ADVANCE VAT RULING

[Asked by Guest]

Dear Sirs,

I am a consignment agent for a Andhra based compnay dealing with ayurvedic products, two years back

I applied for a VAT ruling of 5 % from 14.5%, ( for all ayurvedic medicine and products the vat rate is only 5%)

till date there is no response from the Sales tax department, If the department denies to give VAT ruling of

5 % what will happen, ( we are paying tax @ 5% for the past two years, earlier for 6 years we paid tax @ 14.5%)

(all our product requesting for 5 % tax is having valid AYUSH DEPARTMENT CERTIFICATES)

kindly reply

AI Summary

VAT classification uncertainty can require collection and payment at the higher rate pending an advance ruling decision.
The taxpayer sought an advance VAT ruling to classify AYUSH certified ayurvedic products at the lower rate but received no decision; goods not specifically covered by the VAT schedule fall under the residual entry and attract the higher rate. Until a ruling is issued the taxpayer should have collected and paid the higher rate, and if a later ruling is unfavorable the taxpayer may be required to pay the differential tax with interest.