The SIKKIM VALUE ADDED TAX ACT 2005

,
!
GOVERNMENT GAZETTE
EXTRAOBDINAHY
PUBLISHED BY AUTHORITY
SIKKIM
Ganqtok Monday 21st February, 2005 No- 118
GOVERNMENT OF SIKKIM
LAW DEPARTMENT
GANGTOK
l.
2.
No.5/LD/P/2005 Dated: 19.3.2005.
NOTIFICATION
The following Act of the Sikklm Legislative Assembly having received the assent ol the
Governor on gth day of Nriarch, 2005 is hereby published for general informalionr-
THE SIKKIM VALUE ADDED TAX ACT, 2005,
(ACT NO. 5 OF 2005)
ABRANGEMENT OF SECTIONS
CHAPTER - I
PRELIMINARY
Short tille, extent and commencement
Definitions
CHAPTER . II
COMMEBCIAL TAX AUTHOBITIES AND
APPELLATE AUTHOFITIES
3- CommercialTaxAuthorities
4. Appellate Authority
l
5. Delegaiion of Commissioner's powers and functions
6- -i-ax Authorities and Appellate Authority to be public servants
7. Indentnliy
CHAPTER. III
. INCIDENCE, LEVY AND RATE OF TAX
8. lncidence of iax
9. L.evy ol tax on sale
I0. Levy ol iax on purchases
11. Levy ol tax on containers and packing material
12. Rales of tax cn sale or purchase of goods
13. Levy of tax on iransfer of property in goods lnvolved in the execution of Works
Oontract
14. OLli-Put tax
15- inpui tax
: 16 Compounding oJ tax liabilily in certain cases
17. Ccmpounding of tax liability in case ol Works Contract
iB. lnformalion of awarding oi Works Contract.
19. Deduction of tax at source from the payment to dealer
20. Tax payable
21. lnput tax credit
. 2. Exporis to be zero-rated
. X- 3urden of Prool
24. Power oi State Governmeni to amend Schedules
X" Credit and Debit Notes
CHAPTER - IV
REGISTRATION OF DEALERS. AMENDMEIIT
AND CANCELLATION OF REGISTRATION
CERTIFICATES
27.
24.
29.
Hegistration ot dealers
Voluntary reqistrallon ol dealers-
Security to be iurnished in certain cases-
{rnposition of penalty for faiiure to get registered
. CHAPTER - V
BETUBNS, ASSESSMENT, BE-ASSESSMENT
AND PAYMENT OF TAX
Reiurns, payment of lax. interest and penalty
lnierest on non"payfnent or delayed payment of iax before assessmeni
lnterest on non-payment of assessed iax
Exemption lrom payment ol inler:est
lnterest payable by Commissioner
Founding off ol arnount ol tax, interest or penalty
Collection of tax only by dealers liabie to pay tax
Scrutiny of returns
Assessment oi tax payable by registered dealers
Self assessment of tax-
Assessment of tax payable by dealer other than registered dealers
Payment of assessed tax and penalty
Limiiation for assessment
Determination of interest
*
I
44.
45.
46.
47.
48,
49.
50.
52.
53.
Rectification of misiake in determination ol interest
Recovery of tax, p€inalty and interesi
Tax Recovery lnspector whom certlficates 10 be forwarded
Amendment of certlficates tor tax recovery
Valldlty of Certiflcate for Tax Becovery
Transmission of Certificates for Tax Recovery io Collector in certain cases
Special rnode of recovery of tax, penalty and interest
Assessmenl without pre]udice to prosecution for any oifencd
Assessment after partition oi Hindu Undivlded Family or dissolution oi lirm and tax
payable by a deceased dealer
Ref.rnds
CHAPTER - VI
ACGOUNTS AND RECORDS
Maintenance of acibunts and records etc.
Tax invoice
Electronic record
Bequirement to provide lnformation
Audit oi accounts
Dealer to declare the.name of his business manager
CHAPTER - VII
INSPECTION OF ACCOUNTS, DOCUMENTS, SEARCH AND
SEIZUBE AND ESTABLISHMENT OF CHECKPOSTS
60. Maintenance of accounts by transporter, carrler or transporting agent
61. lmpositiorr of pelalry lor ta lL re to issue lax invoice. cash mer']o or bill
62, Production and i[spection of accounts, registers and documents
55.
56.
57.
59.
j
is
6a
6i1.,
65.
67.
68.
69.
75.
76.
77.
78.
79.
70.
71.
72.
74
Seizure of dealeis accounts
Entry and search of place of business or any other place
Establishment of check posts for inspection of goods in transport
lnterception, detentlon and search ol vehicles or carrier and search of warehouse, elc.
Stock oi qoods stored in undisclosed warehouses
Seizure ol goods
Penalty for transporting goods into Sikkim in contraveniion of Section 60
Transporter liable to penalty lor transport in contravention of the provisions of sub-
section (4) of Section 68
Measures to preveni evasion of tax on sales
Penalty for concealment of sales and furnishing incorrect particulars of sales and purchases
CHAPTER - VIII
APPEAL AND REVISION
Appeal against assessment
Suo motu revision by Commissloner
Bevision by Commissioner upon application
Bev sior by Appellate Autl^o'iLy
Review of Order
Power of taking evidence on oath
Revision to High Court
Revlsion or Heview bY High Court80
o F FEN..#'^I,'J ; JX^*, *
81. Offences and penalties
a2. Special provision lor liability to prosecution
83. Compoundlng of offences
3:
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CHAPTER . X
MISCELLANEOUS
a4. Cancellaiion of registration under specifled circumstances
85. Beiurns etc. to be confidential
86. Powers to call Jor iniormation
87. Statement to be furnished by dealer, transpoder, owner oT lessee ot warehouse, elc'
88. lnformauon to be furnished by dealers regarding changes of business
89. Additional information io be furnished by dealers
90. Supply ol informatioh by dealers in respect of transfer of goods otherwise than by way of
sale
91. Tiansier of busir]ess iJy rcgistered dealer
92 Panial t'ansfer of oJs'ness oy 'egislered dealer
93. Cancellation of registration and transfer of business
94. Barto proceeding in CivilCourt
95. Manner of payment of tax, penalty, interest, etc.
96. Power to prescribe raies of fees
97. Power to make rules
98. Saving in relation io sales outside Sikkim, lnter-State Sales, and Saies in Course of lmport or
ExPort
99. TransitionalProvisions
'100. Bepeal and Savings
101. Power to remove difflculties
SCHEDULES
I Goods exempted from payment oi VAT
li Goods liable for'1 7" rate of VAT
lll Goods liable lot 4"/" @le olVAf
lV Goods Iiable for 4"/. rate of VAT
V Goods liable for 12.5% rate ot VAT
THE SII(I(IMVAI,UE ADDED TAX ACT,2OO5
(ACl' NO. 5 OF 2005)
AN
ACT
to consolidate the law relating lo llle levy oltax on sale olgoods in the Stale ofSikkim and for matters
connccted thercwith or incidennl ihercto
Bc it enactcd by thc Lcgislalurc ofsikkirn in the Fifty-sixth Yearolthe RePublic oilndia as fbllows: -
CHAPTER I
PR-I,I,IMI\ARY
1. Shoft title, extert and commencement:
(l) l his Act may be called Thc Sikkim value Added Tax Act.2005'
tr, .e.'cr (i. olltc t'n'c.'\ik(rm.
(i) Itshallcorncinto lorce on such date as lhe Statc (iovernment may, by notificetion in the
Otllcial Ga7-etle, aPPoirll.
2, Definitions: In this Act. unless the context otherwise requires, -
(i) "Act" mcans lhe Sikkirn Value Added Tax Act, 2005 i
(ii) "Appellate Authority" mcans the Sikkim CommercialTaxes Appellale Authoi ity constituted
u.dcrsub seclio (l) olscction 4l
(iii) 'appointed day' Ineans lhe datc on which lhis Act comes jnto forcc;
(iv) "assessee" rneans any pe$on by whom tax orany othelsum ofmoney is payable Lrnderthis
Acl and includes cvery person in rcspect olwhon any proceedings ullder tiis Act have been
taken for Ihe aslessmellt ollax payahle by himl
(V)..i1sscssir]gautho]ity,'mcansanvofl.]celnotl]clowthelankofAssistantConnnjssionelauthorizcd:
hi/ thc Govenlment or by any aLlll'lol ity empowered by the Covernnent to make any assessrnen! 
i
llllder this AcL;
(vi)'Busincss'inclLrdes-
(a) any traale. commelcc' manulacturc, ol'any adventure or concern in th' n'trrte of h ede'
commcrce. rlanufacture' whelher or not su ch trade' commctce' manufacture' adventure
{jrconcefil is canied on with the motiveto nrakc gaill orprofiland whelher or not any
profltaccurcs liomsuch tr'ade. coft]nelce, manltfacture, adventLLre or concer n il'r-cspcctivc
01 fie lolume.l'rcqucncy, continuity orreg[]rity ol'such lrade, cornmctce. manulactrue.
advenlure ucollcern.
(b ) any tfan saction ol sale or p urchase ir con ncction []ilh or anc illrtr] oi illcider lal to s lLc h
trade. commerce, manulactLrre, adve nture of concern rettrrcd to in sub cl ause ( a) :
(c) ary lransacLion invol\,lng goods, whcther original o| secondhand, u nscN iccable, obsole te
or discarded goods, mcre scrap or lvasle materjal; and
(d) any transaction involving goods obuined rs wxste products or by-producls ir the course
olmanLrlactulc ol processing olother goods or mining or genelalion or disIibution oi
clectical enel8y or any othel ibnn ofpower;
(vii) "capital goods" rneans planL, fiaclinery, dyes, tools, and cqu\rnent uscd in the process ol'
rnanufacturing, excluding civil slructul es and such goods as mlly bij notifl ed lllnr l L nc r, rirn(i
(vu) Cornmissioner" means fieCor nissioner olcorxnercialTil\cs and ircludes, Lrnless the contexl
rcquires otllerwise, theSpecial, Addilional, Joint.Deputy and Assistarlt Commissirllrer of
ComnercialTaxes appointed under sectior 3;
(ix) "Ccnhal Aci' means the Centnl Sales 'Iax Ac!. 1956 (Act 74 ol 1956);
(x) "Conractee" means any peNon for w hom or lirr whose benellt a lvorks contracl is executed i
(xi) "Conlractor" means any person who executes, eithcr himself or through a su Il cor rtractor, a
works conlract:
(xii) "dealer" means any person who, lvhether regu larly or othe.w ise, in the course o I b usiness
buys, sells, supplies, dist iblrtcs or does mythlrg incidenlal to such buyi rg, sell ing, stLpplying or
di stri blrtinEl ol goods, direcdy or indirectly, whethr:r tbr crsh or 1br deitred paymcnl ol lbr
conxnission, rcmuneration o. olher valLratrle consideaation iuld incltLdcsl
(a) a casual b'ader;
(b) a conmission agent, a broker or r dclcredere agent or an auctioleer or any other lercantile
agent, by whatevername called,
(c) a non-resident dealel or'an agent ofa non-resident dcaler or a local brunch l]1'a f itr or
compan y or association or body ol person s \vhcthc r incorporalcLl d Dot. sjlurted oulside
rhe Stare:
(d) a person who. whether in the coulse ofbusiness or Dol,
(i) sells goods produccdby hjm by manulactxle. agrjculture, hortjculhn-e orothe]8ise:or
(ii) tmnsfers ary goods, whetlter rn pursuancc ofa contmcl ol.ltot. lor cash or iordelerred
payment or lorothcr veluable considemtion:
(iii) supplies.by!vayol, oras pan ofany sewice or in any other rnanncr whatsoevcr.
goods being food oranvothcl arliclcs forhuman consumption ol anydril* (whcthcr
or not intoxicaling), u4reresuch supply orscrvice is lorcash. dclcrrcd payment or
oLlrel' ..1-r:rl'le -Jr.i,rcr-rlior:
Ilxplanation I - Every pcrson who acts as an agent on behallola dealcr residing outside the State and
huys, sel1s. sUpplies oI distrlbutes goods ir the.State or acts on bchall of such dealer es -
(a) acommissioD agcnt. blokcr, factor-. a delcredele agcnt. an &uctioneer orotlter
meirantilc agent, by \\,I]atever narne called; or
(b) an agenl lor handl iDg good s or docu menis ol title to goods; or
(c) an agenl lor the colleclion or lhe paylnent olthe sale price ol'goods or'as guar'anloI for sLlch
colleclion or payment and cvcrJ local branch ofa fimr or-corrpany situated outside the Slatei
shall be dee led to be a.lealerlorthepuqroseolthis AcL.
Explaration II- The Centralor'lhe State Govcrnment or an,v oftheirdepa ments orolfices \r,hjch,
\\'lrelher or not in thc coulsc of business. blry. sell or-supply lor commission. rclnuneration or llor othe[
viluable consideration. shall he deemed to be a dealer lor dte puryose ofthis Act.
Explanation III - Any cornmercial or financial eslabllshment inclftlirg a hank. an insurance cornpany. a
lransport company an(1 thc likc whloh whelhcr or noL in lhc course olbusiness buys. sclls. supplies or-
disrributcs goods dircclly or olherl|isc,Ior cash or for delencd payment. commission, rcmuneration or for
other valuable consrderation. shall be deemed Io be a dealer-for Lhe pueose of this Act;
(xiii) "goods" means all kinds ofmovable propcny (othcr thxn ncwspapcrs,.ctionable clairns,
electicil)r, stocks and shares and sccul'ities) and includes livc stock. all nutefials, connnodities
and articles and every kind olprope(y (whedleras goods or in some otherfbrm) involved in
the execution ola worts contmct. and allgrowing crops, grass or lhings atlached lo or lonning
pa ol'thc land \vhich are agreed to be severcd before sale or under the co.tract ofsale;
(xi,,,) "Govemrneri' means lhe Govemmenlof Sikkim:
(x\, "gross tulnover". means-
(a) in respect ofsale ofgoods' aggregate ofthe sale prices received or recejvable by a dealer
onsalesaSdefinedunderctause(xrix)andincludessaleofgoodsmadeoutsidetheState
olinthecourseofinter-statetade0ICommerce0Iexp0rtbutdoesnotinclr'tdesalepdce
ofgoods which have bome the incidence ofpurchasetax under this Act;
(b) for the puryose oflevy of purchase tax' aggregate ofpurchase prices paid or payable by
adealerduring any given period io respect ofpurchase of goods or class or descdption ol
goods which are liable to lax underthis Acl;
ExplaDation : The amount received by a dealer on account of price variation or price escalation in respecl
of sale ot supply of goods shall be deemed to form pan of gross tumover of the tinancial yeal during which
it is actually received;
(xvi) "input" means goods purchased in the course ofbusiness -
(a) tbr use in manufacture of goods including packing matedals but excluding purchases of
Petfol, diesel and natural8as' and
(b) lor use as capiLal goodsi
(xvii) "input tax " means ihe rax paid or payable under lhis Act by a registercd dealer to another
rcgislered dealer on the purchase ofgoods in the course ofbusiness tbr rcsale or lbi the
manul.actureoftil,(ablegoodsolforuseascontamersorpackingmaroialori.ortheexecution
of works conftrci;
(xviii) "manutacturc", with its gununatical variadons ancl cognute expressions means prcducing'
making, extracting any goods or altedng' omarnenting' iinishing' assembling or otherwise
processing, fteating or adapting oI any goods' bLrtdoes notinclude any process or mode ol
manufacure as may be notilied from dme to time;
(xix) "notjfication" means nodfication published in the Offlcial Gazettei
(xx) "otltpr.lt tax" means the tax charged or chargeable in respecr oi sale or supply of goods made
bY a registeied dealer;
(xxi) "Pe6on" includes:-
(a) an lndividual;
(b) ajointfairily;
(c) a company;
qfim;
an association of pemons or a body of individual, whetl'le[ in corporated o] notl
the Central Cov3rnmenLor tl'le Govemment ofSikkim i,r the Covemment ofany other
Staie orUnionTeritory in hrdia;
alocalautlrcdtyl
(xxii) "place ofbusiiess" means any place where adealelsells any goods or keeps accounts relating
to sales or purchase ofgoods and includes any walehouse ofsuch dealer, any place where a
dealerproduces or manufactures goods. any place wheL'eir thegoods aie stored orused fol
transpolling the goods;
(xxiii) "prescribed" means prcscdbed by rules framed under this Aat;
(xxiv) "purcha,se" means aly tmnsfer of piopelty in goods to fie pelson making the purchase for
cash or defered paymenlor othervaluable consideration Lrtrt does not include a tmnsfer by
way of moftgage, hypothecation. charge orpledge;
(xxv) "purchase price"rneans theamountpaid orpayableby adealeras valuable consider"tioo in
respect ofpurchase ofgoods and includes -
(a) any sum char ged for anything done by d1e vendol in.espect ofthe goods at the time of or'
beforc the delivery thereof:
(b) tmnsport costs or freight. ifany;
(c) tlade commissicn, ifany, by whatevernamecalledl
(d) clearing, foMarding and handling charges, if ary;
(e) insumnce charges, ifany:
(0 cost ofpacking, ifanyland
(g) any othercharges orcosts otherthan those specified al,oveifsuch chal-ges oI costs are
incuredorpaid in rcspectofgoods so purcha-sed and includes any amount payable by a
purchaser for anythjng doneby the seller in respect ofgoods at the time of or beforc
delivery thereofto the buyer ifary of the costs, charges. taxes or duties as aforcsaid alc
incurcd in rclation to Lhe trans l'er ofpropclty in goods;
(d)
(e)
(0
G)
Explanation I- Purch$e price shall not include litx pad or payable undel this Ac! by a detler in respecl
oI any such purchase.
Explanation II - For the puryose olthis clause' purchase price shali not include the alnount paid or
payable by lhe plLrchaserby way ofnol1-letunddble deposit whelher by way olasepar'ate agreemenlol
not in connection with or incidental to or ancillery to the said pllrchasc olgoods'
().wi) 'Repealed Act" means suchplovisio s .)1'sikkim Sales Tax Act' 1983inrespectof
corxnodities/prodLicis as wi11be dealt with under the provisions of lhe Sikkim ValLre AcLrled
'l'ax Act,2005 repealed u der section 100:
(xrvli) "Ru1es" meansther[lcs made underthis Acl:
(xxviii) "Sale" means arly tmnsfer ofpropefiy in goods lbrcdsh' delened puyment or othel
valuable considention and includes:-
(a) any tansler, otherwise than ir pursuance ol a contracl oI propefiy in any goods Iorcash'
defened payment or other valuable consideration;
(b) any delivery olgoo.ls on hie-purchase or any system ofp?ryment by instalmen!;
(c) any supply by way ofor as part ol any service or in any other manner whalsoevet ol
goods. being Iood or any other rrticle tbr human consumpiion o' Jrry drlnk (whether or
rot intoxicating), whcre slLchsupply orseivice is tbrcash' dcferrcd paylnenl or oiher
valuable consideration;
(d) any supply ofgoodsby any unincorpomtecl as sociation or- body oipe$ons to a member
thereol for cash, delerred payment or other-valuable considelation' and such u ansfer'
dclivery or supply of any goods shall be deemed to be a sale olthose goods by the person
or u nincolporated associdtjon or bocly ofpersons making thc renster' delivery or suppl)'
adapurchaseolthoses,orlbylhope$ontowhomsuchtlansfil,deliveryorsupply
is madebutdoes not inclucle a mortgage' hypoihecation' chiugeorpledge'
Explanation - A saleofgoods shallbe deeme'lto t4ke place inside the Sikkim-
(a) ifthe goods are within thc State of Sikkim'
(i) in the case oispeciflc or asceltalned goods et the time lhe contract ofsale rnadei and
(ii) in rhe c ase ot' unasceflaincd or lilture goods atthe time oftheir appropriadon to ihe
contlactofsalebylhese]]er,whcLheltheasscntolthebuyertosuchuppropn.rtionis
priol or s ubsequeni t' the appropriation;
(iii) where there is a single conlract ofsale in respect ofgoods situated at more Lhan one
place, then the sale shall be deemed to have Laken place as ifthere is a separate
oontract in rcspect ofgoods al each such places;
(xxix) "Saie pnce" mearls lheamountofvaluable considemtion received orreceivable by adealer for
the sale ofany goods less any sum allowcd as cash discount, according lo the practice Dolmally
prevailing in the adebulinclusive olany sum cl]arged for anything done by fiedealerin
respect of the goods ol sel.vices at thc time ol or befole delivery thereof' excise du ty' special
exciseduty orany other duly orlaxcs except the lax imposed underthis Act;
(xxx) "schedule" means theschedulcappended lo this Acl and the description ofany goods spccified
thercin shallbe subjectto the exceptions' resl ctioos and condilions. if ary' and the application
ofthe provisions ofthis Act, relerring to the Schedule shallbe subject to the circumstances if
any, mentiored therein gener-a11y oragaiost such goods:
(xxxi) 'section " means seclion of llle Act;
(xxxii)"Staie Cc\,emrrenf'rneans the Govem ent ofSikkim;
(xxxiii) "tax" means tax levied and payableunder this Act;
(xxxiv) "taxablegoods" means all goods except lhose specified in Schedulel;
(xxxv) "Tax Recovery Inspector" means aTax Recovery Inspector aPpojnted by lhe State
Govemment under the provisions of the Sikkim (Collection olTaxes and Prevention of
Evasion ofPayrnent olTaxes) Act, 1987(ActNo 7 of 1987);
(xxxvi),.taxab]etumover,'meansthetumovelonwhichadealerisliab]etopaytaxasdefennined
after making such clcdLlctions frcm hjs tota]tumover and in slrch lr:ranner as may be
Pr-escribed;
(xxx;ii) "Value Adde.l Tax or VAT" means a tax on sales orpurchases lcvied under'lhis Acl;
(xxxviii) "works contract" includcs any agrcement lor caflJing out lorcash or delcned Paymenlor
olhelvaluableconsiderdtion,theassemb]ing,co]lshxction,building,altering'manufac&lring,
processing, fabrication, jrstallarion, fiiling ou!' improvernent rcp'tir or ! o mrnissioni ng of
anv movable or imn'lovable ProPel1Y;
()lx,{ix) 'Year" means lhe lln anc ial yeal beginrlingliorn l'' AprlLandendingo Sl"M'rrclr'
CITAPTER II
COMMEI{CIAI, lAX AU'I'HORI'I'IES AND APPELLA LE AUTHORITlI]S
3. Connuerciitl 'lhx Authorities. ' ( 1) Tlrerc shallbe the C'ommissioncr ofcon lercialTaxcs
to be appointed by the Covcmmenl who shell htve all the poweN and shallpcrli n 'rll lhe
duties confe|red ot imposed upon himby or undcrthis Ac!
(2) The Colnmissioner shallhavc suPerintcndencc over all otlicers and persons enrl'oyed in lhe
(\C. Lr:ut Ol'l_ r, A.t:rr'ol cCO.lrl.s.OlL'an':)._
(a) call for returns ltom such o1}lcerc and persons;
(b) make and issLte gener al lules and specify I'ofins tbr regulalil,]g thc practice and procedure
lo be fbilowed by such ofl'icers and penorlsi
(c) issue such ordcrs, il$lrrctions anddir-ections to such officets ud peNolrs as i! mty deenl
lit, ti.r rhe proper rdmirlislration ofthis Act.
(3) (a) -l he G,Jver rrlrlent shull app'rinl thc Speci'rl Comrnissioner, Arlditional Commissioner an( I
as many Joirtt Comnlissiorers. Deputy Commissioners, Assistanl Corl]mis\iLrn(l \,
CoormercialTax inspectors aDd such otllerpcrsons as it thir)]( flt lbr the purpose o1'
pe brlrxrrg thclulolions respeclively assiSncd to Lhem by orunderthis Act'
(b)Such ofriccrs andpcrsons shall perfilnfie s d tunctions within such Ioculiirnrrs iLs tbe
GovernDlert or ary allthodty or olllcer empowered by iI in this behalfmay assign to fienl'
(4) All officers and persons employed fbr the execution ofthis Act shallobseNe 'nd follow the
order-s, instru.lrons and dilections cl the oflicels supedor to them:
(5./ ,"(l o-r L..iLJr'rlnir) o, '.Je''rr^r'tir 1:
(a) transler any case or cases relaLing to any assessce or class ofassessees Peuding belb'e an
assessil'lg , rlthodiy 10 another $sessing aLllbodly havingjurisdiction to derl wilh \rrch 
'rse
or casesl ol
(b) specify any one ol lhc assessing rtrtholitics hrvingluILsilretion uveL cniut:rwh|:hshall
deal with any case or cases lelatirg to any assessee or class ofasset_sees'
(6) Where any case is transfene.l to ar assesslng autho tyundelchLtsc(a)ofsub-section(5)'
slrch asscssing auth.)lity may dealwith thecase eiLherdenovo ol ftomlhe stagc at \\'hich it
was transfen'ed.
4. Appellate Authority (1) The Govemrrcnt shalL apPoint the Sil<kirr Commercial Taxcs
Appellate Authorit) to per lbrm the lunctions assignedto lhe Appellate Authorilyby or under
this AcL.
(2) The Appellale Aulhorily shallbe a Persoll who is or has beel' an officer nothelolv the runk of
the SccrctarJ to Goverllmentof Sikkim 2u'lhas served for a mi lmllm peiod oltwo ycars in
the depatlneni of CPmmercial Taxcs'
(3) Thc tcrm oioIficc. filling ofvacancy end otherconditions oljelf ice oflhe Appcllate Aull]oriiy
shall be such as may be prescrihed'
(4) The limclions ollhe Appellale Aulhority may bepedbmed 'n accordance wilh lhe provisions
of tl'lls Act and the rules madethel eunder'
(5) The Appellale Authol ity shall, with the prcvious sanction ofthe Govemment make regulntions
consistent wlth the provisloris ofthis Act and the l-ules made lherellnder lor rcgulaling ils
lroccdr.rc 11u ll c d:'po.al 'l i'' orr''ne's
(6) The regulations acleundersLlb seclion (5) shall be pu blisned in $eOlficial Gazette'
5, I)elegation ol Commissioner's powers and lunctions - Subject to such resl ctions and
conditions as may be lmposed, llle Connnissiorlcr maJ' by o'del in $'riting 
'lelegate 
any of lris
powen and lunctions under thi-c Act and the rules made lhereunder to any person appoinled
under Section 3.
6. Tax Authorities and Appcllate Authority to be prblic se! vants' - The Commissiorrer and
all otficers appolnted undersection 3 inclu'li g the membcr oI the APPellate Authoity sh^ll be
deemed lo be public se ants within lhc meaning of seclior' 2l of Irdinn Perri I ( lo'le' I86l)
(:15 of 1860).
7, Ildenmity. - No suit. proseculion or other legal proceedings 6hall lie against any Governmcnl
sen/anlemployed for execution olthe provisions of tllis Acj-and rules made lheri:luder fol
anything which is in good faitll done ol intcnded to be done thereunder'
8.
C}L{PTER III
INCIDENCE,I,EVY AND RATE OF TAX
Incidence (,l (ax
Every dealer, -
(a) whose gr oss tumover of s,iles duing the year irnmediately preceding the commencement
of this Act, 
-(i) who has been liable inrmediately before the appointed day to pay tax under the
. Sikkim Sales Tax Act, 1983 or the Central Act, or
(ii) whose gross tumover duing a year fi$t exceeds the taxable llr i on dle day immedialely
preceding the appointed day, and
(b) who is in possession ofa rcgistration cedflcate under ihe Sikkirn Sales Tax Act, 1983
before the appointed day and to whom c)ar]se (a) does notapply,
shall be liable to pay tax Lrnder$is Acton a1l sales eflectedon or-idier the appoinred day.
Every dealer on whom sub-section (l) doesnotapply shall, ilhis gross tumolerofsales
calculated from Lhe commencement of any yeat exceeds the tixabie limit at any lime within
such year, beliable to pay ta,\ underthis Acton all sales, ellected on and from the date
immediately 1b1lowing the day on which such goss turnover ofsales fustexceeds the taxable
limit
ln this Acl, theexplession "taxable limit" means in.elation to anydealer
(a) who impolts for sale any goods into Sikkim, lbr himselfor
(1)
(2)
(3)
on behalf of his principal NIL
(b) who manulactures or prodlLces any Soods for sale Rupees 2,00,000/-
(c) who is engaged in any other business other tllan clauses
(a) and (b)
(d) involved in the execulion ofworks conffact . . . Rupees
Rupees 2,00,000/' ,
1,00,000/-
(4) The State Gove.rment may, by notilication in the Olficial Gzzette, increase the taxable liFit, in
the case of any class of dealers, not exceeding rupees tiliy lakhs, from time to tiEe.
Every dealer who has become liable to pay lax under sub-section (1) or Sub-seclion (2) shall
continue to be so liable until the expiry ofthree consecutive yea6, dudng each of which his
(5)
10
gross tumover ofsales has laiied to exceed the taxable limit o. sltch fu her period after the
dale ofsuch expiry as rnay be allowed by the general or speclal order notllied by thc
Coinmissioner and on thc expitl ofthis period hjs liabjlity to pay tax under sub-section (l) or
sub section (2) shallccase.
Expl;ination - For thc puilose olsub-section (5) in computing the pedod ofthree consccu0\ e Jrecr\ ln
rcspccl oI a dealer !vho has hecorie liablc to pay tax undcr sub-seclion ( i ). thrce yeers which expired
betbrc the appoinred day during lvhjch or each ofwhich the gross tumover fai led to excccd the taxable
llmitshall nol bc includcd.
(6) Evcry dealerwhose liability to pay tax under sub-section (1) or.sub,section (2) has ceased
ufder sub scction (5), shall, rlhis gtoss turnover olsales calculated from the commencement
ofany ycar again exceeds the taxable limlt aL any rime within snch year, he shallbe liatrle to pay
such tax on all sales. eflected on and from the date immediately following the day on which
such gross tl]moler olsales agair] firslexceeds the taxable llmit.
(7) The Co.lmissjonershall. alter making such enqujry as he may think necessary and afterglving
lhe dealer an opporlunlty ofheing heard, fix thc date on and fron which such dealer shall
becorne Iiable 1o pay a tax Lrndcrslrh scction (2) orslth-section (5).
9. Lcvv of tax on snle
(1) In this Act. thc expression "Laxable tun]over ofsales" means. in the case ofa dealer.who is
liable lo pay tax on sales ofgoods under scctiot] S that part ofhis gross tumoverofsales dllring
any pedod which remains allerdeducting therefrom hls tumoverofsales du.ing that pedod as
Iepresents;
(a) salcs ofgoo.ls urhicll arc notliabieforany tax specified in Schedulelol section 12;
(b) sales ofgoods, which are shown to the salisfaction of tie Commissioner. have not taken
piace irl Sikklm or have taken place in the course ofintel,State trade o,"commerce wjthin
the neaning olthe Central Aci or in the colrNe ofimpon ofthe goods inlo orexpofi ofthe
goods out of, the ten-itory oflndia within lhe meaning ofsection 5 ofthat Acr:
(c) such oihersales on such conditions and restrictions as ma-vbe prescribed.
(2) (a) Where thetaxabletumoverofsale is calculated without a separate amountoldle
considemtion being idcntifieC as payment oftax, lhe taxabie tumoverofthat sale is the
total amount of the consjdetation paid without reduction forthe tax multiplied by the lax
fr,rction
11
=
-
,€
€
Ei
:'
(b) For thepurpose ofthis section, the "tax fiactiou" shal(be determined-
for ary sale. by upplying the [or-nu):t:-
Pr = P/ (1+R)
Where P1 is the aggregate ofs[ch sdles prices exc]usive oflax:
P is the aggregate oisuch sales prices irclusive oftax. and
R is the rate of tax applicable to such sales.
10. Levy oftax on purchases-
Every dealerwhois in the course ofhis business purchases any goods_
(i) from a rcgistered dealer in the c cumstances in which no tax undcr section 9 is payable by that
registercddealet on the sale price ofsuch goods, or
(ii) from any other person,
shallbe 1iable to pay tax oD the puchase ofsuch goods, ifatter such purchases. the goods are
not sold within the State ofSikkim or in the couNe of inter State lrade ard commerce or in the
course ofexport out of the territory oflndia but are-
(a) sold or disposed off otherwise, or
(b) consumed or used in the ma[ufacture ofgoods dec]ared to be exempl from tax under this
Act, or
(c) after their use oI consumption in the manulacture ol goods , such manulacturcd goods are
disposed off otherwise than by the way ol sale in the State oI S ikkim or in the course of
inter-State fade and comrnelle or expofi out ofthe tefitory oflndia; or
(d) used or consumed otherwise,
and such tax shall be levied at the same rale at whichtax undersectio[9 would have been
levied on the saleofsuch goods within the State on thedate of such purchases.
11, Levy oftax on containers and packing material-
(1) Where any goods are sold incontainers or packed in any packing matedals, the rateoftax
applicable to such conlainem or packing materials shall, whether lhe pdce ofthc conLliners or
packing materials is charged separately ornot, be the same as those applicable 10 the goods
contained or packed therein:
t2
(2) Wherc such goods are exempt frcm tax, the sale olthe containers or packing matgrials shall
also be exempt flom tax.
Rates oftax on sale or purchase of goods -
The tax payable by adealeron his taxable tul nover shallbe. in so far as such turnoveror
any part theleof. relates to.
(a) lhe goods specifiedin Schedulel
(b) the goods specified in Schedulell
(c) the goods specified in Schedule III
(d) thcgoods specified in SchedulelV
(e) the goods specltied in Schedule V
12.
Nil
1 per cent
4 per cent
4 percent
I2.5 per cenl
13. Levy of tax on transfer of property in goods involved in the execution of Works
Contract'-
( 1 ) Ilvery cleaLer shall pay for each year, a tax under this Act on his taxable tumover for h-ansfer of '
propefiy in goods (whetheras goods or in someotherfom) involved in theexecution of
\r,orks contracl detemlined at the utes specified for the same goods in the Schedules mentioned
.i.ecrion l2:
Provided lhat all amounts towards labour charges and other like charges nolinvolving any ransfer
of pr operty of goods actually inculed in connection with the execulion of works conkact, shall be allowed
to be deducled flom $oss turnover olsuch dealer in detennining his taxable filmover
(2) Where the doaler pr oves to the satisfaction of the prescribed autho ty that rax on the tumover
oigoods supplied by him in tho cor.ll sc ofexecution ofworks contract, has been paid by his
sub contractor, the dealer shal1 not be liable to pay tax again on the tumover of such goods '
(3) Wh e1c a sub con ttactor proves to the satisfaction of the prescribed authority that the tax
Ieviable under sub-section (l) has, actually been pajd by the dealer (his principal conracior)
on the tumover ofgoods supplied to him by the deale' in the coul se ofexeculion ofworks
confact the sub-contmctor shall notbeliable to Pay lax again on lhe tumover ofsuch goods
13
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(4) A dealer shall pay foreach year, a tax under this Act on his taxable turnover in respect ofthe
dght to useany goods (whether or not fot a specitied period) at the lates specitied in the
Schedules undersection 12 for the samegoods had they been sold otherwise than by the
rcniler oflhe right lo use fiem:
Provided lufther ifthe transfer of the riSht to use any goods is made by a dealeron morc than
oneoccasion in ayearto the same or differeflt party, the tax shall beleviab]e on each such occasion'
Explanatio[ L- For the puposes of this section, the transfer ofproperty in goods or lransfer ofdght to
use any goods for any purpose (whether or not for a specified period) shal1 be deemed to have taken p lace
in silikim if the goods transfened are within the state at the time oflheil sansler or use application oI
appropriation for the execr]tion ofworks contract, inespective olthe place where the agreement for the
works contact is made and whether the consent ofthe othel pafiy, priol or subsequent to such use,
application or appropriation has been obtained or oot'
Explanation II.- The levy of tax under this section shall be made whether the works rontrrrt is
executed fully or partly during a year or abandoned or terminated befoE completion
(5) Every person making any payment to contractors executing the works contract shail deducl
such amountinthe form and manner as maybeprescribed as the tax deducted at sourceat
two per cent or not exceeding eight per cent of the said amount' as the state Govemmentmay
bY noiifi carion.detrrmine
14. Out-put teL{'
(1) Output tax in relation to aregistered dealer means the t&x payabie undel this Act in respect of
any sale ofSoods by th4t dealer in the course ofhis business'
(2) Subjectto the prcvisions ofsection 20, adealer shall be liable to pay the output tax under this
Act which shall be levied on the taxable tumover at the rates specified in the Schedules under
section 12
I puttax -
lnput Tax in relation to a registered deaier means &e tax charged under this Act by the selling
dealer to such deaier on the sale to him of any goods for lesale or use in mnnufacturing or
proces'ing olgoods for sale
15.
t4
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16. Compoundillg oftax liability in certain cases -
(1) Nolwithstanding anything to the contrary contained in this AcL tl'le State Govemment may' by
notificaiion andsubjectlo such conditions andiestdctioDs as may beprescribed' permitany
c]assollegisleleddealelswhosegfosstumoveldoesnotexceedthelimitspecit.iedinthe
notificaiion lo pay in licu offie lax payable by them. an amount calculated at such rate not
excecdiog tbur'percent ofhis gross tlnnover as may be specified in the notil'lcadon issued in
rfl. behi{[:
Provideal that no such Pcrmission shall be granted to a manufacturer or a person who impo s any
goods lrom any place outsidij the State for tl'le puryose ofhis businessl
provided fufiher that rhe amount so specitied shall be in addition to any tax that may be payable
by the dealer under section 10.
(2) Dealers to whom the provisions ofsub-seclion (i) apply shall'-
(a) nolcharge any tax or the saleofgoods specified in Schedule I
(b) not charge in excess ollhe rates specified in the nolification issued under sub-section ( lJ'
and
(c) rotbeentitled to issuetax invoices in respectofsales effected by them
(3) Ifreasonable groundsexists tobelieve thal the deal er was noteligible Lopaytax al afixedrate
under sub-seclion (1), the assessing authority shall' withoutp'ejudlce to any action which is or
may be taken under section 81, impose a pcnalty equivalent to three times the amount oftax
arrived al after applying the rate specified under section l2 to the gross turnover ofthe dealer
after deducting ti'le value ofsales ofgoods mentioned in Schedule I ofthat sectionl
provided thatno orderunderthis sub-section shallbe passed without giving the dealer a rcasonable
opportunity olbcing head.
1?. Compounding oftax liahility in c'se of Works Contract
(l) Nolwithstanding anything conlained in sections 9' 11' 12 or 13' every contractor rcfened to in
clause (xi) ofsection 2 may, subject to such restrictions and conditions and in such rnanner as
may be prescribed' at his option, instead ofpaying tax in accoldance wjlh section 12 pay' 0n
the totallalue ofeach ofthe works contnct executed by him, a lump sum tax' by way of
15
composition, attherateoftwo pelrentorat such rcte notexceeding litteen percent, as thc
5nte L,overnment mry. ltom trme tu l' nc. by rtutirii.rtion. spccrty:
Provided that in case ofcancellation ofthe permission gLanted tbr payment 0f lumpsum tax by wlly
ofcomposition, the provisions olsections 9. 10, 11 and 12 and rules made thereunder shall apply.
A contr actor, exercising option under sub-sectio,1(1) shall, so long as the option remarns rn
folce, not be required to maintain accounts ofhis business underthis Actorlhe rules made
tliereunderexcept the records in original of the wor-ks contract, extent oftheirexeculion and
payments received or receivable in rclation to sllch works conlract executed or under execution.
The State Govefinentrnay plescribe thatevery person or any specif'1ed class ofpersons,
making any payment 1o contaclor who has exercised option underthis section. shall deduct
towards paymentoflump sum ta-r, by way ofcornposition at the prescribed late or mtes fuoln
the contl actor on account ofthe works contracl executed by him and remit the amounts so
deducted to the State Golernment.
lfany personfailsto deductorhaving dedocledlails to remil tothe State Government widrin
the prescdbed time, the amountdedlrctible under sub-section (l ) and sub-section (3), shall be
liable tbrpenaity ofa sum notexceeding twice Lhe amount deductible.
The amountdeductjble and actuallydeductcd under s ub-section (3) anclsub-sectiou (4) shdl
be deemed to be a tax for the pu[ose ofthe Sikkim (Co]iection ot'Taxes and Prevenlion ot'
Evasion of Payment of?rxes) Act, 1987 (7 of 19E7).
The assessing authority may,1br the purpose olascertaining the deduction ol paymenl ol't.x ill
appropriate manner and tbr evaluation thercof, rcqllire any contractor, including a conractor
not registered under this Act, to produce before him any oftherclevani documents maintained
by the contactorand or to fun]ish any jnfolmation connected with thc wor'ks executed by
such conl.actor', subject to sub-section (2) ofthis sectlon, and the conractor shall comply with
such requirementi.
Subject as aforesaid, the relevant documents shall, at all reasonable times, be open to inspec t ion,
search ard seizure, ifneed be, by the assessing authodty or any percon rppoirted lo assist him
under sub-section (3, ol5ection J. E
:
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(3)
(6)
(2)
(4)
(5)
(7)
t6
18. Information of awarding of Worl(s Contract.
(1) Any person enleri n g r n to eny contract or lelter of in tent wilh any contraclor fol lrallsfer oi
property in goods (whether as goods or some olher fonn) nlvolved in the execution ofworks
contracl shall lurnish within filieen days fiom the date ofs,gning olthe contract or letter of
inlentsuch information as may he prescribed.lo the a-ssesslng authoily underwhosejudsdiclion
the conlractor's place ofbusiness is situated.
(2) Fallure to do so shallentaila penally not excecding five hundred rupees pelday ofdefault alter
allording such percon a reasonable opporlunity ofbeing heard.
19. Deduction oftax at source from the paymeDt to dealer
(1) Nolwiihstanding anltl'ring contained in any other Iaw or contact to the confary any person or'
any specji'ie.l class ofpersons rcsponsible io pay eny sum to any de erforsaleorsupplies
made Lr! itto the Stale or Ccntfal Government including depallmcnt ofother States situaled
in Sikkim. anl localbody, any authority orcorporation established by ot underastalule and
any Statc or Central Govemlnent undel taking shall, at the lime ofcredit ofsuch sum to lhe
account ofthe dealer or at the time ofpayment thereofin cash or by cheque or drafl or any
orhermode. dcdrrct the amounl oftax from the bills or invoices, at the rate ormtes as specified
in the Schedules under Scction 12.
(2) Theamountoftax so deducted shall be deemed tobethe amount oftax collected by the
dealerfrorn thestatc or Cenral Government Depa menls lr aforesaid organizaiions or
authorilies, as the cane may be, within the nreaning ofsection 8.
(3) Whilc rraking deduction under sub-section (l)' the deducting autl]ority shallgl-anta cedificale
to thedealer in the prescribed forln and shall send a copy lhereofto the concemed assessing
aulhodty within whoseiurisdiction such saleorsupply is made.
(,1) The clealcr shallfurnish an authenticated copy ofsuch ceftifcale to lhe concemed assessing
aulhodty alongwith lhe ieturns as proofofpayment of tax
(5) The amount deducted from the bills o. invoices shallbc deposited to the credii ofthe Stare
Govelnment within filteen days from the date oisuch deductions jn such fotm or r:hallan or
through book adjrlstmentas may beprescibed
(6) The dech-rcting aulhcriry shallsupply a copy ofthe form o1 challan or documenl ofhooks
a.ljuslment. as the case may be, showing the detaiis ofdedr.jtion oftax to the concemed
i$sessing authodty.
l1
(7) The reminance or deposit ofdeducted tax to the creditofthe StateCovernment shall be
adjusted by the concemed assessing aulhority towa]ds the tax liability ofthe dealer and sl'rall
constitute a good ard sufficient discharge of the liability of the deducting authodty to the dealer
10 the extent ofthe amount remitted 01 deposited.
(8) Ifmy person fails to deduct, orhaving deductcd, fails toremit to the State GoventDent wilhin
the stipulated time, the amountdeduolible under sub-section (l), he shall be liable tbr penalty
ofa sun not exceeding twicethe amoLlni dcductible:
Provided that no penalty underthis sub-section shall be irrposcd unless arcasonable opportrnily
oibe'ng heiLrtl rs given to such person.
(9) The amount de.duclible andactually deducted under sub-section (1) and pen:rlty levied under'
sub-section (8) shall be deemed to be a tax for the purpose ofthe Sikkim (Colleodon oflhxes
and Prcvention of EvasioD ofPayment ofTaxes) Act, 1987.
20. Tax payable -
(1) The net tax payable by a registered dealer Ior a qualter shall be the difftrence betwcen the
output tax, if any, and the irpLrt tax, which can be determined fiom the fbllowing tbrmula:-
Ner rax pxyable = lO+P-l ,
Where 'O' denotes the output tax payable for iny tax petlod rs detelmined undcr section 14,
'P'denoles the purchase tax paid by aregistered dealer for any ta,l peiod ls determinecl
under section 10 and 'l' denotes the input tax paid or payable for the said quafler as detcrnined
under section 15.
(2) The net tax payable by a dealer liable to pay tax but not registercd under this Act for a.luarter
shall be equai to the output tax payable for the said quarler as detemined under seclion l4-
(3) lf an amount calculated under sub-section ( L) is a negative quantum in a quanct-
(a) the same shall be adjusted against the tax liability, ifany, under the CentralAct, at the
option of the dealer for the said quater and only the remaining amount of Ccnlral Sales
T&x shall bepayable;or
(b) any amounl of credit rcmaining alier such adj uslment shztll be carried folward to lhe next
quarter
Explanation: In tlus section the expression "quafier" means a Period ofthree months ending on 30'r'June,
30'h September 3l" December or 31'' March in a Year.
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21. Inputtaxcredit
(l) Subjectlo the provisions ofthis Act, an input tax credit as provided iD this scctjon shallbe
clailned by a rcgistered dcalcr, subject to such conditions atd rcstrjctjons as may be prcscribed
on sale ofgoods in the circumstances specified below:-
(a) when a rcgistered dealer pulch ases any inputwithin the State ftont anothersuch dealer
afterpaying him the tax as specified undersection 12, he shallclaim creditot the said input
tax ir the nrannerprescdbed ifthe goods arc sold withi the State or in the course oflntei-
State taade and connrerce;
(b) when a registered dealer-
(i) purchases any inputwjthin the State lrom another such dealer allerpayinghim the tax
undersection 12, or
. (ii) putchaseq any inputandpays tax on such pur-chase un de:- section 10 oftl.le Actand
consumcssuch goods inthe manufacture ofany goods mentioned ilt Schedules lltoV
under section I 2, he shall clajtn credit ofth e said input tax in the manncr prescribed if
the goods so manufactuled aresold withjn the Stateorin the course oflnter- Staie
lraJc arrd cntrrne'cei
(c) rvhcn a registeled dealerpurchases any capitalgoods within the State liom another such
dealeralterpayinghimthetaxasspeciliedundersectioul2,orusesslrchgoodsiithe
rranufacture ofany goods mentioned in Schedules II loVundersectjon l2 andsells the
manufactured goods within the State or in the cou6e oflnter-State trade or commcrLrc or
otherwise, he shallclaim and be allowed, in such lnanneras tnay be prescribed, creditof
theamountofsuch tax;
(d) when aregistered dealcrholds anystoc

Excerpt shown. Open the full act in Lexace.

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