way of deduction in accordance with sub-section (2) shall be without prejudice to any other mode of recovery of tax due under this Act from the dealer executing the works contract.

(6) Where, tax in respect of woks contract is remitted under sub-section (2), the tax payable by the dealer in respect of such works contract shall be reduced by the amount of tax already remitted under the said sub-section :

Provided that the burden of proving that the tax on such works contract has already been remitted and of establishing the exact quantum of tax so remitted shall be on the dealer claiming the reduction.

See Rule:6(3)&17 -1 Form XX

1.Section 5H was inserted by Act No.22 of 1995 w.e.f.1.4.1995. Sub-sections (1) and (2) were subs.by Act No.27 of 1996 w.e.f.1.8.1996. The said sub-sections before subs.read as under:-
5H."(1) Notwithstanding anything contained in this Act, the Central Government, Government,or an Industrial, commercial or trading undertaking of the Central Government or of the State Government or a local authority or a statutory body, shall deduct from out of the amounts payable by them to a dealer in respect of works contracts of the works specified in Section 5F and 5G executed for them , an amount calculated at the rate of four percent of the total turnover.

(2)The tax deducted under sub-section (1) shall be remitted into the Government treasury under the Sales Tax head of account within seven days from the date of such deduction.
2.Subs. by Ordinance No. 10 of 1999 w.e.f.31.12.1999 for the words " an amount calculated at such rate as may be prescribed, but not exceeding three percent of the total turnover".
The said Ordinance was repealed by Act No.19 of2000.
Note:
(i) in rule 17(1)(1) the rate of deduction was fixed at 1% in respect of "Exclusive civil contracts namely contracts for laying and repairing of roads and contracts for canal digging lining and repairing at 1% where as for all other categories of contracts at 3% of turnover determined as per Rule 6(3)(ii) the validity of which has been upheld by the A.P.High Court in23 APSTJ 195.

(ii)The A.P.High Court in 23 APSTJ 195 upheld the validity of Section 5H subject to make provisional assessments and to intimate the authorities required to deduct the tax at source.