Andhra Pradesh - VAT

[Ganeshan Kalyani]

I would like to highlight a situation where a business faces a competition in the local market from few good dealers because of the price. The product is same and the price before VAT is more or less same, only difference is that of VAT rate. The product dealt upon by company A is applying higher rate of residuary schedule as the same does not fall under any of the schedule of lower rate. The company B is collecting lesser rate of VAT on bill specifying the same product name as the company A is mentioning on the Invoices. Company A or B both have their own stand as far as the rate of VAT is concerned.

Is there any route by which the Company B can be asked the back up behind sorting for collection of lower VAT rate. The Right to Information would help to understand what the practice is followed by a company but as regard the back up or supporting or write behind the a particular practice would not be available. I would request your good selves to through some light on the common issue which most of the company may or may not be faced by a company in the market.

[YAGAY andSUN]

Dear Ganesh,

It is settled law that if any goods does not fall specifically in any taxable schedule of the State VAT Act, then, it will duly fall under the residuary tax schedule and peak rate of tax would be applicable. No assessee can on its' own can determine the applicable tax rate of a commodity which is not specifically falls under any tax schedule and start charging a lower tax or higher tax rate at his will.

Hon’ble Supreme Court in the case of Bharat Forge and Press Industries (P) Ltd. v. CCE = 1990 (1) TMI 70 - SUPREME COURT OF INDIA = 1990 (45) ELT 545 considered the issue of classification of item under Residuary Entry when the same is covered by a specific entry. The relevant portion of the decision is as under:-

3. The question before us is whether the Department is right in claiming that the items in question are dutiable under tariff entry No. 68. This, as mentioned already, is the residuary entry and only such goods as cannot be brought under the various specific entries in the tariff should be attempted to be brought under the residuary entry. In other words, unless the department can establish that the goods in question can by no conceivable process of reasoning be brought under any of the tariff items, resort cannot be had to the residuary item. We do not think this has been done.

You may seek clarification from the APVAT Department under Section 67 of the APVAT Act read with Rules made thereunder on deposition of fees as prescribed.

Regards,

Team YAGAY and SUN

(Management and Indirect Tax Consultants)

[Ganeshan Kalyani]

Dear Pradeep Sir,

I would further discuss that, presently the company which is charging at lower VAT rate should be having a valid back up as regarding sorting for lower rate and which is evident by regular assessment by Sales tax department. Whether there is any mechanism to approach the company to know that supporting background or the categorization terms of the product in such manner that it falls in lower VAT rate schedule. There is a question of concern whether who is right in this scenario and in common view the company which is levying tax at lower rate may be incorrect or so as the product which is in subject is not straight away found in any of the schedule, leaving it to take to residuary schedule.

regards,

ganesh

[YAGAY andSUN]

Dear Ganesh,

As discussed earlier, You may seek clarification on this matter from the APVAT Department under Section 67 of the APVAT Act read with Rules made thereunder on deposition of fees as prescribed.

Further, you may contact us along with all material facts and description of the goods on which you need clarification.

We do charge nominal fees for providing our services.

Regards

Team YAGAY and SUN

(Management and Indirect Tax Consultants)

Mobile: 09818131923

AI Summary

Residuary tax schedule determines VAT where goods lack specific classification; seek statutory clarification rather than unilateral rate choices. Goods not specifically covered by a scheduled entry fall under the residuary tax schedule and attract the residuary rate; no assessee may unilaterally choose a lower rate. Where sellers apply different rates to the same product, parties should seek authoritative classification from the APVAT Department under Section 67 of the APVAT Act (fee prescribed) and may engage consultants to present supporting material.