Sales tax on sale of TMT RODS or Other Materials on to a Unit comes under SEZ

[N.SHANKARAN NEELAGRI]

Date: 27.05.2010. To. Tax Management India., New Delhi. --------- Sir, Sub: Seeking clarification regarding TNVAT on sales with reference to the subject cited above we would like to submit the following few lines with due respect for your kind perusal guidance. we have got order for selling TMT RODS for a manufacturing unit for it's building constructions purpose which comes under SEZ in SPICOT perundurai in Erode district (Tamilnad). The purchasing party has requested us to delivery the materials without tax as per G.O.Ms.75 dated 28.06.2005. And here we seek your guidance whether we can sale our materials to that unit without deducting sales tax or should we deduct the same from the purchaser. Hence we earnestly request your goodself to give your proper guidance in this matter for which we here thankful to you sir. With Thanks & Regards, Yours Faithfully, For PAVAI ALLOYS & STEELS (P) LTD., N.SHANKARAN. MANAGER (FINANCE) Cell: 098659 92214

[Dinesh Gupta]

I have tried to find the G.O.Ms 75 but could not. It appear that GOMs 75 is a notification which grants exemption from TNVAT if the goods are supplied for certain purpose. Therefore, you need find that notification, ascertain the validity of the notification of 2005 for the transaction to be undertaken now. I thing TNVAT department or your customer in SEZ would be better resources for this purpose.

AI Summary

VAT exemption for SEZ supplies: seller must verify notification validity before treating the sale as tax-free. Whether supplies of TMT rods to an SEZ unit qualify as tax-free under Tamil Nadu VAT hinges on the applicability and current validity of the cited executive notification; the seller must obtain and examine that notification and secure departmental or purchaser confirmation before treating the sale as exempt, otherwise TNVAT should be charged.