(1) A registered dealer opting to pay tax under sub-section (1) of Section 58, shall satisfy the following conditions -

(a) he shall not have any goods in stock which were brought by him from outside the State or he should not be a manufacturer of taxable goods, on the day he exercises his option to pay tax by way of composition and shall not sell any such goods, brought from outside the State after such date;

(b) he shall not be a dealer who has claimed during such period, input tax credit on stock in hand of goods, under Rule 12 of these rules, as on the date of commencement of that Act, or on the date of incurring liability;

(c) he shall not be a dealer selling goods in the course of inter-State trade or commerce or in the course of export out of the territory of India;

(2) A registered dealer may, in exercise of his option under sub-section (1) of Section 58, pay tax on the sales of goods at the compounded rate not exceeding of 8% on the turnover of sales in Jharkhand, which remains after deducting therefrom, the turnover, representing sales of goods, which are declared tax-free under sub-section (4)(a) of Section 9 of the Act.

(3) If the turnover of sales of the registered dealer, who is permitted to pay tax at the compounded rate, in a year, exceeds fifty lakhs rupees at any time during a year, he shall inform the assessing officer in writing within seven days from the day when his turnover of sales has so exceeded and such dealer opting for composition of tax under Section 58 of the Act, shall automatically become a VAT dealer for the remaining period of the year.

Provided if such dealer fails to disclose that he ceases to be composition dealer u/s 58 of the Act, the provisions of sub-section (2) of Section 40 shall automatically apply.

(4) The Registering Authority granting permission under rule (4), may withdraw the permission if the dealer fails to make payment of tax for any two quarters of a year. The order of withdrawal will be effective from the first date of the quarter for which the dealer has made himself defaulter in the matter of payment of tax for the first time.

(5) The registered dealer, granted Composition Scheme under this rule, when opts to withdraw from Composition, he shall furnish an application before the Registering Authority in Form JVAT 119.

(6) When the Registering Authority, withdraws the permissions under sub-rule (4) of this rule, the provisions of Section 36, 37, 43 and 46 of the Act shall apply to such dealer.