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DVAT New Composition Scheme for Small Restaurants, Hotels, Caterers and Sweet Shops (Delhi VAT)

September 11, 2018

New Composition Scheme for Small Restaurants, Hotels, Caterers and Sweet Shops under Delhi VAT (DVAT)

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BY CA. Ankit Gulgulia (Jain)

Vide Notification No.F.3(29)/Fin(Rev-1)/2015-2016/dsvi/93, Delhi State Government has notified new composition scheme for Small Restaurants, Hotels, Caterers and Sweet Shops under Delhi VAT (DVAT).

Who Can Opt for this Scheme

Every registered dealer whose turnover during the preceding year as well as the expected turnover during the current year does not exceed fifty lakh rupees and who is not making any sales other than that of ready to eat foods and non-alcoholic beverages including cooked food, snacks, sweets, savouries, juices, aerated drinks, tea and coffee etc. served in or catered indoors or outdoors by hotels, restaurants, sweet-stalls, sweet shops, clubs, caterers and any other eating houses.

Therefore any person who works strictly as above can avail this scheme. Further the turnover limit of 50 Lacs is clarifying that this scheme is only for small dealers. The Large dealers shall continue to be assessed in currently ongoing manner as per DVAT Provisions.

Note:- Condition of turnover during preceding year shall not apply to a dealer who commences his business during the current year. Hence in the first year any dealer of above nature of activities can adopt this scheme.

Rate of Composition Tax

5% of Entire Turnover

The Conditions to be Complied by the Dealer

1. Dealer cannot make purchases from or procuring goods from or making sales to or making supplies to any place outside Delhi;
2. Dealer cannot make purchases from a person who is not registered under the Act except in the case of goods specified in the First Schedule;
3. No input Tax Credit Available
4. Not calculate his net tax under section 11 of the Act;

Cannot Collect Tax amount

Not be entitled to issue `Tax Invoices’; and
Continue to retain the original copies of all tax invoices and all retail invoices for all his purchases and copies of all retail invoices issued by him in respect of his sales as required under section 48 of the Act.

Other Modalities of Scheme

A dealer who is paying tax under section 3 of the Act, can opt for payment of tax under this scheme by filing an application in Form RH 01 appended to this notification within a period of thirty days from the first day of the year with effect from which composition is opted.
A dealer applying for a fresh registration can also opt for this scheme by filing application in Form RH 01 appended to this notification alongwith his registration application in Form DVAT 04.
A dealer opting to pay tax under this scheme shall pay tax, at the rates specified in section 4 of the Act, on the value of the opening stock held by him on the first day from which he opts for this scheme and shall furnish the details of such opening stock in Form RH 02 appended to this notification along with proof of payment of due tax in Form DVAT 20, with his application in Form RH 01.
Once a dealer has opted to pay tax under this scheme, he shall, except under the circumstances described at Sl. No. (6) below, hot be eligible to withdraw his option before the end of the year for which opted to pay tax under this scheme.
A dealer who, having opted to pay tax under this scheme for a particular year, does not intend to opt for payment of tax under this scheme for the following year, shall, subject to the conditions contained in section 20 of the Act in so far as they are applicable and further subject to furnishing of intimation regarding withdrawal from this scheme in form RH 03 within thirty days from the end of the year for which opted to pay tax under this scheme, be eligible to claim credit of tax paid on the opening stock held by him on the first day of said following year.

General Conditions

All the provisions of the Act and the rules made thereunder which are not contrary to this scheme shall apply to every dealer opting to pay taxunder the scheme.
The tax period for the dealers opting to pay tax under this scheme shall be a quarter unless otherwise prescribed by the Commissioner for a dealer or class of dealers.
In view of the second proviso to sub-section (1) of section 16 of the Act a dealer who has already opted for composition scheme as per sub-sections (1) to (11) of section 16 and who is covered under the class of dealers described in column 1 of the above table, shall mandatorily withdraw from the composition scheme with effect from 1st April, 2016 by filing application in Form DVAT 03 upto 30th April, 2016. However, such dealers can opt for composition under this scheme as per the procedure explained above.
Notwithstanding anything contained in this notification, the Commissioner may notify, by a special or general order, that any or all of the forms appended to this notification shall be filed online.
Tax paid by a dealer under this scheme shall not be adjusted at any stage against the liability of the dealer to pay tax under section 3 of the Act for any period other than the period for which the dealer was eligible for paying tax under this scheme.
If the turnover of a dealer who opted to pay tax under this scheme exceeds fifty lakh rupees at any time during the year for which so opted, he shall be liable to pay tax under section 3 of the Act on and from the date his turnover exceeds fifty lakh rupees and he shall, subject to the conditions contained in section 20 of the Act in so far as they applicable and further subject to furnishing the intimation in Form RH 03 within seven days from the date on which turnover exceeded fifty lakh rupees, be entitled to claim credit of the input tax paid on opening stock held by him in Delhi on such day.
A dealer who has opted to pay tax under this scheme and has defaulted to furnish the returns for two consecutive tax periods by the prescribed due dates shall, with effect from the first day of the tax period immediately next to the latter tax period in respect of which the default has been committed
- cease to be liable to pay tax under this scheme,
- be liable to pay tax under section 3 of the Act.
Such a dealer shall, subject to the conditions contained in section 20 of the Act in so far as they applicable and further subject to furnishing the intimation in Form RH 03 within seven days after the end of due date prescribed for filing of return for the latter tax period in respect of which the default has been committed, be eligible to claim credit of the tax paid under this Act on the opening stock held by him in Delhi on the first day of the tax period immediately next to the latter tax period in respect of which the default has been committed.
In case a dealer has opted for this scheme but has failed to comply with the conditions specified therein or who, at any later stage, is found not eligible for having opted this scheme, all the provisions of the Act including the liability to pay tax under section 3, along with interest due for delay, if any, shall apply mutatis mutandis as if the dealer has never opted for this scheme.