The Bihar Value Added Tax Act, 2005

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The Act being Central Government’s Legislation was enacted with its short title as the Bihar Value Added Tax Act, 2005 (Act no. 27 of 2005). The purpose and object for which the present Act was provided is for consolidation and amendment of laws relating to imposition of tax on sales or purchase of goods in the Bihar State. The provisions of this Act were extended to the entire Bihar State’s territories. The present Act was enacted by the Indian Parliament in 56th year of republic of India and was assented by the President of India on 23rd day of June, 2005 and also the provisions thereof were brought into operation on 1st day of April, 2005 as has been specifically given under its preliminary provisions. The provisions of Act were amended several times by the relevant Finance Acts. The provisions of this Act are being divided into sixteen chapters and 100 sections.

The preliminary provisions of the Act are contained under first chapter therein relating to the short titling, extension and enforcement thereof. Further, the section 2 of the Act defines certain significant legal terms used under the various provisions of this Act.

So far as the purpose of the Act is concerned, the provisions relating thereto contains under chapter II of the Act, where incidence of the taxes are given. Section 3 speaks for charging of tax on every registered dealer (being registered within the provisions of the Bihar Finance Act, 1981) for selling and purchasing by him. And all other dealers to whom the Act requires the payment of taxes for their sale and purchase should pay taxes under this Act. Minimum 20 per cent of the total amount of tax payable by the dealer under this Act, should be paid by such dealer in addition to the tax payable under this Act as Surcharge on the sale of specified Goods (under Schedule IV annexed with the Act). The limits of such surcharge subject to 20 per cent should be fixed by the State Government. Similarly, purchase tax imposition is explained under section 4, 5 of the Act. However, section 6 specifies the limitations on payment of such taxes on sales or purchases of goods, where no dealer can be taxed for inter-state trade or commerce purchase or sale, or if it is taken place outside the Bihar State or taken place while importation or exportation of goods to or from India. Section 7 requires exemptions of taxes for the sale or purchase of the Goods specified in the Schedule I to the Act.

So far as the constitution of Commercial Tax Tribunal and other taxing authorities and inspector is concerned, the chapter III of the Act makes provisions. Section 9 deals with constitution of such Tribunal and its composition, benches, etc. For constituting the Tribunal, the State Government is responsible. And the said Tribunal should have Chairperson, two members and such members should hold office for the period of 3 years and who should be treated as public servants. Such Tribunal is vested with the authority to make regulations which should be consistent with the Act and rules made thereunder. Such rules to provide for regulating the procedure and other incidental matters of the Tribunal. Other taxing authorities to be appointed by the State Government of Bihar. It is also made clear that if any action is taken by any of such authorities appointed under section 10 or 86 of the Act or by any servant of the Government, is in good faith or even if it is intended in pursuance with this Act or rules made under this Act, then no legal actions should be entertained against such authorities or officers.

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Further, Chapter IV of the Act makes provisions as to rates of taxation and point points in series of sale at which such tax can be imposed. Different rates are provisions for different goods specified under different Schedules annexed with this Act. Moreover, the next chapter seeking persons liable to tax under this Act should get themselves registered and obtain registration certificate from the prescribed authority, however, other persons can also apply for such certificate though they are not subjected to tax under this Act.

The Act makes detailed provisions under its chapter VI as to furnishing of Returns, scrutiny thereof, Assessments, including self-assessments of tax, time limitation thereof, re-assessment of tax and also payment and recovery of the tax under this Act, limitation period for such recovery, etc.

Further, chapter VII of the Act makes provisions as to maintenance of accounts, books thereof and also requires the registered dealers who are making sale to another registered dealer to provide him with tax invoice at the time of purchase containing particulars specified in section 53(2) of the Act. Such dealers also required under this Chapter to audit their accounts in relation to some cases specified under section 54. And provisions regarding search, inspection, seizure also provided under next chapter being chapter VIII of the Act. Establishment of Check posts required to be made by State Government under chapter IX of the Act. Besides other Chapters, the Chapter XII of the Act is very important as it is dealing with the legal provisions as to appeals, review and revisions against the assessment orders or other orders where any interest or penalty, etc. passed by authorities. Such appeals can be preferred before the Joint Commissioner, or the Deputy Commissioner who are specially authorized in relation thereto. Moreover, the appeals against the orders of such Joint Commissioner, or the Deputy Commissioner can be preferred before the Tribunal, also against the decisions of the Tribunal appeal should lie before the Hon’ble High Court of the State. The next chapter deals with penal provisions under the Act. And so far as the constitution and other relevant provisions as to bureau of Investigation is concerned chapter XIV makes provisions in that regards.

The miscellaneous provisions are contained under chapter XV of the Act where besides all other relevant provisions, the Act sought to provide for declaring those agreements which are made to defeat intension and application of this Act, to be void agreements. The Last chapter of the Act makes repealing and saving provisions wherein the Bihar Finance Act, 1981is repealed without affecting the legal proceedings, remedy, etc. under that Act. Also the same chapter makes provisions as to empowering the State Government to make rules under this Act for carrying out the purposes of this Act, also such rules to provide on given matters. Also the chapter makes provisions as to removal of difficulty arising while effecting the provisions of this Act.

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Adv. Faim Khalilkhan Pathan