PACHAI NAYAKI A/C;

[PACHAI NAYAKI]

DEAR SIR,

WE HAVE SOLD "GEAR BOXES" INTRA STATE TAMILNADU WITH VAT RATE OF 5% FOR THE FY 2016-17. WE HAVE RECEIVED NOTCE FROM TNVAT DEPT STATING THAT THE GEAR BOXES WERE FALL UNDER TAX RATE OF 14.5% AND WE ARE LIABLE TO PAY THE BALANCE TAX IE. 14.5% LESS 5%. IS THI CORRECT ? IF YES PLEASE FURNISH THE NOTIFICATION IF ANY

PACHAI NAYAKI

ACCOUNTS - ETAPL

[DR.MARIAPPAN GOVINDARAJAN]

Please inform whether the Revenue indicated the reasons for the levy of VAT @ 14.5% from 5%. If they furnish any tariff head then find the tax rate with reference to the tariff head. If it does not amount to 14.5% then you may filed reply to show cause notice accordingly.

[Ganeshan Kalyani]

In this regard, the schedules of VAT rate to be referred to determine the rate applicable for the product.

AI Summary

VAT rate dispute over classification of gear boxes may require review of tariff heading and formal response.
VAT rate dispute: taxpayer sold gear boxes intra-state under a lower VAT rate while the department alleges a higher rate and seeks the balance. The critical action is to obtain the revenue's stated tariff heading, verify the applicable schedule entry and tax rate, and, if the higher rate is not supported, file a reasoned reply to the show-cause notice and pursue statutory remedies as appropriate.