2018 (6) TMI 173 - AAR - VAT and Sales Tax

Tax exemption for Ready Mix Concrete supply to SEZ clarified under TNVAT Act

The Authority for Advance Ruling clarified that the supply of Ready Mix Concrete to SEZ is exempt from tax based on the conditions outlined in the ... Clarification under Section 48-A of the TNVAT Act, 2006 - exemption for supplies to Special Economic Zone under G.O. Ms.No.193 dated 30.12.2006 - exemption under Section 18(1)(ii) of the TNVAT Act, 2006 - input tax credit claim for exempt suppliesExemption for supplies to Special Economic Zone under G.O. Ms.No.193 dated 30.12.2006 - clarification under Section 48-A of the TNVAT Act, 2006 - exemption under Section 18(1)(ii) of the TNVAT Act, 2006 - Supply of Ready Mix Concrete to a Special Economic Zone (SEZ) for use in the SEZ - HELD THAT: - The Authority examined the application under Section 48-A of the TNVAT Act, 2006 and the entries in the Schedules to the Act together with Notification No. II(1)CTR/58(h-14)/2006 (G.O. Ms. No.193 dated 30.12.2006). Section 18(1)(ii) read with G.O. Ms. No.193 provides exemption for sales of goods made to a registered dealer for use in specified SEZs, subject to the conditions and certification required by that Notification. The Authority also noted prior clarifications in ACAAR No. 15/2014-15 and ACAAR No. 16/2014-15 confirming that supplies for execution of works in SEZ units are exempt as per the terms of G.O. Ms. No.193. Applying these provisions and precedents, the Authority concluded that supply of Ready Mix Concrete to the SEZ falls within the exemption declared in G.O. Ms. No.193 and is therefore not taxable under the TNVAT Act, 2006.Supply of Ready Mix Concrete to SEZ is exempt from tax as per the terms and conditions of G.O. Ms.No.193 dated 30.12.2006.Final Conclusion: The application seeking clarification on the rate/taxability of Ready Mix Concrete supplied to an SEZ is answered: such supplies are exempt under G.O. Ms.No.193 dated 30.12.2006. The order does not pronounce a separate conclusion on availability of input tax credit. Issues:Clarification on the rate of tax for 'Ready Mix Concrete for supply to SEZ' and eligibility for Input Tax Credit for raw materials purchased.Analysis:The case involved an application by a registered dealer seeking clarification under Section 48-A (1) of the Tamil Nadu Value Added Tax Act, 2006, regarding the rate of tax on supplying 'Ready Mix Concrete to SEZ, M/s. Estancia IT Park Pvt. Limited' and the eligibility for Input Tax Credit for raw materials used in producing the concrete.Upon detailed examination of the TNVAT Act, 2006, and TNVAT Rules, 2007, along with related entries in all Schedules to the TNVAT Act, 2006, it was found that Section 18(1)(ii) of the TNVAT Act 2006, read with relevant notifications, provides an exemption from sales tax for goods sold to a registered dealer for specific purposes in Special Economic Zones (SEZs). The exemption is subject to conditions, including obtaining and furnishing a certificate declaring the specific use of purchased goods.Referring to previous clarifications, it was highlighted that the sale of goods for works contracts in SEZ units is exempt from tax under the terms specified in the relevant government notification.Consequently, the Authority for Advance Ruling clarified that the supply of Ready Mix Concrete to SEZ is exempt from tax based on the conditions outlined in the relevant government notification, specifically G.O. Ms.No.193 dated 30.12.2006.In conclusion, the judgment provided a clear interpretation of the tax exemption provisions under the TNVAT Act, 2006, for supplies to SEZs, ensuring compliance with the specified conditions for eligibility for tax exemption and Input Tax Credit.