CLARIFICATIONS & ADVANCE RULING UNDER TAMIL NADU VALUE ADDED TAX ACT, 2006

[Mr. M. GOVINDARAJAN]

Section 48A of the Tamil Nadu Value Added Tax Act, 2006 (‘Act’ for short) provides for clarifications and advance ruling.   The said section provides that the Government may constitute a State Level Authority for clarification and Advance Ruling comprising of the Commissioner of Commercial taxes and two Additional Commissioners to clarify, any point concerning the rate of tax, on an application by a registered dealer.  Such application shall be entertained unless it is accompanied by proof of payment of such fee, paid in such manner, as may be provided.

No application shall be entertained where the question raised in the application-

• is already pending before any appellate or revising authority of the department of Appellate Tribunal or any Court; or
• relates to an issue which is designed apparently the avoidance of tax.

The application shall not be rejected without giving the applicant a reasonable opportunity of being heard and where the application is rejected, reasons for such rejection, shall be recorded in the letter.

    The order of the authority shall be binding-

• on the applicant who has sought for the clarification or advance ruling;
• in respect of the goods in relation to which the clarification or advance ruling was sought; and
• on all the officers working under the control of the Commissioner of Commercial Taxes.

The Authority shall have power to review, amend or revoke its clarification or advance ruling at any time for good and sufficient cause after giving an opportunity of being heard to the affected parties.   An order giving effect to such review or amendment or revocation shall not be subject to the period of limitation.

Rule 12A provides the procedure for clarification and advance ruling which is detailed as below:

• Every application seeking clarification on any point concerning the rate of tax shall be made to the Authority in  Form VV in quadruplicate;
• It shall be accompanied by a crossed banker’s cheque in favor of State Bank of India or crossed demand draft or pay order of a Bank in support of having paid a sum of ₹ 1,000/- in favor of the Commissioner of Commercial Taxes, Chennai;
• On receipt of such application, the Authority shall cause a copy thereof to be forwarded to the assessing or registering authority concerned and call for any information or records;
• The Authority may either admit or reject the application within 30 days from the date of receipt of the application;
• The application shall not be rejected without giving the applicant a reasonable opportunity of being heard and the reasons for rejections shall be recorded in the order;
• The Authority shall send a copy of every order to the applicant and the authority concerned;
• The Authority shall hold its sittings, normally, at its headquarters at Chennai as and when required and date of hearing shall be intimated to the applicant and the authority concerned;
• The Authority may at its discretion  permit or require the applicant to submit such additional facts as may be felt necessary to enable it to pronounce its clarification or advance ruling;
• Where in the course of the proceedings before the Authority, a fact is alleged which cannot be borne out by record, it shall be stated clearly and concisely and supported by a duly sworn affidavit;
• Where an application is admitted, the Authority shall after examining further material as may be placed before it by the applicant or obtained by the Authority, pass such order as it deemed fit on the question specified in the application, after giving a reasonable opportunity to the applicant of being heard, if he so desired;
• The Authority shall send a copy of the order to the applicant and to the authority concerned;
• On the date of hearing, if the applicant does not appear in person or through an authorized representative the authority may dispose of the application ex-parte on merits;
• If the application is disposed as ex-parte and if the applicant applies within fifteen days of receipt of the order and satisfies the Authority that there was sufficient cause for the non appearance the Authority may set aside the ex parte order restore the application for fresh hearing;  The copy of the said order shall be sent to the applicant and the authority concerned;
• Where the applicant ides or is wound up or dissolved or disrupted or amalgamated or succeeded to by any other person or otherwise comes to an end the application shall not abate and may be permitted by the Authority, where it considers that the circumstances justify it, to be continued by the executor, administrator or other legal representative of the applicant or by the liquidator, receiver or assignee or successor, as the case may be, on an application made in this behalf;
• An applicant may withdraw the application filed at any time before the issue of orders by the Authority.

Some of the clarifications/advance rulings given by the Authority are produced as below:

Advance Ruling No. 026/2014-15, dated 16.12.2014 - Load Bodies for Commercial vehicles

It is clarified that-

• The ready built Load Bodies for commercial vehicles  are primarily taxable @ 14.5% under Entry 49 of Part C of I Schedule to the TNVAT Act, 2006, on supply to the actual users of the vehicles;
• The ready built ‘Load Bodies” for commercial vehicles are taxable @ 5% as industrial inputs on sale to manufacturers of vehicles within Tamil Nadu for mounting on the chassis  of the vehicles, on certification by the buyer-manufacturer as prescribed under Rule  6(3)(b) of TNVAT Rules, 2006.

Advance Ruling No. 031/2014-15, dated 24.12.2014 -  Scraps

It is clarified that Iron and Steel (Ferrous) scraps and the Non Ferrous Metal scraps  obtained on dismantling the machines are taxable @ 5% respectively under Entry 41 read with section 14(vi)(i) and (x) of CST Act, 1956 and entry 122(b) of Part B of First Schedule to the TNVAT Act, 2006.

Advance Ruling No. 032/2014-15, dated 24.12.2014 -  Boiler components

It is clarified that-

• ‘Boiler components’ (ducting components) are taxable generally at 14.5%  under entry 37 of Part C of First Schedule of TNVAT Act, 2006; and
• However ‘Boiler components’ attracts  tax @ 5% as capital goods under  Entry 25 of Part B of First Schedule read with Section 2(11) of the TNVAT Act, 2006 on sale to industrial manufacturers inside the State.

Advance Ruling No. 033/2014-15, dated 24.12.2014 - Scrap Battery and lead based scrap

It is clarified that Scrap Batter and lead based scrap is taxable at 5% under entry 67-A(ag) of Part B of first schedule to TNVAT Act, 2006.

Advance Ruling No.036/2014-15, dated 24.12.2014 - Similac - Advanced infant formula

It is clarified that Similac - Advanced infant formula  is a baby milk food taxable at 5% under Entry 82  of Part B of First Schedule to the TNVAT Act, 2006.

Advance Ruling No .038/2014-15, dated 24.12.2014 -  Commercial LPG

It is clarified that-

• The Commercial or Industrial Liquefied Petroleum Gas (LPG) is generally taxable @ 14.5%  as being the unclassified commodity under Entry 69 of Part C of first schedule to the TNVAT Act, 2006 on sale to traders or other dealers;
• The Commercial or Industrial Liquefied Petroleum Gas (LPG) is taxable@ 5% under Entry 67 of Part B of First Schedule to TNVAT Act, 2006, on sales as industrial input to manufacturers or industries within Tamil Nadu State against the certificate issued by the buying dealer as prescribed under Rule 6(3)(b) of TNVAT Rules, 2007.

Advance Ruling No. 046/2014-15, dated 02.01.2015 -  Unbranded foods and drinks

It is clarified that the ‘unbranded foods and drinks (breakfast, lunch and dinner) including snacks and drinks’ on sale to on in the canteens of SEZ units’ are not eligible for VAT exemption provided under G.O. Ms. No.  193, Commercial Taxes & Registration (B2) Department, dated 30.12.2006 read with Section 88(3)(i) of the TNVAT Act, 2006 or zero rating under Section 18(1)(ii) of TNVAT Act, 2006, in the light of the proviso to Rule 27(3) of SEZ Rules, 2006.

Advance Ruling No. 048/2014-15, dated 24.12.2014 - Cloth bags/purses

It is clarified that clothes/purses made of are exempt from tax  vide Notification No. II(1)/CTR/30(a-2)/2007 in G.O. Ms. No. 79/CT & R (B2) Dept, dated 23.03.2007 as per Sl. No. 13 in the list of commodities exempt under the notification.

Advance Ruling No.049/2014-15, dated 26.12.2014 - Plastic Boxes for jewellary packing

It is clarified that plastic jewel boxes are taxable at the reduced rate of 5% as per Notification No. II (1)/CTR/12 (R-20/2011-GO No. 78, CT & R (B2) Dept. dated 11.07.2011vide Sl. No. 13 among the commodities  listed under the Notification.

Advance Ruling No.053/2014-15, dated  16.12.2014 - Tupper ware Plastic Products - Food Grade Virgin Plastic Kitchen wares

It is clarified that “Tupper ware Plastic Products - Food Grade Virgin Plastic Kitchen Wares” are taxable at the reduced rate of 5% vide Entry in Sl. No. 13, with the description “All Plastic goods other than doors, windows, frames, profiles, automobile, industrial and sanitary items”, in Notification No. II(1)/CTR/12(R-20)/2011 in G.O. MS No. 78, Commercial Taxes and Registration (B2), department dated 11.07.2011.

Advance Ruling No. 054/2014-15, dated 16.12.2014 - Combined Harvestor Radiator

The clarification is that ‘Combined Harvester Radiator’, since specially designed for use in  Combined Harvester Machines, is taxable at 5%  under sub-entry (iv) of the Entry 140 of Part B as being a part of ‘Combined Harvester’ falling under sub entry (iii) of Entry 140 of Part B of First Schedule to the TNVAT Act, 2006.

Advance Ruling No. 061/2014-15, dated 24.12.2014 - Cutting Blade Coils and Leather Cutting Knives (Rute Die Steel)

It is clarified that Cutting Blade Coils and Leather Cutting Knives (Rute Die Steel) are taxable @ 5% as being the tools under Entry 138 of Part B of First Schedule to the TNVAT Act, 2006.

Advance Ruling No. 065/2014-15, dated 26.12.2014 - Bleaching powder

It is clarified that bleaching powder, basically a chemical called Calcium Hypo Chloride - falling under entry  1 Part B of the First Schedule of TNVAT Act, 2006 taxable @ 5%.

Advance Ruling No. 066/2014-15, dated 24.12.2014 - Vehicle Tracking Device

It is clarified that Vehicle Tracking Device is an information technology product, falling under entry 68(7)© of Part B of First Schedule to the TNVAT Act, 2006 taxable @ 5%.

Advance Ruling No. 068/2014-15, dated 26.12.2014 - Tapered Roller Bearings and Bearing components

It is clarified that the tapered roller bearings and bearing components are taxable @ 5% under Entry 12  of Part B of First Schedule to the TNVAT Act, 2006.

Advance Ruling No. 076/2014-15, dated 24.12.2014 -  Cane Furniture

It is clarified that ‘Cane furniture’ is taxable @ 14.5% as an unclassified commodity under Entry 69 of Part C of First Schedule to TN VAT Act, 2006

Advance Ruling No. 79/2014-15, dated 16.12.2014 - Stray Field Animal Repellant

It is clarified that Stray Animal Repellant is liable to tax @ 14.5% as an unclassified commodity under Entry 69 of Part C of Fourth Schedule of TNVAT Act, 2006.

Advance Ruling No. 80/2014-15, dated 16.12.2014 - Pest Control Device

It is clarified that Pest Control Device (Rat Trap) with registered brand name “Trubble-Gum” is liable to tax @ 14.5% as an unclassified commodity under Entry 69 of Part C of Fourth Schedule of TNVAT Act, 2006.

Advance Ruling No. 083/2014-15, dated 26.12.2014 - Zari of all kinds, excluding polyester film yarn and radiant yarn

It is  clarified that ‘Zari of all kinds, excluding polyester film yarn and radiant yarn are exempt from VAT Notification No.II (1) /CTR/4(b-8)/2010 in G.O. No. 33-VIII, Commercial Taxes and Registration Department dated  29.03.2010 with effect from 12.10.2010.

Advance Ruling No. 090/2014-15, dated 24.12.2014 - Office work station, conference table

It is clarified that the supply of ‘office work station’ and ‘conference table’  in works contract falls under the category of ‘all other works’ taxable @ 5% of the total contract value of work executed as per Act No 4 of 2012 with effect from 10.03.2012.

Advance Ruling No. 091/2014-15, dated 26.12.2014 - Interior Decoration

It is clarified that ‘interior decoration’ falls under the category of civil works contract taxable @ 2% under Section 6(1)(i) read with explanatory clause of Section 6(5) of the TNVAT Act, 2006.

Advance Ruling No. 093/2014-15, dated 24.12.2014 - Electrical goods in interior civil works contract

It is clarified that the transfer of electrical goods in interior civil works contract is taxable @ 5% under Section 6 (1) clause (iii) of TNVAT Act, liable to be assessed @ 5% as all other works as per Act No. 4 of 2012 with effect from 10.03.2012.

Advance Ruling No.094/2014-15, dated 26.12.2014 - Permethrin - Technical

It is clarified that ‘Permethrin - Technical’ is a species of ‘Insecticide’ for agricultural/horticultural purposes exempted from tax falling under entry 38A (b) in Part B of the fourth schedule to TNVAT Act, 2006, if used for agricultural/horticultural purposes.

Advance Ruling No. 095/2014-15, dated 26.12.2014 - Deltamethrin -  Technical

It is clarified that ‘Deltamethrin - Technical’ is a species of ‘Insecticide’ for agricultural/horticultural purposes exempted from tax falling under entry 38A(b) in Part B of the fourth schedule to TNVAT Act, 2006 if used for agricultural/horticultural purposes.

Advance Ruling No.096/2014- 15, dated 26.12.2014 - Cypermethrin - Technical

It is clarified that ‘Cypermethrin - Technical’ is a species of ‘Insecticide’ for agricultural/horticultural purposes exempted from tax falling under entry 38A (b) in Part B of the fourth schedule to TNVAT Act, 2006 if used for agricultural/horticultural purposes.

Advance Ruling 098/2014-15, dated 26.12.2014 - Plastic Battery Trolley cum Stand

It is clarified that ‘plastic battery trolley cum stand’ is taxable at the reduced rate of 5% as one kind of plastic goods  falling under Entry in Sl. No. 13 with the description ‘All Plastic goods other than doors, windows,  frames, profiles, automobile, industrial and sanitary items’ in Notification No. II(1)/CTR/12(R-20)/2011, in G.O. Ms. No.78,. Commercial Taxes and Registration (B2) Department, dated 11.07.2011.

Advance Ruling 039/2014-15 and 100/2014-15, dated 05.01.2015

It is clarified that -

• ‘Epoxy Zinc Phosphate Primer for Railway coaches’  is liable to CST at 5% on interstate sales to Indian Railways located  in other States, as per Entry 67-A(ad)(iv) of Part B of First Schedule to the TNVAT Act, 2006 read with Section 8(2) of CST Act,1956;
• ‘Paints’ such as Polyurethane Surfacer &  Polyurethane Full Glass Enamel and Unsaturated Polyester Putty for Railway Coaches’  are liable to CST @ 5% on interstate sales to Railways as ‘parts of railway coaches’  under Entry 112 of  Part B of First Schedule to the TNVAT Act,. 2006 read with Section 8(2) of the CST Act,1956

Advance Ruling No. 51/2014-15, dated 27.01.2015 -  Motor

It is clarified that electric motor is liable to 14.5% under Entry 27 Part C First Schedule to TNVAT Act, 2006.  If it is sold to a manufacturing unit within the State of Tamil Nadu for use as capital goods  in manufacturing process, it is liable to tax  at 5% as capital goods under  section 2(11) of  TNVAT Act, 2006.  If it is sold to manufacturers of power operated machinery within the State of Tamil Nadu, it is also liable to 5% under Entry 67 of Part B of First Schedule to TNVAT Act, 2006 read with Rule 6(3)(b) of the TNVAT Rules,  2007 as industrial input.

Advance Ruling No. 52/2014-15, dated 30.01.2015 - Primer

It is clarified that ‘Primers of all kinds’ are  generally taxable at 5% on sale either  by the manufacturers  or by the Traders  under Entry 67-A (ad) (iv) of Part B of  First Schedule to TNVAT Act, 2006, irrespective of the fact whether it is sold as industrial inputs or otherwise.    The earlier advance ruling in 85/2012-13  dated 14.02.2013 is cancelled.

Advance Ruling  No.122/2015, dated 09.02.2015 -,Railway wagons Engines, Coaches and Parts thereof and paints  and paints system for interior coaches

It is clarified that paints such as polyurethane Surfacer & Polyurathane Full Glass Enamel and Unsaturated Polyerster Putty for Railway Coaches’ are liable to CST @ 5% on interstate sales  to Railways as ‘parts of Railway Coaches’  under Entry 112 of  Part B  of First Schedule to the TNVAT Act, 2006 read with Section 8(a) of CST Act, 1956.

Advance Ruling No. 123/2014-15, dated 09.02.2015 - Railway Wagons, Engines, Coaches  and parts thereof  and paints synthetic  for the system of exterior  painting of coaches.

It is clarified that  paints, such as Polyurathane Surfaces & Polyurathane Full Glass enamel and unsaturated  polyester putty  for Railway Coaches’  are liable to CST @ 5% on interstate sales  to Railways as ‘Parts of Railway Coaches’ under Entry 112 of Part B  of First Schedule to the TNVAT Act, 2006 read with Section 8(a) of CST Act, 1956.

Advance Ruling No. 124/2014-15, dated 09.02.2015 - Primers

It is clarified that ‘Primers of all kind’  are generally taxable @ 5%  on sale either by manufacturers or by the traders under Entry No. 67A (ad) (iv)  of Part B of First Schedule  of the TNVAT Act, 2006 irrespective of the fact whether  it is sold as industrial inputs or otherwise.

Advance Ruling No. 62/2014-15, dated 12.02.2015 - Mathematical learning instruments  and drawing instruments  made out of plastic or any other material or an alloy.

It is clarified that mathematical learning instruments and drawing instruments made out of plastic or any other material or an alloy is exempt from tax as per notification No. II(1)/CTR/30 (a-2)/2007, dated 23.03.2007