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Vat audit under Karnataka Vat act, 2003


CA Pulkit Sharma

2014-09-06

Section 31(4) of Karnataka VAT Act, 2004 speaks about VAT audits as:

Every Dealer whose Total Turnover in a year exceeds one hundred lakh rupees shall have his accounts audited by a chartered accountant or a cost accountant or a Tax practitioner subject to such conditions and such limits as may be prescribed and shall submit to the prescribed authority a copy of the audited statement of accounts and prescribed documents in the prescribed manner.

Let analyze the above section, who is a Dealer under Karnataka VAT Tax act, 2003?

Section 1(12)

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, and includes-

 

(a) an industrial, commercial or trading undertaking of the Government, the Central Government, a State Government of any State other than the State of Karnataka, a statutory body, a local authority, company, a Hindu undivided family, an Aliyasanthana Family, a partnership firm, a society, a club or an association which carries on such business;

(b) 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;

(c) 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;

(d) 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 ;

(e) a person who sells goods produced by him by manufacture or otherwise;

(f) 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.

(g) 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;

(h) a person engaged in the business of delivery of goods on hire purchase or any system of payment by installments;

(i) 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;

 

What is definition of Total Turnover as per Karnataka VAT Act, 2003?

Section 1(35)

Total turnover means the aggregate turnover in all goods of a dealer at all places of business in the State, whether or not the whole or any portion of such turnover is liable to tax, including the turnover of purchase or sale in the course of interstate trade or commerce or in the course of export of the goods out of the territory of India or in the course of import of the goods into the territory of India and the value of goods transferred or dispatched outside the State otherwise than by way of sale.

Any person who has a turnover within Karnataka less than 100 Lakhs but have interstate sale of more than 100 Lakhs, shall he get the VAT Audit under Karnataka VAT Act, 2003?

Yes, as it’s evident from the section 31(4) of Karnataka Vat Act, 2003 that if TOTAL TURNOVER exceeds 1 crore, audit must be done. Total turnover includes all sales made, whether within state or out state and it also includes export sales.

Also to be noted that total turnover figure in form 240 should include sales within state, interstate or export sales.

In form 240, Total turnover, Local sales and sales under CST Act should be shown separately.