GOVERNMENT OF KARNATAKA (DEPARTMENT OF COMMERCIAL TAXES)

Whereas the draft of the Karnataka Value Added Tax Rules, 2005 proposed to be made was published as required by sub-section (1) of the section 88 of the Karnataka Value Added Tax Act, 2003 (Karnataka Act 32 of 2004) in notification No.FD 54 CSL 2005, dated 16^th March, 2005, in the Karnataka Gazette (Extraordinary) No.389, dated 16^th March, 2005, inviting objections or suggestions from all the persons likely to be affected thereby, within 10 days from the date of its publication.  
And, whereas the said Gazette was made available to the public on 16^th March, 2005. 
And, whereas the objections and suggestions received by the Government have been considered. 
Now, therefore in exercise of the powers conferred by section 88 of the Karnataka Value Added Tax Act, 2003 (Karnataka Act 32 of 2004), the Government of Karnataka hereby makes the following rules, namely.-

1. They shall come into force on the First day of April, 2005.

1. “Local VAT office” or “VAT sub-office” means an office specified by the Commissioner to function so in respect of such dealer or class of dealers as may be specified;

(ix) “VAT Sub-officer” means a Commercial Tax Officer in charge of a VAT Sub-office.

TURNOVER, REGISTRATION AND PAYMENT OF SECURITY

(g) All amounts realized by sale by a dealer of his business as a whole.
(h) All amounts collected by way of tax under the Act;
(i) The turnover in respect of which the dealer’s agent has paid tax, and the dealer has furnished a certificate in Form VAT 140.
(j) All amounts separately collected in tax invoices as commission under the provisions of the Agricultural Produce Marketing (Regulations) Act, 1966, by a commission agent:
Provided that the tax is not separately charged for and collected in the tax invoices on such commission.
(k) All amounts received or receivable by way of interest on the unpaid amount payable in respect of goods delivered on hire purchase or on any system of payment by instalments, where such interest is specified and charged for by the dealer separately without including such amounts in the price of the goods delivered and does not exceed twenty percent per annum on the amount remaining unpaid.
(l) All amounts actually expended towards labour charges and other like charges not involving any transfer of property in goods in connection with the execution of works contract including charges incurred for erection, installation, fixing, fitting out or commissioning of the goods used in the execution of a works contract.
(m) Such amounts calculated at the rate specified in column (3) of the Table below towards labour charges and other like charges as incurred in the execution of a works contract when such charges are not ascertainable from the books of accounts maintained by a dealer.  

Sl. No.	Type of contract	Labour and like charges as a percentage of the value of the contract
(1)	(2)	(3)
1.	Installation of plant and machinery	Fifteen per cent
2.	Installation of air conditioners and air coolers	Ten per cent
3.	Installation of elevators (lifts) and escalators	Fifteen per cent
4.	Fixing of marble slabs, polished granite stones and tiles (other than mosaic tiles)	Twenty five per cent
5.	Civil works like construction of buildings, bridges, roads, etc.	Thirty per cent
6.	Construction of railway coaches on under carriages supplied by Railways	Thirty per cent
7.	Ship and boat building including construction of barges, ferries, tugs, trawlers and draggers	Twenty per cent
8.	Fixing of sanitary fittings for plumbing, drainage and the like	Fifteen per cent
9.	Painting and polishing	Twenty per cent
10.	Construction of bodies of motor vehicles and construction of trucks	Twenty per cent
(1)	(2)	(3)
11.	Laying of pipes	Twenty per cent
12.	Tyre re-treading	Forty per cent
13.	Dyeing and printing of textiles	Forty per cent
14.	Any other works contract	Twenty five per cent

Explanation – I: Where the turnover of a dealer claiming deduction under clause (l) in any tax period is not sufficient to cover the deduction, it shall be allowed to the extent of the turnover of the dealer in that period, and the balance shall be carried forward to the following tax period or any subsequent tax period.
Explanation – II: For the purpose of clause (l), “labour and other like charges” include charges for obtaining, on hire or otherwise, machinery and tools used in the execution of a works contract, charges for planning, designing and architects' fees, cost of consumables used in the execution of the works contract, cost of establishment to the extent relatable to supply of labour and services and other similar expenses relatable to supply of labour and services.
Explanation - III: For the purpose of clause (l), gross profit earned by a dealer shall be apportionable to the value of the goods and labour and other like charges involved in the execution of a works contract in the same ratio as in the total turnover.

submit an application in Form VAT 1 for registration to the jurisdictional Registering Authority in whose area the principal place of business of the dealer is located, accompanied by a fee of five hundred rupees;

(ii) make an application for registration, signed and verified as specified in the application and every person signing and verifying such application shall  furnish two copies of his recent photograph in passport size along with the application and shall also furnish such photograph once in every five years;
(iii) if he is a casual trader or a non-resident dealer, submit the application in Form VAT 1 before commencement of his business; and
(iv) where the details in his Form VAT 1 change at any time, as specified under Section 28, submit an application in Form VAT 3, showing the amendments to such details within thirty days of the date such changes took effect.
5.If the registered dealer has more than one place of business, he shall submit a further application in Form VAT 5a to the jurisdictional Registering Authority, along with Form VAT 1 if the additional place of business exists at the time of submission of application for registration and in other cases within ten days from the opening of additional place of business.
6. If the registered dealer is a partnership firm or an association of persons, it shall submit a further application in Form VAT 5b to the jurisdictional Registering Authority.
7. The Registering Authority shall review each application for registration to ensure that it contains all the information required and acknowledge receipt of the application.
8. (1) Where the Registering Authority is not satisfied that the particulars contained in the application are correct and complete, he shall reject the application for reasons to be recorded in writing, after giving the dealer an opportunity of showing cause in writing against such rejection.
(2) The Registering Authority may demand a security as prescribed under rule 23 before issuing a certificate of registration.
9. (1) The Registering Authority shall assign a registration number or Taxpayers Identification Number (TIN) to the dealer and issue a certificate of registration in From VAT NIF to him, and also certified copies of such certificate for any additional place of business.
(2) The Commissioner shall, authorize any Local VAT officer or VAT sub-officer to issue a certificate of registration with an assigned registration number to the Central or any State Government, statutory or local authority specified under sub-section (4) of section 25 for the purposes of the collection and payment of tax.
10.Where a certificate of registration is lost or destroyed, a certified copy of the registration certificate shall be issued by the jurisdictional Registering Authority on a written request by the registered dealer.
11.(1) Every dealer shall display his certificate of registration in a prominent location at his main place of business, and certified copies shall be displayed at his any additional place of business.
(2) Every registered dealer who closes any of his additional places of business shall report such closure and surrender the certified copy of the certificate of registration issued to such additional place of business to the jurisdictional Registering Authority.
12. (1) Where a dealer liable to get registered under section 22, has failed to do so, the Registering Authority of the area shall proceed to register such dealer under section 24 after conducting such survey, inspection or inquiry as specified in sub-rules (2), (3) and (4) and after giving the dealer a reasonable opportunity of being heard.  
(2) The Registering Authority may inspect the offices, shops, business premises, godown, vessels, receptacles or vehicles belonging to the dealer and may also conduct inquiry as he may consider necessary for the purposes of determining the taxable turnover of the month or year.
(3) The Registering Authority may visit the business premises of the dealer including any place or receptacle or vehicle where the dealer has stored his goods and obtain stock inventory of the goods held in stock and on that basis arrive at the approximate stock value of the goods taking into consideration of the prevailing market rates or the purchase invoices if any produced.
(4) The Registering Authority may also record the daily sales particulars as per the books of accounts maintained and produced and if the books of accounts are not produced or if the particulars recorded in the books of accounts, in the opinion of the Registering Authority are not true and correct, he may proceed to estimate the same on the basis of any other material which he considers relevant.
  (5) The Registering Authority may proceed to estimate the taxable turnover in a month or year for the purpose of registration either on the basis of daily sales particulars or on the basis of stock value whichever he considers more relevant.
13.(1) Every registered dealer, otherthan a dealer falling under sub-section (7), (8) or (9) of Section 22, may submit a written request, together with a final return in Form VAT 115, to the Registering Authority to cancel his registration where in the previous twelve consecutive months his total or taxable turnover did not exceed the threshold as specified under Section 22, and such request shall be made within twenty days after the end of such period.  
(2) Every registered dealer who either sells or discontinues his business shall submit a written request, together with a final return in Form VAT 115, to the Registering Authority to cancel his registration, and such request shall be made within fifteen days after such event.  
14. Any dealer who was voluntarily registered may submit a written request to cancel his registration only after two years have passed from the effective date of the registration, and such request together with a final return in Form VAT 115, shall be made within twenty days after the end of such period.
15.(1) Where a registered dealer carrying on business as an individual enters into a partnership, he shall report the fact to the Registered Authority, together with a final return in Form VAT 115, within fifteen days of his entering into such partnership, requesting cancellation of his registration, and make an application for a new registration of the partnership under rules 4     and 6.
(2) Where a registered dealer is a partnership, any change including dissolution, shall be reported to the Registered Authority, within fifteen days of such change, and in the case of dissolution, a request made for cancellation of the registration together with a final return in Form VAT 115.
(3) The heirs of a deceased registered dealer shall submit a written request, together with a final return in Form VAT 115, to cancel the registration within thirty days from the date of death.
16.Every dealer or any other person who requests cancellation of any registration issued shall surrender the certificate of registration together with any certified copies issued to the jurisdictional Registering Authority.
  17.If the Registering Authority is satisfied that a dealer who submitted a request to cancel his registration is no longer obliged to be registered, or on the death of any registered dealer, he may cancel the dealer’s registration, with effect from the day following the last day of the tax period in which he determined that the dealer was no longer obliged to be registered or any subsequent date to be determined by him or the day of death of the registered dealer and inform the dealer in Form VAT 11, together with a notice in Form VAT 210 demanding payment of any tax or interest due.
18.Subject to the provisions of rules 19 and 20, the Registering Authority shall cancel the registration of any dealer, after providing an opportunity of being heard.-
  (i) whose total turnover does not exceed the threshold specified in section 22, but excluding a dealer liable for registration under sub-sections (7), (8) and (9) of section 22, whether a request for cancellation was made or not, with effect from the day following the last day of the tax period in which the taxable sales were discontinued or any subsequent date to be determined by him; and
  (ii) who issues tax invoices without effecting any taxable sales, from the date such dealer discontinued effecting  taxable sales, even where his total turnover of exempt goods exceeds the threshold specified in section 22.
  19.The Registering Authority shall not cancel the registration of any dealer if he has reasonable grounds to believe that the dealer will engage in taxable sales within a period of twelve months following the date on which the dealer’s taxable sales were discontinued and shall inform the dealer if any written request has been made for cancellation of registration.
  20. A dealer, whose registration is cancelled in accordance with the above rules, and where deductions were made for the tax paid on inputs on all the taxable goods in his possession, shall be treated as if he had sold such goods, and the sale of these taxable goods shall be deemed to have been completed on the effective date of the cancellation of the dealer’s registration and in exchange for the equivalent of the prevailing market price of the goods on such date.
21.       For purposes of rule 20, goods shall be considered to be in the possession of the dealer when they are available for sale or for any other use by the dealer.
22.       The duties and obligations imposed by the Act and these rules on any registered dealer shall not be affected by the cancellation of his registration, to the extent that they are necessary to recover the tax due and obtain any information for which the dealer was responsible during the period of his registration.
 
Payment of security
23.(1) The Registering Authority may, subject to sub-rule (2), demand from any dealer a security as specified under section 26 in a sum not exceeding the limits specified in rule 24, after giving the dealer the opportunity of showing cause in writing against such demand.
(2) The Government or the Commissioner may, by notification, fix the amount of security in the case of specified categories of dealers.
24.Where a dealer is required to pay a security, the amount payable shall not exceed.-
(1) if he has opted to pay tax by way of composition under section 15, an amount equivalent to the tax anticipated to be payable by him in a two months period, and
(2) in other cases, an amount equivalent to the tax anticipated to be payable by him in a three months period.
25. A security may be furnished by the dealer.-
(1) by depositing with the Registering Authority, Government securities for the amount fixed by the said authority; or
(2) by furnishing to the said authority a guarantee from a Scheduled Bank as defined in the Reserve Bank of India Act, 1934, agreeing to pay the Government on demand, the amount of security fixed by the said authority; or
(3) by furnishing any other form of security as may be notified by the Commissioner.
26.The security paid under rule 23 shall be maintained in full until it is dispensed with by the jurisdictional Registering Authority on being satisfied that the reasons for its demand no longer exist, or until the registration certificate is cancelled, whichever is earlier.

ACCOUNTS AND DOCUMENTS
Obligation to issue a tax invoice

27. Every registered dealer shall issue a tax invoice when he sells taxable goods or exempt goods along with any taxable goods, as specified in section 29.
28.(1) A tax invoice shall be issued, even where generated by any mechanical device, with the original, marked “original-buyer’s copy”, delivered to the buyer and the copy, marked “seller’s copy”, retained by the registered dealer.
(2) On demand, another copy of the tax invoice, marked “transporter’s copy”, shall be issued to the buyer.
(3) A registered dealer shall not issue more than one tax invoice in respect of any sale, and may provide a duplicate, where the original of the tax invoice is lost or destroyed, with the declaration that it is a duplicate of such tax invoice.
29. A tax invoice shall contain the following details, namely:-

(i)the total value; and
(j) signature of the selling dealer or his agent.
Bills of sale
30.(1) A bill of sale as specified in section 29, issued by a registered dealer where the value of the goods sold is in excess of one hundred rupees, or a registered dealer selling non-taxable goods or a registered dealer selling goods in the course of inter-state trade or commerce or in the course of export out of the territory of India or import into the territory of India, shall contain the following details, namely.-
(a) a consecutive serial number with date of sale;

(2) A bill of sale shall, on demand, be issued in duplicate, even where generated by any electronic or mechanical device, with the original, marked “original”, delivered to the buyer and the copy retained by the registered dealer.
(3) Every registered dealer who buys goods from a person other than a registered dealer shall raise a bill recording such transaction containing the following details, namely.-
  (a) a consecutive serial number with date of purchase;
(b) the name and address of the seller; and
(c) a description of the goods with its value.
 
Credit and Debit Notes
31.Where a registered dealer has given a tax invoice in respect of a sale of goods and thereafter the goods or any part thereof are returned to the seller if the sale is cancelled or for any other reason, or the value of the sale is altered, whether due to a discount or otherwise, he shall, subject to the provisions of section 30, give to the buying dealer a credit or debit note containing the following details, namely.-

32.(1) A credit or debit note shall be issued in duplicate, even where it is generated by any mechanical device, with the original, marked “original", delivered to the buyer and the copy retained by the registered dealer.
(2) A registered dealer shall not give more than one credit note or debit note in respect of the same adjustment, and may provide a duplicate, where the original of the debit note or the credit note is lost or destroyed, with the declaration that it is a duplicate of such credit or debit note.
 
Keeping of accounts and records
33.(1) Every registered dealer and every person liable to be registered under the Act shall keep and maintain a true and correct account of his daily transactions showing the goods produced, manufactured, bought and sold by him and the value thereof separately together with invoices and bills.
(2) Every such dealer or person shall keep separate purchase, sale and disposal accounts in respect of each commodity, whether taxable or not, dealt with by him.
(3) Every dealer shall maintain a VAT account containing details of input and output tax, together with credit and debit notes issued during any tax period.
(4) Every such dealer or person shall keep current books of accounts at the place or places of business entered on his certificate of registration, and every purchase and sale shall be brought to account as soon as the purchase or sale is made.
(5) The registers, accounts and documents maintained shall be sequentially numbered, and where the registers and other documents are maintained by means of a computer or any other similar mechanical device, the dealer shall maintain copies in paper of such registers and other documents printed on a monthly basis.
(6) Any entry in such registers, accounts and documents shall not be erased, effaced or overwritten, and all incorrect entries shall be scored out under attestation and correct entry recorded and where the registers, accounts and documents are maintained by means of a computer or any other similar mechanical device, the dealer shall also maintain a record of correction or change of any entry.
(7) For the purpose of sub-rule (4), current books of accounts shall include computer hardware and software used in connection with business activities of the dealer or person.
(8) The accounts maintained by dealers together with all invoices, bills, declarations, way bills and delivery notes relating to stocks, deliveries, purchases, output and sales shall be preserved by them for the time specified under section 32 or for any further period as may be notified by the Commissioner and shall be kept at the place of business, mentioned in the registration certificate.
(9) Every commission agent, broker, del credere agent, auctioneer or any other mercantile agent shall maintain accounts showing.-
(a) particulars of authorization received by him from each principal to purchase or sell   goods on behalf of each principal separately;
(b) particulars of goods purchased or goods received for sale on behalf of each principal each day;

(d) details of accounts furnished to each principal each day; and
(e) the tax paid on purchases or on sales effected on behalf of each principal and the challan number and date of remittance of the tax into the Government Treasury.
(10) Every purchasing agent shall keep particulars of the names and addresses of the dealers or persons from whom he purchased the goods, and every selling agent shall keep the particulars of the names and addresses of the dealers or persons to whom he sold the goods.
(11) Every wholesale dealer, importer, exporter and manufacturer shall maintain monthly stock accounts in respect of each commodity dealt with by him, and such stock account shall contain particulars of purchases or receipts, sales, deliveries and balance of stock.
(12) Every manufacturer of goods shall maintain monthly production of accounts, showing quantitative details of the various raw materials used in the manufacture and the quantitative details of the goods so manufactured.
(13) Every dealer who is required to maintain stock accounts shall maintain subsidiary accounts for each godown if there is more than one godown for keeping his stocks.
(14) Every dealer or person executing works contract shall keep separate accounts showing.-
(a) the particulars of the names and address of the persons for whom and on whose behalf he carried on the execution of works contact in respect of each works contract;
(b) the particulars of goods procured by way of purchase or otherwise for the execution of works contact;
(c) the particulars of goods to be utilized in execution of each works contract; and
(d) the details of payment received in respect of each works contract.
(15) Every dealer or person engaged in the transfer of a right to use any goods shall keep.-
(a) particulars of the names and addresses of the persons to whom he delivered the goods for use;
(b)details of amounts received in respect of each transaction; and
(c) monthly stock accounts in respect of each commodity dealt with by him and such stock account shall contain particulars of purchases or receipts, deliveries and balance of stock.
(16) Every dealer claiming exemption on his turnover under sub-section (2) of section 8 shall retain for every tax period a declaration in Form VAT 140 obtained from the registered dealer who sold the taxable goods relating to such turnover on his behalf and the selling agent shall issue the declaration to his principal within ten days from the end of the month in which such goods were sold.
(17) Every dealer claiming deduction of input tax on goods purchased on his behalf by any other registered dealer shall retain for every tax period a declaration in Form VAT 145 obtained from the registered dealer who purchased the taxable goods on his behalf and also the tax invoices in original relating to such purchases, and the purchasing agent shall issue the declaration and furnish the tax invoices to his principal within ten days from the end of the month in which such goods were purchased.
(18) Any officer authorized by the Commissioner to make an assessment under section 38 or to exercise powers under sub-section (1) of section 52, shall exercise powers under sub-section (2) of section 31.
34.(1) Every registered dealer who is, not a company defined under the Companies Act, 1956 (Central Act 1 of 1956) or a company incorporated outside India and required to have his accounts audited under sub-section (4) of section 31 shall have his accounts audited by a Tax Practitioner enrolled under rule 163 for a period of not less than three years or under section 36 of the Karnataka Sales Tax Act, 1957 (Karnataka Act 25 of 1957) for a period of not less than three years on the date of such audit or by a Chartered Accountant.
(2) Every other registered dealer who is required to have his accounts audited under                 sub-section (4) of section 31 shall have his accounts audited by a Chartered Accountant.
(3) The audited statement of accounts shall be submitted in Form VAT 240 to the jurisdictional Local VAT officer or VAT sub-officer within six months after the end of the relevant year.
35. Any Officer requiring any dealer to produce before him the accounts and other documents or to furnish any information relating to his business under subsection (1) of section 52 shall serve upon the dealer a notice in Form VAT 275.

RETURNS, STATEMENTS, ASSESSMENTS, PAYMENT AND RECOVERY
Furnishing returns and statements
36 .For the purposes of this Part, “net value” shall mean.-
(1) with respect to sales within the State, the aggregate of amounts mentioned in clauses (a) to (e) of sub-rule (1) of rule 3, less deductions specified in sub-rule (2) of rule 3, excluding that mentioned in clause (d);
(2) with respect to sales in the course of inter-state trade or commerce, the turnover as determined under the provisions of the Central Sales Tax Act 1956 (Central Act. 74 of 1956) ;
(3) with respect to goods transferred or despatched outside the State, otherwise than by way of sale, their value less any cost of freight, insurance and similar charges, accounted for by the dealer in the document of transfer;
(4) with respect to sales of goods in the course of export out of the territory of India, or imported into the territory of India, their value less any cost of freight, insurance and similar charges, accounted for by the dealer in the bill of sale; and
(5) with respect to purchases or receipts of goods other than by way of purchase, their value on which tax is charged by the seller or their value less any cost of freight, insurance and similar charges, mentioned on the document of transfer.
37.The tax period for every registered dealer, other than those dealers opting for payment of composition of tax, shall be one calendar month or such period as specified by the Registering Authority under section 35.  
38. (1) Every registered dealer shall submit a monthly return, containing particulars of net values of sales, purchases and other transactions, including input and output tax claimed or collected and net tax relating to all of his places of business, and accompanied by proof of full payment of any tax due, to the jurisdictional Local VAT officer or VAT sub-officer in Form VAT 100 within twenty days after the end of the relevant tax period.
(2) Every department of Government, statutory or local authority shall submit a monthly return, as specified in sub-rule (1), to the jurisdictional Local VAT officer or VAT sub-officer or to such Local VAT officer or VAT sub-officer as may be notified by the Commissioner where such body is located in areas falling under more than one Local VAT officer or VAT sub-officer. 
(3) The tax indicated in the return shall be due on the twenty first day after the end of the relevant tax period.
(4) As long as any dealer remains registered, he shall submit such monthly return, whether or not any tax is due for any tax period.
(5) The Government may notify any Bank or appoint any intermediary in respect of any class of dealers as responsible for receipt of returns along with payment of tax or any other amount due under the Act electronically or otherwise, subject to such conditions as may be specified.
(6) Any registered dealer furnishing a revised return under sub-section (4) of section 35 shall do so in Form VAT 110.
(7) A dealer may also submit a return electronically to the jurisdictional Local VAT Officer or VAT sub-officer or to a Bank or any intermediary appointed by the Government, subject to such procedure as specified.
39.(1) Where any return submitted is apparently incomplete or incorrect, the jurisdictional Local VAT officer or VAT sub-officer shall issue a notice in Form VAT 150 requiring the dealer to submit a complete or correct return within ten days of issue of the notice.
(2) Any dealer not submitting a complete or correct return within the time specified under sub-rule (1), shall be liable to a penalty under section 72 and any interest due.
40. Where any return is not accompanied by proof of full payment of the tax due in accordance with rule 41, the jurisdictional Local VAT officer or VAT Sub-officer may issue a notice in Form VAT 210 informing the dealer to pay the outstanding tax due, together with interest payable under section 36.
41.Where any dealer submits a return after the due date, and also where a dealer submits a revised return in Form VAT 110, such return shall be accompanied by proof of payment of the interest due under section 36.
42.Any dealer required to furnish a final return as specified under sub-section (4) of section 27 shall do so in Form VAT 115.
43. (1) Every casual trader shall submit to the jurisdictional Local Vat Officer or VAT Sub-officer, a monthly return in Form VAT 100 along with proof of full payment of tax due, within ten days after the end of any month.
(2) Where a casual trader stops his occasional transactions during the course of a month he shall submit to the jurisdictional Local VAT Officer or VAT Sub-officer, a monthly return in Form VAT 100 along with proof of full payment of tax due, within seven days of the completion of the last transaction.
(3) Where a casual trader conducts occasional transaction or transactions of a business nature in the area under the jurisdiction of Local VAT Officer or VAT Sub-officer and leaves such jurisdiction, he shall before leaving and immediately following the closure of the said transaction submit to the Local VAT Officer or VAT Sub-officer concerned a final return in Form VAT 115 along with proof of full payment of tax due.
44. (1) (a) Every Department of a Government, statutory body or a local authority, when they collect tax under the provisions of section 9, shall submit a monthly return in Form VAT 100 to the jurisdictional Local VAT officer or VAT Sub-officer, together with proof of full payment of the tax due in accordance with rule 52, within twenty days after the end of the relevant month. 
(b) Where any return is not accompanied by proof of full payment of the tax due in accordance with rule 52, the jurisdictional Local VAT officer or VAT Sub-officer may issue a notice in Form VAT 210 informing the concern to pay the outstanding tax due, together with interest payable under section 36.
(2) (a) Every authority, when they deduct tax under the provisions of Section 9-A, shall submit a monthly statement in Form VAT 125 to the jurisdictional Local VAT officer or VAT sub-officer, together with the proof of full payment of tax deducted in accordance with rule 52, within twenty days after the end of the relevant month.
(b) Where the amount remitted to the Government Treasury for any month is less than the amount of tax deducted at source for that month or where, default is made in complying with provisions of sub-section (5) of Section 9-A, the amount payable for any month shall be determined by the jurisdictional Local VAT officer or VAT Sub-officer, to the best of judgement of such authority, after providing an opportunity of being heard to the tax deducting authority and it shall serve upon the concerned tax deducting authority a notice in Form VAT 210 which shall pay the sum demanded in the said notice within the time and in the manner specified in the notice.
(3) (a) The certificate referred to in Section 9-A shall be in Form VAT 156 and shall be obtained by the tax deducting authority from the jurisdictional Local VAT officer or VAT Sub-officer, on payment of one hundred rupees per book of fifty forms or two rupees per form.
(b) The Certificate in Form VAT 156 shall be issued within fifteen days from the end of the month in which deduction was made.
(c) Every such form so obtained by the tax deducting authority shall be kept by it in safe custody and it shall be personally responsible for the loss, destruction or theft of any such form or the loss of revenue to the Government, resulting directly or indirectly from such loss, destruction or theft.
(d) Every tax deducting authority issuing certificates in Form VAT 156 shall maintain for each year separately an account showing the amounts of tax deducted certificates of tax deduction issued, and the particulars of remittances made into the Government Treasury in Form VAT 157.
(e) If any Form VAT 156 is lost, destroyed or stolen, the tax deducting authority shall report the fact to the issuing authority within a week of such loss, destruction or theft and shall make appropriate entries in the register maintained in Form 157 and take such other steps including the furnishing of an indemnity bond and issue of public notice of the loss, destruction or theft as the issuing authority may direct.
(f) Any tax deducting authority which has obtained Form VAT 156 shall not either directly or through any other person transfer the same to another person.
(g) As soon as a report is received from the tax deducting authority regarding loss, destruction or theft of Form VAT 156, the issuing authority shall, within ten days, report to the jurisdictional Joint Commissioner of Commercial Taxes and shall also take action to notify such loss, destruction or theft in the Official Gazette.
(h) The register maintained in Form VAT 157 along with Form VAT 156 shall be open for inspection by the issuing authority or by an Officer of the Commercial Taxes Department authorized by the Commissioner.  
Assessments
45. (a) The Commissioner may authorize any officer to make an assessment under the provisions of sub-sections (1) and (2) of section 38.
(b)The Commissioner may authorize any officer to make a protective assessment under sub-section (5) of section 38.
46. The Commissioner may authorize any officer to make a re-assessment under section 39.
47. (1) Where a dealer is a body corporate and has more than one place of business and if it so desires, the Commissioner may on an application from it and on being satisfied that the provisions of sub-rule (1) of Rule 38 are likely to cause hardship by a special order, permit each branch to be assessed separately by the jurisdictional Local VAT officer or VAT sub-officer in which the main place of business of such dealer is situated, as a separate business; and such permission shall be subject to the provisions of the Act and rules relating to registration, filing of returns, assessments, payments and recovery of tax or other amounts due and subject to the conditions that.-
(i) the tax payable under any of the provisions of the Act by each of such branch together with other places of business in the State shall not, be less than the tax that would have been payable by him under any of such provisions of the Act, if such branch was not treated as a separate unit under sub-section (6) of Section 38;
(ii) every branch shall get registered as required under these rules irrespective of its total turnovers in any year being less than the turnovers specified in Section 22; and
(iii) every branch shall be assessed to tax under the Act, irrespective of the amount of turnover of such branch being less than the minimum specified in Section 22, as such rate or rates as applicable.
(2) Where, upon completion of the assessments of all the branches, if the dealer proves to the satisfaction of the Commissioner that the aggregate of the total turnover of all such branches in the State did not exceed the turnovers specified in Section 10, the Commissioner may, direct the jurisdictional Local VAT officer of VAT sub-officer to rectify the assessment order and refund the amount of tax paid by the dealer.
48. Where a Department of a Government, statutory body or a local authority furnishes a return, the officer authorized by the Commissioner in this behalf may inspect the accounts of the Department, statutory body or local authority to verify the correctness of the return and if the return is found incorrect, he shall direct the Department, statutory body or the local authority concerned, to rectify the mistake.
49. (1) Where a driver or person-in-charge of a goods vehicle does not comply with sub-section (2) of section 54, the owner of such vehicle shall be assessed to tax on the value of the goods carried at the rates applicable to such goods under the provisions of the Act and such assessment shall be issued in Form VAT 245.
(2) Before making an assessment under section 54, the owner of the vehicle shall be given a reasonable opportunity of showing cause against such assessment.
(3) When making any assessment under section 54, the owner of the vehicle may also be directed to pay, in addition to the tax assessed, the penalty levied under sub-section (5) of section 54.
(4) The tax and penalty levied under section 54 shall be, payable upon service of a notice in Form VAT 340, and the owner of the vehicle shall pay the sum demanded within the time and the manner specified in the notice.
(5) The authority for the purpose of sub-section (4) of section 54 and this rule shall be, the officer in charge of the first check post or barrier, or any other officer empowered to issue the transit pass under sub-section (1) of section 54.
Payment
50.(1) (a) The tax or any other amount under the Act or these rules shall be paid by the dealer or any other person, in cash, by postal order, money order, crossed cheque or crossed demand draft, in favour of the Registering Authority or the jurisdictional Local VAT officer or VAT sub-officer or any other authorized officer, or by remittance into the Government Treasury or the State Bank of India or its associate Bank or any other Bank approved by the Reserve Bank of India and specified by the Government, on a tax challan in Form VAT 152.
(b) Where any payment is made by cheque, such cheque shall be as prescribed under the Karnataka Financial Code.
(2) The tax or any other amount under the Act or these rules may also be paid by the dealer or any other person, by electronic remittance to the Assessing Authority or the State Bank of India or its associate Bank or any other Bank approved by the Reserve Bank of India and specified by the Government.
51. If a cheque presented by a dealer towards payment of tax or other amount due under the Act or these Rules is dishonored for want of adequate financial cover on two occasions in any year, the dealer, shall not thereafter be permitted to make payment by means of a cheque for such time as the jurisdictional Local VAT officer or VAT sub-officer in its discretion specifies, after being given a reasonable opportunity to show cause against such action.
52.(1) (a) Every payment made under the Act or under these rules into a Government Treasury or the State Bank of India or the Reserve Bank of India, shall be accompanied by a tax challan in  Form VAT 152 or Form VAT 153 in the case of payment under sub-section (5) of Section 9-A, whichmay be obtained from any Government Treasury or at any Local VAT office or VAT sub-office.
(b) Challans shall be filled up in triplicate, and the copies marked ‘original’ and ‘duplicate’ shall be returned, duly receipted, to the dealer or any person as proof of payment, of which the copy marked ‘duplicate’ shall be attached by him to the return to be submitted to the relevant authority, and the third copy marked ‘triplicate’ shall be retained by the Treasury.
(2) (a) Every payment made under the Act or under these rules into the State Bank of India or its associate Bank or any other Bank approved by the Reserve Bank of India and specified by the Government, shall be accompanied by a tax challan in  Form VAT 152 or Form VAT 153 whichmay be obtained from any Local VAT office or VAT sub-office or the Bank.
(b) Challans shall be filled up in quadruplicate, and the copies marked ‘original’ shall be returned to the dealer duly receipted as proof of payment, and such copy marked as ‘duplicate’ shall be sent along with the statement or return to the Assessing Authority by the Bank, and the copy marked ‘triplicate’ shall be sent to the Treasury by the Bank and the copy marked ‘quadruplicate’ shall be retained by the Bank.
53.(1) Any dealer may apply in Form VAT 155 to the authority provided in sub-rule (2), and subject to the conditions specified in sub-rule (4) and (5), for permission to pay any amount due under the Act in instalments.
(2) The dealer may apply, within twenty one days from the date on which any tax or other amount becomes due, to.-
(a) the Commissioner, where the sum in relation to which instalments are sought is rupees twenty five lakh or less, or the period within which the sum is sought to be paid does not exceed  twenty four months; and
(b) the Government in other cases.
(3) The authority empowered under sub-rule (2) may relax the specified time limit in cases where adequate justification is furnished by dealer in respect of the delay involved.
(4) The dealer shall be liable to pay interest on the tax or other amount due at the rate specified under section 37 during such period of delay involved and during the period between the time limit specified in sub-rule (2) and the date of order permitting such amount to be paid in instalments, and the sum for which instalments are sought shall be deemed to include interest so payable.
(5) The conditions referred to in sub-rule (1) shall be.-
(a) that the dealer is unable to pay the sum for which the instalment facility is sought, for reasons beyond his control;
(b) that the dealer furnishes adequate security to the satisfaction of the jurisdictional Local VAT officer or VAT sub-officer for the recovery of the sums in relation to which instalments are sought; and
(c) that the dealer pays along with each instalment, and in addition to the sums permitted to be paid in instalments, interest at the rate of fifteen per cent per annum on the sums remaining unpaid at such time.
(6) The authority to whom an application has been made under this rule may, at its discretion and after making such enquiry as deemed necessary, by an order in writing, permit a dealer to pay the tax or other sums due for which the application under sub-rule (1) is made in such instalments, at such intervals and subject to such conditions as may be specified in its order.
(7) If any condition mentioned in sub-rule (5) is contravened or a default is made in making payments in accordance with any order passed under sub-rule (6), the whole of the sum remaining unpaid on the date of such default shall become recoverable at once in a lump sum together with interest in accordance with the provisions of the Act.
54.(1) Where the Government has permitted an eligible industrial unit for deferment of tax under section 42, such deferment of tax shall be.-
(a) given to that eligible industrial unit as certified by the Director of Industries and Commerce or his nominee;
(b) restricted to the tax payable on the sale of goods manufactured by such industrial units; and
(c) restricted to such amounts and such period as specified in the relevant Government Order.
(2) The officer authorized by the Commissioner in this behalf may verify the validity of any certificate or claims relating to the tax concession.
(3) The tax referred to in sub-rule (1) shall include any tax payable according to any assessment, re-assessment, appeal or revision under the provisions of the Act.
(4) The jurisdictional Joint Commissioner of Commercial Taxes shall issue a 'Certificate of Entitlement' in Form VAT 160 regarding the deferment of any tax payable by an industrial unit.
(5) The amount of tax deferred shall be paid by the industrial unit after the expiry of the deferred period in such instalments as specified in the Certificate.
(6) The tax deferred under the provisions of this rule shall be immediately recoverable at any time prior to the expiry of the period of deferment if the unit contravenes any of the provisions of the relevant Government Order or the conditions of the Certificate of Entitlement, or if the Certificate is cancelled or revoked by the issuing authority.
(7) The Government may permit, by an order, an industrial unit to pay deferred tax within the specified deferred period at a discounted rate as may be specified.

Recovery
55. In this Part, unless the context otherwise requires,
(1) ‘Certificate’ means a certificate received by the Tax Recovery Officer.
(2) ‘Defaulter' means the dealer or any other person named in the certificate;
(3) ‘Execution’ in relation to a certificate, means recovery of arrears in pursuance of the certificate;
(4) ‘Movable property’ includes growing crops;
(5) ‘Share in a corporation’ includes stock, debentures or bonds;
(6) ‘Tax Recovery Officer’ means any officer authorized by the Commissioner to exercise powers under clause (b) of sub-section (9) of section 42 in respect of such cases as specified in rule 54.
56.(1) Where a dealer or any other person is in default, or is deemed to be in default, in making a payment of tax or any other amount due under the Act, the authority concerned may forward to the jurisdictional Tax Recovery Officer a certificate in Form VAT 345 and such Tax Recovery Officer shall be,-
(a) a Commercial Tax Officer where the amount due does not exceed fifty   thousand rupees;
(b) an Assistant Commissioner where the amount due exceeds fifty thousand rupees but does not exceed two lakh rupees; and
(c) a Deputy Commissioner in all other cases. 
(2) The authority concerned shall forward a certificate in Form VAT 345, in respect of any additional amount that becomes due in cases where a certificate in Form VAT 345 has already been issued and the amount due covered by such certificate is not recovered fully, to the Tax Recovery Officer to whom such certificate was forwarded earlier notwithstanding that the additional amount or total amount due exceeds the limit specified in sub-rule (1).
(3) The Tax Recovery Officer, on receipt of the certificate in Form VAT 345, shall proceed to recover from such defaulter the amount specified therein in accordance with the provisions in this Part.
(4) The authority concerned may issue a certificate under sub-rule (1) notwithstanding that, proceedings for recovery of the amount by any other mode has been taken.
57. When a certificate has been received by the Tax Recovery Officer, he shall cause to be served upon the defaulter a notice in Form VAT 350 requiring the defaulter to pay the amount specified in the certificate forthwith in the case where the amount has become due on an assessment made under sub-section (5) of section 38, and in other cases within fifteen days from the date of service of the notice.
58. (1) The certificate shall not be executed until the period of fifteen days has elapsed since the date of the service of the notice, other than where the amount which has become due is on an assessment made under sub-section (5) of section 38.
(2) Where the Tax Recovery Officer is satisfied that the defaulter is likely to conceal, remove or dispose of the whole or any part of such of his movable property as would be liable to attachment or distraint in execution of a decree of a Civil Court, and that the realization of the amount of the certificate would in consequence be delayed or obstructed, he may at any time, for reasons to be recorded in writing, attach to or distrain on the whole or any part of such property.
(3) If such defaulter furnishes security to the satisfaction of the Tax Recovery Officer, such attachment or distraint shall be cancelled from the date on which such security is accepted by the Tax Recovery Officer.
59. If the amount mentioned in the notice is not paid within the time specified therein, the Tax Recovery Officer shall proceed to realize the amount by.-

60.There shall be recoverable in the proceedings in execution of every certificate.-

(a) the service of notice upon the defaulter to pay the arrears, warrants and other processes, and
(b) all other proceedings taken for realizing the arrears.
61.(1) Where property is sold in execution of a certificate, there shall vest in the purchaser merely the right, title and interest of the defaulter at the time of the sale, even though the property itself is specified.
(2)Where immovable property is sold in execution of a certificate, and such sale has become absolute, the purchaser's right, title and interest shall be deemed to have vested in him when the property is sold, and not from the time when the sale becomes absolute.
62.No suit shall be maintained against any person claiming title under a purchase certified by the Tax Recovery Officer in the manner laid down in this Part on the ground that the purchase was made on behalf of the plaintiff or on behalf of some one through whom the plaintiff claims.
63.(1) Whenever assets are realized, by sale or otherwise in execution of a certificate, the amounts so realized shall.-
(a) first, cover the costs incurred by the authority concerned;
(b) next, be paid to the authority concerned for the amount due under the certificate in execution of which the assets were realized;
(c) next, be paid to the authority concerned for any other amount due   under the  Act or these rules; and
(d) any balance, be paid to the defaulter.
(2) If the defaulter disputes any claim made by the authority concerned to receive any amount referred to in clause (c) above, the Tax Recovery Officer shall resolve the dispute.
64.(1) Except as otherwise expressly provided in the Act and these rules, every question arising between the authority concerned and the defaulter or their representatives relating to the execution, discharge or satisfaction of a certificate, or relating to the confirmation or setting aside of a sale held in execution of such certificate, shall be resolved by the order of the Tax Recovery Officer before whom such question arises.
(2) A suit may be brought in a Civil Court in respect of any such question upon the ground of fraud.       
65.(1)All such property as is by the Code of Civil Procedure, 1908 (5 of 1908), exempted from attachment and sale in execution of a decree of a Civil Court, shall be exempted from attachment or distraint and sale under this Part.
(2) The Tax Recovery Officer's decision as to what property is entitled to exemption shall be final.
66.(1)Where any claim is preferred, or any objection is made to the attachment, distraint or sale of any property in execution of a certificate, on the ground that such property is not liable to such attachment, distraint or sale, the Tax Recovery Officer shall proceed to investigate the claim or objection.
(2) The Tax Recovery Officer shall not investigate where he considers that the claim or objection was itself deliberately or unnecessarily delayed.
(3) Where the property to which the claim or objection applies has been advertised for sale, the Tax Recovery Officer ordering the sale may postpone it pending the investigation of the claim or objection, upon such terms, security or otherwise.
(4) The claimant or objector must adduce evidence to show that.-
(a) in the case of immovable property, on the date of the service of notice issued under this Part, to pay the arrears, or
(b) in the case of movable property, on the date of the distraint or attachment,
he had some interest in, or was in possession of, the property in question.
(5) Where, upon investigation, the Tax Recovery Officer is satisfied   that, for the reason stated in the claim or objection, such property was not, on the said date, in the possession of the defaulter or of any other person on his behalf or that, being in the possession of the defaulter at the said date, it was in his possession, not on his own account or as his own property, but on account of or in trust for any other person, or partly on his own account and partly on account of some other person, the Tax Recovery Officer shall make an order releasing the property, wholly or to such extent as he thinks fit, from distraint or attachment or sale.
(6) Where the Tax Recovery Officer is satisfied that the property was, on the said date, in the possession of the defaulter as his own property and not on account of any other person, or was in the possession of some other person in trust for him, or in the occupancy of a tenant or other person paying rent to him, the Tax Recovery Officer shall disallow the claim.
(7) Where a claim or an objection is preferred, the party against whom an order is made may institute a suit in a Civil Court to establish the right which he claims to the property in dispute, but subject to the result of such suit, the order of the Tax Recovery Officer shall be final.
 
67.Where,
(1) the amount due with costs and all charges and expenses, resulting     from the attachment to or distraint on any property, or incurred in order to hold a sale, are paid to the Tax Recovery Officer, or
(2) the certificate is cancelled,
the attachment or distraint shall be deemed to be withdrawn, and in the case of immovable property, the withdrawal shall, if the defaulter so desires, be proclaimed at his own expense, and a copy of the proclamation shall be affixed in the manner provided by this Part for a proclamation of sale of immovable property.
68.(1)Any deficiency of price which may happen on a resale, by reason of the purchaser's default, and all expenses resulting from such resale, shall be certified by the Tax Recovery Officer and shall, at the instance of either the authority concerned or the defaulter, be recoverable from the defaulting purchaser under the procedure provided under this Part.
(2) An application filed after fifteen days from the date of resale shall not be entertained.
69.(1)  The Tax Recovery Officer may, in his discretion, adjourn any sale hereunder to a specified day and hour.
(2) Where a sale of immovable property is adjourned under sub-rule (1) for a longer period than one calendar month, a fresh proclamation of the sale under this Part shall be made, unless the defaulter consents to waive it.
(3) Every sale shall be stopped if, before the lot is knocked down, the arrears and costs, including the costs of the sale, are paid to the Tax Recovery Officer.
70.(1) Where a notice has been served on a defaulter under rule 56, the defaulter or his representative in interest shall not be competent to mortgage, charge, lease or otherwise deal with any property belonging to him, except with the permission of the Tax Recovery Officer, nor shall any Civil Court issue any process against such property in execution of a decree for the payment of money.
(2) Where an attachment has been made under this Part, any private transfer or delivery of the property attached or of any interest therein and any payment to the defaulter of any debt, dividend or other monies contrary to such attachment, shall be void as against all claims enforceable under the attachment.
71.Any officer or other person having any duty to perform in connection with any sale under this Part shall not, either directly or indirectly, bid for, acquire or attempt to acquire any interest in the property sold.
72.  A sale under this Part shall not take place on a Sunday or other general holidays recognized by the State Government or any day which has been notified by the State Government to be a local holiday for the area in which the sale is to take place.
73. The Tax Recovery Officer may apply to the officer-in-charge of the nearest police station for such assistance as may be necessary in the discharge of his duties, and the authority to whom such application is made shall depute a sufficient number of police officers for furnishing such assistance.
Attachment or distraint and sale of movable property
74.The Tax Recovery Officer, attaching to or distraining on any movable property, shall prepare a warrant in Form VAT 355 specifying the name of the defaulter, and the amount to be realized and cause a copy of the warrant to be served on the defaulter. 
75.If, after service of the copy of the warrant, the amount is not paid forthwith, the Tax Recovery Officer shall proceed to attach to or distrain on the movable property of the defaulter.
76.(1) Where any movable property, other than agricultural produce, proceeded against is in the possession of the defaulter, it shall be seized, and the Tax Recovery Officer shall keep the property in his own custody or the custody of one of his subordinates or arrange for its safe custody, and shall be responsible for due custody thereof.
(2) Where the property seized is subject to speedy and natural decay, or where the expense of keeping it in custody is likely to exceed its value, the Tax Recovery Officer may sell it forthwith.
77.Where the property proceeded against is agricultural produce, it shall be attached by affixing a copy of the warrant.-
          (1) on the land on which such crop has grown, if such produce is a  growing crop; or
(2) on the threshing floor, the place for treading out grain or the like, or fodder-stack, on or in which it is deposited, if such produce has been cut or gathered,
and another copy on the outer door or on some other conspicuous part of the house in which the defaulter ordinarily resides, or on the outer door or on some other conspicuous part of the house in which he carries on business or personally works for gain, or in which he is known to have last resided or carried on business or personally worked for gain, and the produce shall thereupon be deemed to have passed into the possession of the Tax Recovery Officer.
78.(1)Where agricultural produce is distrained, the Tax Recovery Officer shall make such arrangements for the custody, watching, tending, cutting and gathering thereof, and the authority concerned shall bear such amount as the Tax Recovery Officer shall require in order to defray the cost of such arrangements.
(2) Subject to such conditions as may be imposed by the Tax Recovery Officer in this behalf, either in the order of attachment or in any subsequent order, the defaulter may tend, cut, gather and store the produce and do any other act necessary for maturing or preserving it and, if the defaulter fails to do all or any of such acts, any person appointed by the Tax Recovery Officer in this behalf may, subject to the like conditions, do all or any of such acts, and the costs incurred by such person shall be recoverable from the defaulter as if they were included in the certificate.
(3) Agricultural produce attached as a growing crop shall not be deemed to have ceased to be under attachment or to require re-attachment merely because it has been severed from the soil.
(4) Where an order for the attachment of a growing crop has been made at a considerable time before the crop is likely to be fit to be cut or gathered, the Tax Recovery Officer may suspend the execution of the order for such time as he thinks fit, and may, in his discretion, make a further order prohibiting the removal of the crop pending execution of the order of attachment.
(5) A growing crop which is not fit for storing shall not be attached under this rule within twenty days before the time at which it is likely to be fit to be cut or gathered.
79.(1) A debt not secured by a negotiable instrument, a share in a corporation, or other movable property not in the possession of the defaulter except for property deposited in, or in the custody of, any Court, shall be attached, and the attachment shall be made by a written order in Form VAT 360 prohibiting.-
(a) in the case of a debt, the creditor from recovering the debt and the  debtor from making payment thereof until receipt of a further order from the Tax Recovery Officer;
(b) in the case of a share, the person in whose name the share may be standing from transferring the same or receiving any dividend thereon;
(c) in the case of any other movable property, the person in possession of the same from giving it to the defaulter.
(2) A copy of such order shall be affixed on some conspicuous part of the office of the Tax Recovery Officer, and another copy shall be sent, in the case of debt, to the debtor, and in the case of shares, to the proper officer of the corporation and in the case of other movable property, to the person in possession of the same.
(3) A debtor, prohibited under clause (a) of sub-rule (1), may pay the amount of his debt to the Tax Recovery Officer, and such payment shall be deemed as paid to the defaulter.
80.(1) Where the property proceeded against is a decree of a Civil Court for the payment of money or for sale in enforcement of a mortgage or charge, it shall be attached, and attachment shall be made by the issue of a notice in Form VAT 365 to the Civil Court requesting the Civil Court to stay the execution of the decree unless and until.-
(a) the Tax Recovery Officer cancels the notice; or
(b) the authority concerned or the defaulter applies to the Court receiving such notice to execute the decree.
(2) Where a Civil Court receives an application under clause (b) of sub-rule (1), it shall, on the application of the authority concerned or the defaulter, and subject to the provisions of the Code of Civil Procedure, 1908 (5 of 1908), proceed to execute the attached decree, and apply the net proceeds in satisfaction of the certificate.
(3) The authority concerned shall be deemed to be the representative of the holder of the attached decree and to be entitled to execute such attached decree in any manner lawful for the holder thereof.
81. Where the property proceeded against consists of the share or interest of the defaulter in movable property belonging to him and another as co-owner, it shall be attached and the attachment shall be made by a notice in Form VAT 370 to the defaulter prohibiting him from transferring the share or interest or charging it in any way.
82. Where the property is a negotiable instrument not deposited in a Court or in the custody of a public officer, it shall be distrained by the Tax Recovery Officer.
83.(1) Where the property proceeded against is in the custody of any Court or public officer, it shall be attached and the attachment shall be made by a Tax Recovery Officer by a notice in Form VAT 375 to such Court or officer, requesting that such property, and any interest or dividend becoming payable thereon, should be held subject to his further orders.
(2) Where such property is in the custody of a Court and a question of title or priority arising between the authority concerned and any other person not being the defaulter, claiming to be interested in such property by virtue of any assignment, attachment or otherwise, shall be determined by such Court.
84.(1) Where the property proceeded against consists of an interest of the defaulter being a partner in the partnership property, the Tax Recovery Officer may make an order charging the share of such partner in the partnership property and profits with such payment of the amount due under the certificate, and may, by the same or subsequent order, appoint a receiver of the share of such partner in the profits, whether already declared or accruing, and of any other money which may become due to him in respect of the partnership, direct accounts and enquiries and make an order for the sale of such interest or such other order as the circumstances of the case may require.
(2) The other partners shall be at liberty at any time to redeem the interest charged or, in the case of a sale being directed, to purchase the same.
85. In the case of distraint, the property seized shall be, as far as possible, proportionate to the amount specified in the warrant.
86. In the case of distraint of movable property by actual seizure, the Tax Recovery Officer shall, after seizing the property, prepare an inventory of all the property attached, specifying in it the place where it is lodged or kept, and a copy of the inventory shall be delivered to the defaulter.
87. Attachment by seizure shall be made after sunrise and before sunset and not otherwise.
88. The Tax Recovery Officer may break open any inner or outer-door of any building and enter any building in order to seize any movable property, if he has reasonable grounds to believe that such building contains movable property liable to seizure under the warrant and he has notified his authority and intention of breaking open if admission is not given, and he shall give all reasonable opportunity to women to withdraw.
89. The Tax Recovery Officer may direct that any movable property attached or distrained under this Part, or such portion thereof as may seem necessary to satisfy the certificate, shall be sold.
90. When any sale of movable property is ordered by the Tax Recovery Officer, he shall issue a proclamation in Form VAT 380 in the language of the District where the intended sale taxes places, specifying the time and place of sale and whether the sale is subject to confirmation or not.
91.(1) A proclamation under rule 90 shall be made public by the beat of a drum or other customary mode,
(a) in the case of property distrained.-
(i) in the village in which the property was seized or, if the property was seized in a town or city, in the locality in which it was seized; and
(ii) at such other places as the Tax Recovery Officer may direct; and
(b) in the case of property attached other than by distraint, in such  places as the Tax Recovery Officer may direct.
(2) A copy of the proclamation shall also be affixed in a conspicuous part of the office of the Tax Recovery Officer.
92. Except where the property is subject to speedy and natural decay or when the expense of keeping it in custody is likely to exceed its value, no sale of movable property under this Part shall, without the consent in writing of the defaulter, take place until after the expiry of at least fifteen days from the date on which a copy of the sale proclamation was affixed in the office of the Tax Recovery Officer.
93.(1) When the property to be sold is agricultural produce,
(a) sale shall be held if such produce is a growing crop, on or near the land on which such crop has grown; or
(b) sale shall be held if such produce has been cut or gathered, at or near the threshing floor or place of treading out grain or the like, or fodder-stack on or in which it is deposited; or
(c) the Tax Recovery Officer may direct that the sale to be held at the nearest place of public resort, if he is of opinion that the produce is thereby likely to sell to greater advantage.
(2) Where, on the produce being put up for sale.-
(a) a fair price in the estimation of the Tax Recovery Officer is not  offered for it; and
(b) the owner of the produce, or a person authorized to act on his behalf, applies to have the sale postponed till the next day or, if a market is held at the place of sale, the next market day,
the sale shall be postponed accordingly, and shall be then completed, whatever price may be offered for the produce.
94.(1) Where the property to be sold is a growing crop and such crop is fit for storing but is not stored, the day of sale shall be so fixed as to make the crop ready for storing before the arrival of such day, and the sale shall not be held until the crop has been cut or gathered and is ready for storing.                                              
(2) Where the crop is not fit for storing or can be sold to a greater advantage in an unripe state, it may be sold before it is cut and gathered, and the purchaser shall be entitled to enter on the land, and to do all that is necessary for the purpose of tending or cutting or gathering the crop.
95.   The property shall be sold by public auction in one or more lots as the Tax Recovery Officer may consider advisable and, if the amount to be realized by sale is satisfied by the sale of a portion of the property, the sale shall be immediately stopped with respect to the remainder of the lots.
96. (1) Where movable property is sold by public auction, the price of each lot shall be paid at the time of sale or as soon after as the Tax Recovery Officer directs and, in default of payment, the property shall forthwith be re-sold.
(2) On payment of the purchase money, the Tax Recovery Officer shall grant a certificate specifying the property purchased, the price paid and the name of the purchaser and the sale shall become absolute.
(3) Where the movable property to be sold is a share in goods belonging to the defaulter and a co-owner, and two or more persons, of whom one is such co-owner respectively, bid the same sum for such property or for any lot, the bidding shall be deemed to be the bidding of the co-owner.
97.Any irregularity in publishing or conducting the sale of movable property shall not vitiate the sale, but any person sustaining substantial injury by reason of such irregularity at the hands of any other person may institute a suit in a Civil Court against him, for compensation, or if such other person is the purchaser, for the recovery of the specific property and for compensation in default of such recovery.
98.Notwithstanding anything contained in this Part, where the property to be sold is a negotiable instrument or a share in a corporation, the Tax Recovery Officer may, instead of selling it by public auction, sell such instrument or share through a broker.
99.Where the property attached to or distrained on is current coins or currency notes, the Tax Recovery Officer may, at any time during the continuance of the attachment or distraint, direct that such coins or notes, or a part thereof sufficient to satisfy the certificate, be paid over to the authority concerned.
Attachment and sale of immovable property
100.Attachment of the immovable property of the defaulter shall be made by an order inForm VAT 385 prohibiting the defaulter from transferring or charging the property in any way and prohibiting all persons from taking any benefit under such transfer or charge, and a copy of the order of attachment shall be served on the defaulter.
101.The order of attachment shall be proclaimed at some place on or adjacent to the property attached by beat of drum or other customary mode, and a copy of the order shall be affixed on a conspicuous part of the property and on the notice board of the office of the Tax Recovery Officer.
102.Where any immovable property is attached under this Part, the attachment shall relate back to, and take effect from, the date on which the notice to pay the arrears, issued under this Part, was served upon the defaulter.
103. (1) The Tax Recovery Officer may direct that any immovable property which has been attached or such portion thereof as may seem necessary to satisfy the certificate, shall be sold.
(2) Where any immovable property is ordered to be sold, the Tax Recovery Officer shall cause a proclamation, in Form VAT 390 of the intended sale, to be made in the language of the district.
104. A proclamation of sale of immovable property shall be made after notice to the defaulter, and shall state the time and place of sale and shall specify, as fairly and accurately as possible,-
(1) the property to be sold;
(2) the revenue,  assessed upon the property or any part thereof;
            (3) the amount for recovery of which the sale is ordered; and
(4) any other thing which the Tax Recovery Officer considers is                                                                      material for a purchaser to know, in order to judge the nature and value of property.
105.(1) Every proclamation for the sale of immovable property shall be made at some                                       place on or near such property by beat of drum or other customary mode, and a copy of the proclamation shall be affixed on a conspicuous part of the property and also on a notice-board at the office of the Tax Recovery Officer.
(2) Where the Tax Recovery Officer so directs, such proclamation shall also be published in the Official Gazette or in a local newspaper, or in both, and the cost of such publication shall be deemed to be part of the costs of the sale.
(3) Where the property is divided into lots for the purpose of being sold separately, it shall not be necessary to make a separate proclamation for each lot, unless proper notice of the sale cannot, in the opinion of the Tax Recovery Officer, otherwise be given.
106. A sale of immovable property under rule 103 shall not, without the consent in writing of the defaulter, take place until after the expiration of at least thirty days calculated from the date on which a copy of the proclamation of the sale has been affixed on the property or in the office of the Tax Recovery Officer, whichever is later.
107. The sale shall be by public auction to the highest bidder and shall be subject to confirmation by the Tax Recovery Officer.
108. (1) On every sale of immovable property, the person declared to be the purchaser shall pay, immediately after such declaration, a deposit of twenty five per cent of the amount of his purchase money, to the Tax Recovery Officer, and in default of such deposit, the property shall forthwith be resold.
(2) The full amount of purchase money payable shall be paid by the purchaser to the Tax Recovery Officer on or before the fifteenth day from the date of the sale of the property.
109. In default of payment within the period mentioned in sub-rule (2) of rule 108, the deposit shall, after defraying the expenses of the sale, be forfeited to the Government by the Tax Recovery Officer, and the property shall be resold, and the defaulting purchaser shall forfeit all claims to the property or to any part of the sum for which it may subsequently be sold.
110. All persons bidding at the sale shall be required to declare if they are bidding on their own behalf or on behalf of their principals, and in the latter case, they shall be file their authority, and in default, their bids shall be rejected.
111.(1) Where immovable property has been sold in execution of a certificate, the defaulter, or any person whose interests are affected by the sale, may at any time within thirty days from the date of the sale, apply to the Tax Recovery Officer to set aside the sale, on his depositing,-
(a) for payment to the authority concerned, the amount specified in the   proclamation of sale  for the recovery of which the sale was ordered, with interest thereon at the rate of six percent per annum calculated from the date of the proclamation of sale to the date when the deposit made; and
(b) for payment to the purchaser, as penalty, a sum equal to five per cent of the purchase money .
(2) Where a person makes an application under rule 112 for setting aside the sale of his immovable property, he shall not, unless he withdraws the application, be entitled to make or pursue an application under this rule.
112. (1) Where immovable property has been sold in execution of a certificate, the authority concerned, the defaulter or any person whose interests are affected by the sale, may, at any time within thirty days from the date of sale, apply to the Tax Recovery Officer to set aside the sale of the immovable property on the ground that notice was not served on the defaulter to pay the arrears as required by this Part or on the ground of a material irregularity in publishing or conducting the sale.
(2) A sale shall be set aside on any such ground, if the Tax Recovery Officer is satisfied that the applicant has sustained substantial injury by reason of the non-service or irregularity.
(3) An application made by a defaulter without depositing the amount recoverable from him in execution of the certificate shall be disallowed.
113.  At any time within thirty days of the sale, the purchaser may apply to the Tax Recovery Officer to set aside the sale on the ground that the defaulter had no saleable interest in the property sold.
114.(1) Where no application is made for setting aside the sale under the foregoing rules, or where such an application is made and disallowed by the Tax Recovery Officer, the Tax recovery Officer shall, if the full amount of the purchase money has been paid, make an order confirming the sale, and thereupon the sale shall become absolute.
(2) Where such application is made and allowed and where, in the case of an application made to set aside the sale on deposit of the amount and penalty and charges, the deposit is made within thirty days from the date of the sale, the Tax Recovery Officer shall make an order setting aside the sale.
(3) An order shall be made under sub-rule (2), after a notice of the application has been given to the persons affected thereby.
115. When a sale of immovable property is set aside, any money paid or deposited by the purchaser on account of the purchase, together with any penalty, deposited for payment to the purchaser, and such interest as the Tax Recovery Officer may determine, shall be paid to the purchaser.
116.(1) Where a sale of immovable property has become absolute, the Tax Recovery Officer shall grant a certificate in Form VAT 395 specifying the property sold, and the name of the person who, at the time of sale, is declared to be the purchaser.
(2) Such certificate shall state the date on which the sale became absolute.
117.(1) Where an order for the sale of immovable property has been made, if the defaulter can satisfy the Tax Recovery Officer that there is a reason to believe that the amount of the certificate may be raised by the mortgage or lease or private sale of such property, or some part thereof, or of any other immovable property of the defaulter, the Tax Recovery Officer may, on the defaulter’s request in writing, postpone the sale of the property comprised in the order for sale, on such terms and for such period as he thinks proper, to enable him to raise the amount.
(2) In such a case,-
(a) the Tax Recovery Officer shall grant a certificate to the defaulter, authorizing him, within a period to be mentioned therein, and notwithstanding anything contained in this Part, to make the proposed mortgage, lease or sale;
(b) all monies payable under such mortgage, lease or sale shall be paid, to the Tax Recovery Officer; and
(c) a mortgage, lease or sale under this Rule shall become absolute after it is confirmed by the Tax Recovery Officer.
118. Every resale of immovable property, in default of payment of the purchase money within the period allowed for such payment, shall be made after the issue of a fresh proclamation in the manner and for the period herein before provided for the sale.
119.Where the property sold is a share of undivided immovable property, belonging to the defaulter and a co-sharer, and two or more persons, of whom one is such co-sharer, respectively bid the same sum for such property or for any lot, the bid shall be deemed to be the bid of the co-sharer.
120. Every Tax Recovery Officer, or others acting under this Part, shall have the powers of a Civil Court while trying a suit, for the purpose of receiving evidence administering oaths, enforcing the attendance of witness and compelling the production of documents.
121.(1) An appeal from any original order passed by the Tax Recovery officer under this Part not being an order which is final, shall lie to the jurisdictional Joint Commissioner authorized by the Commissioner in this behalf.
(2) Every appeal under this rule must be made within thirty days from the date of the order appealed against.
(3) Pending the decision of any appeal, execution of the certificate may be stayed if the appellate authority so directs.
122.Any order passed under this Part may, after notice to all persons interested, be reviewed by the officer who made the order, or by his successor-in-office, on account of any mistake apparent from the record.
123. Where any person has, under this Part, become surety for the amount due by the defaulter, he may be proceeded against under this Part as if he were the defaulter.
124. Nothing in this Part shall affect any provision of the Act under which the tax is a first charge upon any asset.
125.(1) The provisions of the Act and these rules relating to recovery of tax, penalty and any other amount due under the Act, including the provisions of section 36, shall apply to payment and recovery of tax assessed and penalty levied under section 54.
(2) Where the tax assessed and penalty levied under section 54 is not paid within the time specified inForm VAT 340, the officer in charge of any check post shall, without prejudice to other modes of recovery, detain any goods vehicle belonging to such defaulter upon its entry into the State.
(3) The Officer-in-charge of the check post shall release the vehicle detained, upon production of proof of payment of the tax or penalty or both, due by the defaulter.
(4) Where the tax or the penalty or both, are not paid by such defaulter within ten days from the date of detention of the vehicle, the officer in charge of the check post may, after giving a notice on of not less than fifteen days to the defaulter, dispose of the vehicle in public auction and adjust the sale proceeds towards the tax and penalty, the excess amount shall, after deduction of the charges incurred for the sale, be refunded to the defaulter.
126. Any officer authorized under the Act to levy tax and penalty and demand any fee shall have the power to recover such tax, penalty and fee due together with any interest payable by exercising powers under section 45.
Adjustments and refunds
127. (1) Where any dealer, in whose case the input tax deductible relating to goods exported outside the territory of India exceeds the output tax payable by him as specified under sub-section (5) of section 10 on the basis of the return submitted for any month during a year or where any dealer, in whose case the input tax deductible exceeds the output tax payable by him on the basis of any final return submitted under sub-section (4) of section 27, seeks adjustment of such amount or any other such amount during the year, towards tax payable by him under the Act or the Central Sales Tax Act, 1956, or where he is found to be in arrear of tax for any tax period under this Act, the Karnataka Sales Tax Act, 1957, Central Sales Tax Act, 1956 or Karnataka Tax on Entry of Goods Act, 1979 or Karnataka Special Tax on Entry of Certain Goods Act, 2004, the jurisdictional Local VAT officer or VAT sub-officer shall make the adjustment sought , if found correct, or shall make his own adjustment towards the arrear of any tax found and shall issue a notice in Form  VAT 250, showing details of any adjustment made.
(2) Where in the case of any dealer other than a dealer claiming deduction of input tax relating to goods exported outside the territory of India during any month in a year, the input tax deductible, exceeds the output tax payable by him as specified under sub-section (5) of section 10 or the tax payable under the Central Sales Tax Act, 1956 on the basis of the return submitted for any month in a year, the jurisdictional Local VAT officer or VAT sub-officer shall adjust, such amount towards the arrear of any tax for any tax period under this Act, the Karnataka Sales Tax Act, 1957, Central Sales Tax Act, 1956 or Karnataka Tax on Entry of Goods Act, 1979 or Karnataka Special Tax on Entry of Certain Goods Act, 2004, and shall issue a notice in Form VAT 250, showing details of any adjustment made.
           128. (1) Where a dealer is eligible for refund of tax under sub-section (5) of section 10 on the basis of the return submitted for any month during a year in respect of any goods exported outside the territory of India after adjustment under sub-rule (1) of rule 127 or a dealer is eligible for refund on the basis of any final return submitted under sub-section (4) of section 27, the officer authorized by the Commissioner in this behalf shall proceed to issue to such dealer a refund payment order in Form VAT 255 sanctioning refund of such amount within thirty five days after the end of the month for which such return is furnished within the time specified under section 35 or within fifteen days from the date of receipt of such return if it is filed after the time specified for that month and any other subsequent month for that year in which the dealer is eligible for refund of tax on the basis of the return filed or within thirty five days from the date of receipt of such final return.
(2) In the case of any other dealer eligible for refund of tax under sub-section (5) of section 10 on the basis of the return submitted for the last month of any year, after adjustment under rule 127, the officer authorized by the Commissioner in this behalf shall proceed to issue to such dealer a refund payment order in Form VAT 255 sanctioning refund of any amount refundable, within thirty five days after the end of the last month of the year for which such return is furnished, within the time specified under section 35 or within fifteen days from the date of receipt of such return if it is filed after the time specified, declaring such amount as refundable after any adjustment.
(3) The Local VAT officer or VAT sub-officer may reject, within the time specified in sub-rule (1) or (2), any claim for refund if the claim filed appears to involve any mistake apparent on the record or appears to be incorrect or incomplete, based on any information available on the record, after giving the dealer the opportunity to show cause in writing against such rejection.
(4) In computing the period of thirty five days in sub-rule (1) or (2), there shall be excluded of the following periods under sub-section (3) of section 50, namely.-
(a) any delay attributable to the conduct of the person to whom the refund is payable;
(b) the time during which any reasonable inquiry relating to the return or claim was initiated and completed; and
(c) the time taken for adjustment under sub-section (2) of section 50 by the refunding authority of any tax, interest or other amount due.
(5) Where any amount refundable under sub-rule (1) is not refunded to the dealer within the period specified, the refund payment order in Form VAT 255 shall include the interest specified under section 50 covering the period following the end of the said period to the day of refund.
(6)The Local VAT officer or VAT sub-officer shall, if he is satisfied that any other refund is due to any person under the Act, by virtue of any order or proceeding, issue to such dealer a refund payment order in Form VAT 255 sanctioning refund of such amount together with payment of interest as provided under section 50.
(7) Where a refund payment order is issued, the officer shall simultaneously send a copy of such order to the Treasury Officer concerned or, where the cash transactions of the Government are handled by the Reserve Bank or any of its agency Banks, to the officer in charge of such Bank where the payment of the refund is to be made.
129.(1) The application to be submitted under section 47 shall be in Form  VAT 260.
(2) The person claiming refund shall enclose with the application copies of tax invoices duly certified by the dealer in respect of whom the order of forfeiture under section 47 is passed, and a certified copy of the order of forfeiture so passed.
(3) If the claim for refund relates to collection of tax by more than one dealer, separate application in respect of each of such dealer shall be made.
(4) On receipt of the application, if the Commissioner is satisfied, after holding such inquiry as he considers necessary, that the claim for refund is valid and admissible, he shall pass orders for such refund of the amount or any part thereof by the jurisdictional Local VAT Officer or VAT sub-officer.
130. (1) Any person claiming reimbursement of tax under section 21 shall make an application in Form VAT 165, to the Commissioner within sixty days from the date of purchase, together with copies of invoices.
(2) On receipt of the application, if the Commissioner is satisfied, that the claim for reimbursement is valid and admissible, he shall pass orders for such reimbursement of the amount or any part thereof by the jurisdictional Local VAT Officer or VAT sub-officer.
 

PARTIAL EXEMPTION, CAPITAL GOODS AND SPECIAL ACCOUNTING SCHEMES
Apportionment
131. Apportionment of input tax in the case of a dealer falling under section 17 shall be calculated as follows.-
(1) All input tax directly relating to sale of goods exempt under section 5 other than such goods sold in the course of export out of the territory of India, is non-deductible.
(2) All input tax directly relating to taxable sales may be deducted, subject to the provisions of section 11.
(3) Any input tax relating to both sale of taxable goods and exempt goods, including inputs used for non-taxable transactions, that is, the non-identifiable input tax, may be deducted, based on the following formula.-
Sales of taxable goods x non-identifiable input tax = deductible element of input tax.
Total sales                                                      
(including non-taxable transactions)
 
(4) For the purpose of clause (3),
(a) ‘Sale of taxable goods’ would be the aggregate of the amounts specified in clauses (b), (c), (d), (e) and (f) of sub-rule (1) of rule 3 relating to sale of goods other than those exempt under section 5 which are not sold in the course of export out of the territory of India; and
(b) “total sales” means total turnover less.-
(i) the amount specified in clause (a) of sub-rule (1) of rule 3, and
(ii) the deductions specified in clause (e) of sub-rule (2)   of rule 3.
(5) Where in the case of any dealer, the Commissioner is of the opinion that the      application of the formula prescribed under clause (3) does not give the correct amount of deductible input tax, he may direct the dealer to adopt a special formula as he may specify.

132.(1) Any dealer claiming input tax deduction under rule 131, shall complete his return on a provisional basis each month, and the true apportionment for the year shall be made in the returns to be furnished for the sixth and final months of the year after calculating the apportionment under clause (3) or (5) of rule 131 for the part period and the whole year.
(2) Where, under sub-rule (1), in any period of one month the total input tax due on a dealer’s non-taxable transactions does not exceed five hundred rupees, all such input tax in that period shall be treated as input tax on taxable sales.

Capital goods scheme
133. (1) A dealer claiming input tax under section 12, in respect of capital goods, as notified under clause (7) of section 2, shall, apply in Form VAT 170 to the jurisdictional local VAT officer or VAT Sub-officer within thirty days of commencement of commercial production or sale of taxable goods.
(2) The jurisdictional local VAT officer or VAT Sub-officer shall review such application to ensure that it contains all the information required and notify the dealer within one month of the date of receipt of the application that it was received within the prescribed time, and where it is not satisfied that the particulars contained in the application are correct and complete, and after giving the dealer a reasonable opportunity of being heard, it shall reject the application for reasons to be recorded in writing.
(3) The jurisdictional local VAT officer or VAT Sub-officer shall inform a dealer eligible for input tax rebate in Form VAT 175 within thirty days of receipt of an application which is correct and complete.
(4) Deduction of input tax under section 12 shall be subject to the following conditions.-
(a) In the case of a dealer selling goods in the course of export out of the territory of India and the capital goods are used for the sale of such goods, wholly or partially, and also used in the business the deduction shall be adjusted or refunded as spe