Karnataka vat act

We have recived a notice from vat office stating that you have not file form 240 for the financial year 2009/10. so u have to pay penalty of rs 5000/- plus 50 rs perday till now as per section 74(4) of the kvat act-2003.I want clarification regarding penalty u/s 74(4) of the act .In the book klj pulication the above section says the following:

Any dealer who fails to submit within the time prescribed a copy of the audited statement of accounts,shall be liable to pay a penalty of 5000/- rs and,a furhter penalty of 50/-rs perday for so long as the (failure to submit a copy of the audited statement of accounts)continues,after being given an opportunity of showing cause in writing against such imposition of penalty by the prescribed authority.

we have not filed form 240 for the finanacial year 2009/10 by mistake, last date for submitting form 240 is  31/12/2010.the officers asking for penalty of rs 50/- p/day from the beginning of  1/1/2011 to up to now, but we have recived notice only on 23/9/2011. 

 my question is whether we have to pay penalty from the date of issue of notice or from the date of 1/1/2011.if it is from the date of notice pls tell me any notification or judgement for it. thanking you in advance

advocate & tax consultant

Section 74(4) of Karnataka VAT Act, narrates the penalty provision for not filing Form 240. It discretionery power given to LVO. You may state the reason for delay in filing the Form 240. The officer may reduce the penalty at his discretionery power. 


Ours is a state government undertaking engaging contractors with service tax, VAT,PF registratiins. A contractor with conposition dealer staus under Karnatak VAT rules undertakes a contract for pure labour work where there is no transfer of property in goods is involved. From his bills 4% flat VAT is deducted and TDS  be issued. The contract clearly stipulates that the contractor does not supply any materials nor goods under this contract.  there is no loading of VAT in the estimate as there is no sale / deemed sale of goods involved in the contract. it is purely a lobour contract, not a works contract.. Please inform whether deduction of VAT at source  for composition scheme contractor is legal and correct.


When there is no transfer of property from the contractor to the contractee, then there is no tax liability on the contractor as there is no sale involved in the transaction. In this case you need not deduct the TDS from the contract payment


Our taxable Turnover is Rs.69,220.00 and URD purchases is Rs.46,900.00. Whether we are liable to submit form 240 under KVAT Act. If not filled within due date can we liable to pay penalty on above?


Dear Sir,

My company is facing same problem. We had business operations in Karnataka state. Could you please give the section or rule under which the LVO can waive or reduce the penaly imposed for late filing of annual audited return ?

You may contact me on my email id : CANKS2013@GMAIL.COM

CA Narendra Soni






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