Tax update 15th October 2013

e-sugam notification revised

1

The Karnataka Government has

released a new notification specifying

the documents that are to be carried for

all movement of goods to, from or

within Karnataka.

This new notification will apply for all

movement of goods taking place from

the 1st of November 2013 onwards.

The earlier notification will stand

withdrawn from this date.

2

Major Changes

E Sugam is now mandatory for the

following additional goods, for

despatches as a result of sale (if sale

value exceeds Rs. 20,000):

a. Cement b. Chemicals of all kinds c. Electronic goods of all kinds d. Lubricant Oil and Waste Oil e. Machinery and Parts f. Non Ferrous metals in all

forms g. Packing Material h. Readymade Garments i. Tea

3

The E Sugam form now contains some

additional fields such as the taxable

value of the goods, the amount of tax

collected and rate of tax.

E Sugam is also made mandatory for

receipt of the following additional

goods from outside the State:

a. Chemicals of all kinds b. Electronic Goods of all kinds c. Non Ferrous Metals d. Packing Materials e. Pepper f. Readymade Garments g. Tea

Notification No. ADCOM (I & C)/P.A./CR-31/2011-12 Office of the Commissioner of Commercial Taxes, Karnataka Dt. 09/10/2013

TSMT New E Sugam Notification

Effective from

1st November 2013

KVAT

2

7th Time that the E-sugam

notification is being

amended

Our View

Use the E-sugam for all

movement of goods

irrespective of whether it is

mandatory as per the

notification

1

Section 53(2) of the Karnataka Value

Added Tax Act, 2003 specifies that

certain documents shall accompany a

goods vehicle and empowers the

Commissioner to notify the goods, the

transport of which needs to be entered

in the notified website.

In pursuance of the above, the

E- Sugam facility was introduced.

The E- Sugam is akin to a delivery

note that contains all the relevant

particulars of the goods and the

transportation.

The details, once entered on the

website, constitute the E Sugam Form

which carries a unique number.

The Form may be printed or just the

reference number of the Form may be

carried along with goods.

2

The notification categorises the

movement of goods into 5 different

classes, viz

1. Movement as a result of Sale

2. Movement not as a result of

sale

3. Receipt of goods from

outside the state

4. Movement within Revenue

District for Job-Work

5. Movement within Revenue

District other than for Job-

Work

As regards points 1 & 3, the list of

goods to which the provision applies

has been specified. Further, even for

the goods specified, E-Sugam has been

made applicable only if the value of the

goods exceeds Rs. 20,000/-.

E-sugam demystified

3

3

Point No. 3 includes receipts of goods

into the State for any purpose

including in the course of imports.

Point No. 2 dealing with movement

not as a result of sale mandates the

raising of E-Sugam for all such

outward movements which are not as

a result of sale. This, therefore, covers

all movements such as stock transfers,

goods despatched for repair, job work,

goods returned etc.

The points 4 & 5 are really sub sets of

Point No. 2. This causes some

4

confusion as one would assume that all

movements, which are not as a result

of sale, necessarily need to be

accompanied by the E-Sugam Form in

terms of Point No. 2 discussed earlier.

However, Point No. 4 has once again

mandated the E-Sugam form for

movements within the revenue district

for Job Work purposes.

The subsequent movement from the

job worker has been exempted from

this provision and the only

requirement is that the goods must be

accompanied by a self printed delivery note (Form 515) or a labour charges bill.

Point No. 5 has also got a blanket exemption and for any movement within a revenue district that does not result in sale and is not for job work purposes (eg. Movement for weighment, branch transfer etc.) only a self printed delivery note in Form 515 needs to be carried.

The term revenue district has not been defined and may be the subject matter of unnecessary controversy.

Further, it is not clear if the Provisions governing Points 4 & 5 override the provisions in Point No. 2.

To avoid litigation and harassment at checkposts, it may be better to raise E-Sugam for movements covered under Points 4 & 5, BUT along with the self printed delivery note in Form 515!

The procedural aspects of how to access the website and general guidance regarding the usage of the website along with provisions governing the raising of E Sugams through Mobiles are detailed in the notification.

The valiadity period of the Forms has also been specified and ranges from 2 days to 10 days depending on the distance between the origin and destination of the goods.

CONCLUSION:

For Point No. 1 – Invoice + E-Sugam

For Point No. 2 – E Sugam + relevant document such as Stock Transfer Note

For Point No. 3 – E Sugam + Purchase Invoice/Relevant Document

For Point No. 4 & 5 – E Sugam + Form 515 + other relevant document such as labour

charges bill, if applicable.