(1) The tax payable by a dealer on his taxable turnover in so far as such turnover or any part thereof relates to, -

(a) the sales of goods not falling within sub-section (2), -

1. in the case of goods specified in Schedule A, shall be calculated at the rates specified therein;

2. in the case of declared goods except those specified in Schedule B, shall be calculated at four per cent or such other rate not exceeding the ceiling specified in clause (a) of section 15 of the Central Act as the State Government may, by notification in the Official Gazette, direct;

3. in the case of goods specified in Schedule C, shall be calculated at four per cent or such other rate not exceeding ten percents the State Government may, by notification in the Official Gazette, direct;

4. in the case of other goods, shall be calculated at ten percent or such other rate not exceeding fifteen per cent, as the State Government may, by notification in the Official Gazette, direct:

Provided that where any goods are sold in containers or packed in any packing materials, the rate of tax applicable to such containers or packing materials shall, whether the price of the containers or packing materials is charged separately or not, be the same as those applicable to the goods contained or packed therein; and where such goods are exempt from tax, the sale of the containers or packing materials shall also be exempt from tax;

(b) the purchase of goods, shall be calculated at four per cent or such lower rate applicable on sale of such goods had it been a sale falling under clause (a):

Provided that the State Government may, by notification in the Official Gazette, direct that the tax shall be calculated at a lower rate.

(2) The tax payable by a dealer on his taxable turnover in so far as such turnover or any part thereof relates to goods of the description referred to in sub-section (4) sold to a VAT dealer or such other registered dealer as may be prescribed (hereinafter both referred to in this section as "authorised dealer"), shall be calculated-

a. if the goods are of the description contained in Schedule D, at the rate mentioned against such goods, otherwise;

b. at four per cent or such lower rate applicable on sale of such goods had it been a sale falling under clause (a) of sub-section (1)

Provided that the State Government may, by notification in the Official Gazette, direct that tax under clause (b) shall be calculated at a lower rate:

Provided further that the State Government, if satisfied that it is necessary or expedient so to do in the interest of promotion of exports out of the country may, by notification in the Official Gazette, direct that tax under clause (b) on the taxable turnover which relates to the sale of goods of such class or classes to such class or classes of authorised dealers for such use by them, as may be specified in the notification, shall be calculated at zero rate.

(3) The provisions of sub-section (2) so far as the rate of tax applicable thereunder on a sale of goods in the State is lower than the rate of tax applicable under clause (a) of sub-section (1) if such sale had been a sale falling within that clause, shall not apply unless the dealer selling the goods furnishes to the assessing authority in the prescribed circumstances and in the prescribed manner-

(a) if the goods are sold to an authorised dealer, a declaration duly filled in and signed by him containing the prescribed particulars in the prescribed form obtained from the prescribed authority and in case such form is not available with such authority, a self printed and serially numbered form authenticated by such authority in the prescribed manner; or

(b) Omitted .

(4) The goods sold to an authorised dealer referred to in sub-section (2)-

(a) are goods of the class or classes specified in the certificate of registration of the authorised dealer purchasing the goods as being intended, subject to any rules made by the State Government in this behalf, for use by him-

1. in the manufacture of goods for sale;

2. in the telecommunications network;

3. in mining; or

4. in the generation or distribution of electricity or any other form of power;

(b) are goods of the class or classes specified in the certificate of registration of the authorised dealer who is covered under the notification issued under the second proviso to clause (b) of sub-section (2), purchasing the goods as being intended for use by him for the purposes specified in the said notification;

(c) are containers or other materials used for the packing of any goods or classes of goods specified in the certificate of registration referred to in clause (a) or clause (b).

(5) If an authorised dealer after purchasing any goods for any of the purposes specified in clause (a), clause (b) or clause (c) of sub-section (4) fails, without reasonable excuse, to make use of the goods for any such purpose, the assessing authority may, after giving him a reasonable opportunity of being heard, by order in writing, impose upon him by way of penalty a sum not exceeding one-and-a-half times the tax which would have been levied additionally under clause (a) of sub-section (1), if the sale made to him had been a sale falling within that clause:

Provided that no penalty shall be imposed where an authorised dealer voluntarily pays the tax which would have been levied additionally, as referred to in the foregoing provision, with the return for the period when he failed to make use of the goods purchased for the specified purposes.

(6) Notwithstanding anything contained in this section, no tax under this Act shall be payable by any dealer in respect of sale of any goods made by such dealer to a registered dealer for the purpose of setting up, operation, maintenance, manufacture, trading, production, processing, assembling, repairing, reconditioning, re-engineering, packaging or for use as packing material or packing accessories in an unit located in any Special Economic Zone.

Explanation.- The goods referred to in sub-section (6) shall be of such class or classes as specified in the certificate of registration of the registered dealer.

(7) The provisions of sub-section (6) shall not apply to any sale of goods unless the dealer selling such goods furnishes to the prescribed authority referred to in sub-section (3), if so required by him, a declaration in such form and manner, as may be prescribed, and which has been authenticated by the prescribed authority, duly filled in and signed by the registered dealer to whom such goods are sold.