GOVERNMENT OF ANDHRA PRADESH COMMERCIAL TAXES DEPARTMENT
PROCEEDINGS OF THE AUTHORITY FOR CLARIFICATION AND ADVANCE RULING
(Under Section 67 of APVAT Act, 2005)
Present :
Sri T.Yugandhar Reddy, Addl.Commissioner (VAT)
Sri T.Vivek, Jt.Commissioner (VAT)
Sri K.Raghavaiah, Jt.Commissioner (Audit)
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CCT's Ref.No.PMT/P&L/A.R.Com/197/2005 DT.2-8-2005
Ref: - CCT's Ref.No.PMT/P&L/A.R.Com/2005, Dt.13.4.2005.
O R D E R:
M/s. Tide Water Oil Co. (I) Limited, (TIN No.28660128374) have filed an application dt.25.6.2005 and sought clarification and advance ruling on the following items under Section 67 of APVAT Act, 2005 read with Rule 66(2)(i) of APVAT Rules, 2005 along with the application fee of Rs.1000/-.
They sought clarification on the following:
1. Whether they can allow Trade discount in the VAT invoice itself?
2. Whether VAT is recoverable at their end for Free issues under Trade scheme or not ?
3. Whether they can maintain invoice serial numbers as per their operational convenience?
4. Whether their customers can claim input tax credit for the credit notes received from the company on discounts / price variation etc. ?
Sri R.Venugopal, Deputy Manager (Sales) appeared on behalf of the firm for hearing on 20-7-2005 and explained the case.
The issue has been examined with reference to the provisions of the APVAT Act and Rules and the ruling is given as under:
The applicant is entitled to show the trade discount allowed in the Tax Invoice itself and collect VAT on the net consideration i.e. VAT at the applicable rate on the net amount (total consideration charged minus the discount allowed). The discount allowed shall be in the nature of normal trade discount. According to Sub-Rule 2 of Rule 16 of APVAT Rules, 2005 – all amounts allowed as discount shall not be included for the purpose of determining taxable turnover provided such discount is allowed in accordance with the regular practice of the VAT dealer, or is in accordance with the terms of a contract or agreement entered into in a particular case and provided also that accounts show that the purchaser has paid only the sum originally charged less the discount;
2. Whether VAT is recoverable at their end for Free issues under Trade scheme or not?
Free issues are not taxable. Therefore, VAT need not be recovered at the applicant's end for free issues under trade scheme.
The applicant has factories at Mumbai, Chennai, Silivassa etc, and products manufactured there are transferred to Andhra Pradesh. The provisions of AP VAT Act & AP VAT Rules'2005 do not govern the maintenance of invoices at these locations, which are outside the State of Andhra Pradesh.
Coming to raising of invoices in the State of AP and maintaining serial numbers as per the operational convenience, the applicant shall follow the provisions mentioned in Rule 26 and Rule 27 of AP VAT Rules'2005. The applicant shall issue a tax invoice if the products are sold to another VAT dealer and a normal invoice if the products are sold to a non-VAT dealer. The tax invoice shall bear a serial number that is either printed or computer generated and date on which it is issued. The applicant can maintain more than one set of serial numbers of tax invoice provided there is a relation between the serial numbers. For example, if the applicant is issuing invoices from two locations or offices, the serial number of the tax invoice can start with the location code followed by the number and date. The same structure shall be followed at the other location.
4. Whether their customers can claim input tax credit for the credit notes received from the company on discounts / price variation etc.?
The customers of the applicant on receiving the credit note from the applicant on discounts / price variation can not claim input tax credit on the tax amounts mentioned in the credit notes. On the other hand, they shall reduce input tax credit by such tax amounts in the tax return for the tax period during which the credit notes are received.
Note: An appeal against this proceedings can be filed before the Sales Tax Appellate Tribunal, A.P., Hyderabad within 30 days of this ruling.