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The Union Territory (U.T). of Dadra & Nagar Haveli is a centrally administered territory without legislature. The territory was under Portugal Rule up to its liberation i.e. up to 02/08/1954. It was integrated with Indian Union on 11th August, 1961. In the beginning there was no sales tax leviable as it was backward territory inhabitant by Scheduled caste & Scheduled Tribes. The GOI had exempted this U.T. from Sales tax regime. However, with the increase in Industries, Trade and commercial activities in the U.T., there was persistence from the neighboring States to discontinue the exemption of tax to avoid unhealthy competition of prices among the neighboring States; it was decided to impose sales tax in the U.T.

Accordingly, the Dadra and Nagar Haveli Sales Tax Regulation, 1978 and rules made there under and Central Sales Tax Act, 1956 for Sales Tax came in to force from 1983. Further with the implementation of VAT Policy at all India level, the Dadra & Nagar Haveli Regulation 2005 & Dadra & Nagar Haveli Value Added Rules 2005 were enforced with effect from 01.04.2005. Thus at present following tax laws are in force.

The Department of Value Added Tax falls under the Finance Department, Administration of the U.T of Dadra & Nagar Haveli. The prime responsibility of the department is overlooking the Revenue administration of the Commercial Taxes Acts.
The Department of Value Added Tax, Administration of Dadra & Nagar Haveli, administers the following Acts

1. The Dadra & Nagar Haveli Value Added Tax Regulation, 2005

2. The Dadra & Nagar Haveli Sales Tax Regulation, 1978

3. The Central Sales Tax Act , 1956

Value Added Tax is a major source of revenue for the Union Territory (U.T) of Dadra & Nagar Haveli. Sales Tax is the most important source of revenue for the UT of Dadra & Nagar Haveli. During 2012-2013, the DVAT collected Rs.548.22 crores crores and 636.08 crores in 2013-14 on account of Sales Tax (including Value Added Tax).The U.T. is exempted zone for manufacturing dealers registered between 01.01.1984 to 31.03.1999 who fulfilled the criteria laid down under the provisions of Dadra and Nagar Haveli Sales Tax Regulation 1978 and rules made there under for Sales Tax as per the Central Sales Tax Act,1956. The Exemption has been extended for 15 years upto 31.12.2017 for interstate sales as well as local sales subject to auditions prescribed vide Notifications. Dealers have been registered with this department as traders and manufactures (70% dealer are the manufactures).

There are three stages in taxation. The first is the incidence of tax, the second is quantification or assessment of tax and the third is the recovery of tax. A dealer liable to pay tax has to take a certificate of registration from the Department, although his liability which is dependent only on the taxable event does not depend on Registration.