Clarification Seeking on

Name of the Dealer

30-072009

M.S.T.C Ltd.,

ROT on un-Serviceable Scrap purchased in auction.

30-07- ,Grandeur Homes Pvt.

.Works Contracts
2009
Ltd.,
30-07- Bhavani Electronics &
Whether VAT is applicable on I T Z Cash Cards?
2009
Communications
30-072009

Aacess Equipments

30-072009

Perma Steelia (India)

ROT on " Aluminium Profile used in Curtain Wall Panel".
(P) Ltd.,

ROT on " Over head Cranes, Conveyors and Furnaces".

30-072009

Maa Television
Network Ltd.,

30-072009

Vasavi
Pharmaceuticals

Method to be followed for issue of "C" Forms

30-072009

Hemanth Printers

ROT on " Label Printed on Job work".

I.T.C.

30-07- Dekars Fire & Security ROT on " Design/Supply,/Installation/ testing & commissioning of
2009
Systems (P) Ltd.,
Fire Protection Systems"
30-072009

Sri Raghavendra
Enterprises

30-072009

Dura Line India (P)

Ltd.,

Whether TDS is to be deducted from a sector specific approved

SEZ.

30-072009

A D P (P) Ltd.,

Whether Information Technology Services are considered as

"goods" or not? Or Works contracts, if so, taxable U/Entry 39 of
IV Sch.?

ROT on Food items sold in running of a Canteen

30-07- Ness Technologies (I) Whether Information Technology Services are considered as
2009
(P) Ltd.,
"goods" or not?
30-07Madras Cements Ltd., I. T. C.
2009
30-072009

Keith Electronics Pvt.

ROT on " Optical Fiber Fusion Splicer Machine".
Ltd.,

29-072009

Zuari Cement Ltd

Whether pre-deposit of disputed tax in the case of taxing in

deferment period is to be deposited or to be defered as in the
case of payment

29-072009

S P P Poly Pack (P)

Ltd.,

ROT on " Printed/Plain Polythene Bags, Sheets, Tubes & Waste

Scrap of Plastic".

29-072009

Pan Electro Technic

Enterprises (P) Ltd.,

ROT on " Electrical Transformers ( Dry Type)

29-07ROT on " Staplers, Stapler pins, Paper punch, Alpins & Index Fick
Ratan Stationery Mart.
2009
clips."
29-072009

Acalmar Oils & Fats

Ltd.,

29-072009

Minar Masts

28-072009

Bambino Agro
Industries

ROT on " Palm Stearin".

ROT On " Transportable Containers for Missiles and its Spare
parts and Accessories".
Whether " Macaroni" is similar to the product " Vermicelli".

28-07Zen Technologies Ltd., ROT on " Simulators".

2009
23-102009

Kovi Plastics (P) Ltd.,

ROT on " Aluminium Sheet perforated, Aluminium Scrap Castings &

Aluminium Extrusion Profile".

23-102009

Nahnce Engineering
Solutions (P) Ltd.,

23-102009

Bharath Heavy Plate &

Vessels Ltd.( BHPV)

Whether Heat Exchangers designed, developed, Manufactured &

delivered to ADA will amount to sale?

23-102009

C.D.R. Healthcare Ltd.,

ROT on " Air Clean/Air Ventilation systems/Air Handling Systems &

Spares".

23-102009

Bake Zone Bakers &

Confectioneries

ROT On sale of Soft Ware with A.P. & Out side A.P.

Whether Bakery items sold across the counter can claim I T C?

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 G. Lakshmi Prasad, Addl.Commissioner(Policy)

Dr. K. Raghavaiah, Addl. Commissioner(Audit & DMU )
Sri. D.Venkateswara Rao, Joint Commissioner ( Legal)

1.A.R.Com/ 22 /2007.

Dated 30- 07- 2009.

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:

I.

M/s M.S.T.C. Limited Visakhapatnam, (TIN 28820100562.) have filed an

application.
II.

They sought clarification on the following unserviceable Scrap:

1) U/S. Vehicle Engines made of Alluminium & Iron.
2) U/S Fuel Separator made of Alluminium & Iron
3) U/S. Duplicators Assorted Types
4) U/S. Printing Machines / Embossing Machines/Sealing Machine/Plotter.
5) U/S. Generators made of Iron
6) U/S. Rubber Moulding Machine made of Iron
7) U/S. Vaccum cleaners assorted
8) U/S. Wooden Boats assorted
9) U/S. Fire extinguishers Assorted
10) U/S. Mobile welding Generators
11) U/S. Fire Boats Assorted
12) U/S. Centrifugal Casting Machine made of Iron
13) U/S. Propeller Shaft Assorted made of Iron and Brass Attachments
14) U/S. Aqua guard water filter made of Alluminium.
15) U/S. Pumps Assorted made of Brass and Iron.
and ruling is given as under:

III.

The applicant states that it is a Government of India Enterprise and main activity

is to conduct auctions/invite tenders for sale of the materials belong to various

Government Departments/Public Sector Undertakings. They sought for clarification on
rate of tax on various un-serviceable scrap items, which includes, unserviceable pump
Assorted made of Brass and Iron pertains to Eastern Naval Command to sell through
auction. As per Sl. No. (xi) of Explanation IV to Section 2 (10) of the APVAT Act,
any other Corporation, company, body or authority owned or set up by or subject to
administrative control of the Central Government or any State Government shall be
deemed to be a dealer.

As M.S.T.C Ltd., is a Government of India Enterprise, the sales of un-serviceable

goods including pumps in open auction are liable to tax @ 12.5%, since none of the
unserviceable goods, mentioned in the application for clarification, as mentioned in para
II above, is specified in the Schedules I, II, III, IV or VI. The company is not eligible for
ITC as per sub-section (10) of Section 13 of APVAT Act.
Therefore, it is clarified that the goods in question, sold in auction, are liable
to tax @ 12.5%
Sd/Addl.Commissioner

Sd/Addl.Commissioner

Sd/Jt. Commissioner.

NOTE:- An appeal against this proceedings can be filed before the Sales Tax Appellate
Tribunal, A.P. Hyderabad within 30 days of this ruling.
Addl./Jt.Commissioner
***

2.A.R.Com/ 27 /2007.

Dated 30 -07 -2009.

Ref:-1) CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005

**
O R D E R:
I.

M/s Grandeur Homes Pvt. Ltd,. Secunderabad, (TIN 28458385409 ) have

filed an application.

II.

They sought clarification on the following:

1) In the light of the new Clause (g) will Clause (e) survive for applicability
on goods to be purchased by Works Contractors taxed Under Section 4 (7)
(a)(b)(c)(d) of the AP Vat Act?

2) Is tax under Section 4 (4) applicable on purchases of constructional

materials from local un-registered dealers or from TOT dealers by the
above category of Works Contractors when none of the contingencies
envisaged under Sub Clauses to Section 4(4) are applicable? The ruling is
given as under:
III.

The applicant is doing business of Constructing Flats, Luxury Apartments, and

selling. He opted for composition and paying tax @ 4% on 25% of the consideration
received for such sale, and not availing any I T C. He is procuring all building/
construction materials from local Registered dealers under VAT and TOT.
IV. (i)

The Ruling is that Clause (e) of sub section (7) of Section 4 of the APVAT

Act provides for levy of tax on the turnover relating to the goods purchased from the
dealers in other States and from unregistered dealers in this State and used in the
execution of works contracts in the State of Andhra Pradesh by a works contractor,
who has opted to pay tax by way of composition, at the rates applicable to those
goods in the schedules to the APVAT Act and the contractor is liable to pay tax on
the balance turnover, arrived at by deducting the aforesaid turnover from the total
contract receipts, at 4% by way of composition. What is taxed under clause (e)
therefore is the turnover of deemed sale of the goods purchased from other States or
from unregistered dealers in this State. It does not seek to levy tax on interstate
transactions which is prohibited by clause (g).

Since there is no contradiction

between the two clauses, clause (e) survives.

(ii)

The provisions of Section 4(4) of the APVAT act are attracted when a
VAT dealer purchases any goods from a non VAT dealer and uses
those goods as inputs for goods which are exempt from tax or which

are disposed otherwise than by way of sale locally or in interstate

trade. Use of goods in the works executed by a works contractor in the
State of Andhra Pradesh is a deemed sale of those goods by the
contractor to the contractee under APVAT Act.

Therefore the

provisions of Section 4(4) are not attracted in such cases.

***
3.A.R.Com/ 73 /2007.

Dated 30- 07- 2009

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:
I.

M/s Bhavani Electronics & Communications, Governerpet, Vijayawada,

(TIN 28080100716) have filed an application.

II.

They sought clarification on the following:

Whether VAT is applicable on ITZ Cash Cards, which are used as just like
Bank Debit Cards and if so, rate of tax.

III.

The application stated that they got dealership for ITZ Cash Cards, from M/s.

Essel Agro Pvt. Ltd,. Delhi, to sell them to customers, which are used for purchases of
Railway Tickets, for paying Dish T.V. Tents, and to other purchases at some selected
show rooms, just like Bank Debit Cards. They contended that, in the said transactions,
there is no involvement of goods and it is nothing but plastic money. Hence requested to
know whether VAT is applicable to ITZ Cash Cards, if so the rate of tax applicable them.
Only the rupee notes, sold to RBI are exempted vide entry 27 of Schedule I of the
APVAT Act. ITZ Cash Cards are not rupee notes and are sold to various customers. They
are also not specified in any of the Schedules and hence liable to tax @12.5% under the
residuary entry of Schedule V.
Therefore, it is clarified that the ITZ Cash Cards falls under residuary entry
of Schedule V of the APVAT Act, 2005 and liable to tax @12.5%.

***
4.A.R.Com/ 87/2007.

Dated 30 - 07- 2009

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:
I. M/s Aacess Equipments, Gandhinagar, Balanagar, Hyderabad, (TIN 28690108779)
have filed an application and sought clarification and advance ruling on the following
items:
Rate of tax on material handling equipments OVER HEAD CRANES,
CONVEYORS AND FURNACES and ruling is given as under:
II. The applicant stated that they are manufacturers of material handling equipments such
as, CRANES, CONVEYARS AND FURNACES ETC. and hence sought for rate of tax
on these goods.
The goods Overhead Cranes, and Conveyors are not notified in any of the
Schedules of APVAT Act, 2005 and hence falls under residuary entry of Schedule V, and
liable to tax @ 12.5%, however, the goods Furnaces falls under item 45 of entry 102 of
IV Schedule to AP VAT Act, and liable to tax @ 4%.
Therefore, it is clarified that, the goods manufactured by the applicant,
OVER HEAD CRANES & CONVEYORS fall under residuary entry of Schedule
V of APVAT Act, and are liable to tax @ 12.5%, while FURNACES that fall under
item 45 of entry 102 of IV Schedule to APVAT Act, 2005 are liable to tax @ 4%.
***
5.A.R.Com/ 103 /2007.

Dated 30 - 07- 2009.

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:
I.

M/s Perma Steelia (India ) Private Limited, Hyderabad (TIN 28360141091.) have

filed an application and sought clarification and advance ruling on the following items

The rate of tax applicable to Aluminum Profile used in Curtain wall Panel
which is incorporated in the works contract, if they opt for payment of tax on the basis of
value of goods at the time of incorporation of such goods in the works executed under
sub-section (7) (a) of Section 4 of AP VAT Act, 2005 and ruling is given as under:
II.

Extrusion is the process by which long straight metal parts can be produced. The

cross-sections that can be produced vary from solid round, rectangular, to L shapes, T
shapes, Tubes and many other different types. Extrusion is done by squeezing metal in a
closed cavity through a tool, known as a die using either a mechanical or hydraulic press.
Aluminum Profiles used in Curtain Wall Panel. Curtain walls are typically designed
with extruded aluminum members, which are called as Aluminum Profiles. They fall
under HSN Code 7604.20 and are liable to tax @ 4%, as per entry 27 of the Schedule IV
to the APVAT Act.
Therefore, it is clarified that Aluminum Profiles used in Curtain Wall
Panels with HSN Code 7604.20 falls under entry 27 of the IV Schedule to the
APVAT Act, 2005 and liable to tax @ 4%.

***
6.A.R.Com/ 64 /2008.

Dated 30 - 07 - 2009

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:
I. M/s Maa Television Network Ltd., Punjagutta, Hyderabad, (TIN 28880168557.)
have filed an application and sought clarification and advance ruling on the following
items
a. Whether they are entitled to claim as input tax credit the 4% tax
they paid on local purchases.

b. Whether they are entitled to claim as input tax credit the 8.5%
portion of the tax which they paid over and above 4% on goods
taxable at 12.5%.
and ruling is given as under:
II.

The applicant is in the business of Satellite Channel, De-Coders, Edit-Recorder,

Edit-Player, Edit Consol, Audio Mixer, Camera, purchase of Movie Rights, Satellite
Broadcasting Rights and Telecommunication Networking Equipment. They stated that
in the course of business they made purchases of among the others the business assets.
Such purchases are also made with in the state, by paying the VAT charged by the sellers.
Thus they are purchasing goods taxable @b 4% as well as 12.5% and hence sought
clarification on claiming of Input Tax Credit.
III.

The ruling is that under the provisions of the APVAT Act only those dealers

who are registered as VAT dealers are eligible to claim input tax credit subject to the
conditions and restrictions contained in Section 13 of the APVAT Act and Rule 20 of
APVAT Rules. Under these provisions a dealer registered as VAT dealer is eligible to
claim input tax credit on the local purchases of taxable goods, which are not
included in the negative list under Rule 20, and purchased from other VAT dealers
to the extent such purchases relate to the taxable turnovers under APVAT Act or
CST Act.
***

7.A.R.Com/97/2008.

Dated: 30-07-2009

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:
I.

M/sVasavi Pharmaceuticals, Gunfoundry, Hyderabad, (TIN 28840132927) have

filed an application and sought clarification and advance ruling on the following items
a. Furnishing of particulars of purchase to the Department.

b. Method to be followed for issuing C Forms and ruling is given as

under:
II.

The applicant prayed to clarify the procedure to be adopted by them in the

under mentioned circumstances:

1)

The applicant purchases goods from outside the State of A.P.

2)

The supplier Bills the applicant as and when goods are dispatched at the
particulars rate; say for Rs. 1,00,000/-

3)

The supplier specified to the applicant that the Goods be sold: for say Rs.
60,000/-

4)

The supplier issues credit notes to the applicant for a sum of Rs. 50,000/-

5)

Sometimes the goods are supplied in a particular month and the credit notes
are given in the following month.
In the above circumstances the applicant seeks clarifications on the
following points:

I.

What is the value to be shown in VAT 200 return against column 06.
(1) Whether the Total Value of Invoice for the month.
(2) Whether the total value of Invoice less the value of credit notes during the
month.
(3) What is to be shown if the value of invoice is less than the value of the
credit notes in that month.

II

The issue arising out of the above impact on the value of C Forms to be
issued to the supplier. The following are the issues:
(4) Whether C Form is to be issued for the entire value of invoice.
(5) Whether C Form is to be issued for the entire value of invoice less than
value of credit notes.
(6) What is the value for which C Form is to be issued if the value of credit
notes is greater than the value of the invoices in that month.
(7) Whether it is mandatory to specify in the credit notes the invoice against
which the reduction in price is given.

The authority constituted by the commissioner of Commercial Taxes

under Section 67 of the APVAT Act, to clarify any aspect of the
implementation of APVAT Act has no jurisdiction to clarify on any of the
provisions under CST Act because, there is no enabling provisions under
any of the Sections including Section 9 (2) or 9 (2A) or 9 (2B) of the CST
Act to make the provisions relating to Advance Rulings under AP VAT
Act applicable to CST Act.
Therefore, this Authority is not inclined to give ruling on the issues
raised under CST Act.
***

8.A.R.Com/ 2 /2009.

Dated 30- 07-2009

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:
I. M/s Hemanth Printers, Kachiguda, Hyderabad, (TIN 28290253096) have filed an
application and sought clarification and advance ruling on the following:
Rate of tax on Label Printing on Job Work
II. The applicant submitted the following documents:
Write up on the issue.
III. The applicant is a printer and one of the Beedi Company ordered for printing on
the Label for which paper is also supplied by the Beedi Company, and hence
sought for clarification on rate of tax on LABEL PRINTING ON JOB WORK.
VI.

The ruling is that the work of printing Labels on job work basis utilizing
the paper supplied by the customer is a works contract. The dealer
executing such works contract is liable to pay tax on the value of the
goods such as ink etc. used in the work under Section 4 (7) (a) of the

APVAT Act. Alternatively the dealer can also opt for payment of tax by
way of composition at 4% on the total contract receipts under Section 4
(7) (c) of the APVAT Act.
*********
9.A.R.Com/ 31/2009.

Dated 30- 07-2009

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:
I. M/s Dekars Fire & Security Systems Pvt. Ltd., Ashoknagar, Hyderabad,
(TIN 28444693072) have filed an application and sought clarification and advance
ruling on the following and ruling is given as under:II.

The applicants are contractors in Designing/Supply/testing & commissioning of

Fire Protection Systems for all high rise buildings & Industries which include Hydrant
System, Sprinkler System, Medium and High velocity Water Spray System, Automatic
Smoke and Heat Detection System, Coal conveyor Detection and Emulsifier System,
Extinguishers, Gas Based Systems, and hence sought for clarification on:
1) Wish to know the prevailing tax on Design/supply/installation/testing &
commissioning of Fire Protection Systems- such as Hydrant System,
Sprinkler System, Medium and High velocity Water Spray System,
Automatic Smoke and Heat Detection System, Coal conveyor Detection
and Emulsifier System, Extinguishers, Gas Based Systems .
2) Only supply/trading of imported smoke/heat detectors/Microprocessor
based panels.
3) What is the Labor component/percentage to be considered if its works
contract (whether the unit rate for each item is inclusive of
Design/supply/installation/labor/testing & Commissioning) ?.
III.

The ruling is that the question whether a particular transaction is a sale or

works contract is a mixed question of fact and law to be determined by the assessing
authority concerned independently in each case after examining the agreements, invoices,

vouchers etc and applying the provisions of the Act and case law with reference to the
facts of the case. The Authority for Advance Ruling will not step into the shoes of an
Assessing Authority. Therefore

the applicant is requested to file all the documents

relating to their transactions before the assessing authority concerned for

adjudication.
***

10.A.R.Com/ 10 /2009.

Dated 30 07- 2009

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:
I.M/s Sri Raghavendra Enterprises, Vanasthalipuram, Hyderabad,(TIN 28762137467)
have filed an application and sought clarification on the following:
Rate of tax on food items in running of Canteen at Sampurna Theatre,
Vanasthalipuram, in lieu of Amendment of Sec. 9 of APVAT Act, in G.O.Ms.No. 175,
Revenue, Dept. dt. 18.02.2009, and whether they are eligible for claiming of Input Tax
Credit.
II.The applicant submitted the following documents:
Write up on the issue and ruling is given as under:
III.

The ruling is that, under clause (d) of sub section (9) of Section 4 of the

APVAT Act every dealer running a restaurant, sweet stall, or any other eating house
and whose total turnover is more than Rs. Five lakhs and less than Rs. One crore
fifty lakhs per annum is liable to pay tax at 4% on his taxable turnover.
The dealers who are liable to pay tax under clause (d) of sub section (9) of
Section 4 of the APVAT Act are not eligible to claim input tax credit in view of the
prohibition contained in clause (h) of sub section (5) of Section 13 of the APVAT Act.

11.A.R.Com/ 1/2009.

Dated 30 - 07 - 2009

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:
I. M/s Dura Line India Pvt. Ltd, Dwarakapuri, Visakhapatnam, (TIN 28469116821.) have
filed an application and sought clarification and advance ruling on the following :
Whether the work done for laying of pipeline to a company which is authorized
to develop and operate a sector specific approved SEZ , at Visakhapatnam is liable for
deduction of tax in view of the inclusion of sales to EZ Developer in Schedule I where
there is no any VAT liability under APVAT Act.
.

The issue has been examined with reference to the provisions of the APVAT Act

and Rules and ruling is given as under:

II. The applicant stated that are locally registered under VAT Act, to do business as works
contractor and got a allotted a pipeline laying work from Brandix India Apparel City Pvt.
Ltd Visakhapatnam, a company which is authorized to develop and operate a sector
specific approved SEZ at Atchutapuram, Visakhapatnam. The work is executing in the
SEZ. The sale of goods to SEZ Developer is included in Schedule I. The contractee
proposed to deducted works contract tax from bills and hence sought for clarification
whether there is a need for deduction of tax at source in view of the inclusion of sales to
SEZ Developer in Schedule I where there is no any VAT liability under APVAT Act.
III. The facts of the case have been carefully examined. It should be noted that the tax
deducted at source cannot be equated with tax liability. Section 22 (3) does not
distinguish between works done for different categories of contractees and different
destinations of supply, when it comes to the tax deduction at source. No exemptions
from TDS are provided under the APVAT Act. Therefore, exemption from TDS cannot

be granted even in cases where the deemed sales i.e., supplies of goods by way execution
of works contracts are exempted. Hence the Contractees, who are under the statutory
obligation to deduct tax at source in terms of Sec. 22 (3) of the APVAT Act, shall collect
tax at source at the appropriate rates. However, in case the tax liability of the works
contractors, from whom the tax is deducted at source, is less than the amount of tax
deducted at source, the differential amount will be refunded or adjusted against the
present or future liability.
IV. Accordingly the application for Advance Ruling and Clarification is disposed
of with the ruling that the Contractees shall collect tax at source at the
appropriate rates from the Works Contractors, even if the supplies of goods by
them by way execution of works contracts are exempted under any of the
provisions of the APVAT Act.
***

12.A.R.Com/ 67/2008.

Dated 30-07- 2009

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:
I. M/s ADP Private Limited, Raj Bhawan Road,Hyderabad, (TIN 28740128436.)
have filed an application and sought clarification and advance ruling on the following
a)

Whether the applicant who is engaged in development of customized software

are taxable under the service tax law as Information Technology Services U/
the Finance Act, 2008 be considered as goods u/APVAT Act, 2005?

b)

Whether the activity of ADP is considered as Works Contract.

c)

If the activities of ADP are considered as goods, then would be taxable under
which entry, either u/entry No.39 of Schedule IV i.e. IT software of any media
or under entry No. 2 i.e. Goods

of intangible or incorporeal nature as

mentioned under relevant schedule of APVAT Act.

d)

The date from which applicability would arise whether retrospective from April
1, 2005.

e)

Can the applicant avail Input tax credit on eligible purchases made for
development of software, if the transaction is being subject to APVAT by the
Advance Ruling authorities now.

f)

If the answer for above is in positive, whether would be eligible for the same
retrospectively from April,1,2005?

g)

In case, applicant is also providing taxable services along with taxable goods,
whether the applicant can claim input tax credit completely on common inputs?

h)

Whether the applicant can claim the refund on the excess input tax credit lying
unutilized and ruling is given as under:

II. The applicant stated that the company is registered U/VAT Act, and also as STP unit
under Software Technology Park in India with STPI authorities. Now ADP is engaged in
providing IT enable services and development of customized software to ADP Inc. USA
and other affiliated entities. Hence sought for clarification on the issues mentioned supra.
The Ruling is given as under:
III. a)

Customized software is goods for the purpose of levy of tax under APVAT Act,

as held by the Honble Supreme Court in the case of M/s. Tata Consultancy Services Vs
State of A.P., 137 STC P. 620 and Honble STAT in the case of M/s. Computer Vision Lab
India Limited Vs State of A.P., reported in 46 APSTJ P. 244
b)

Whether a transaction is a sale or works contract is to be determined by the

assessing authority with reference to the facts of each case and the documentary
evidence relating to that case.

c)

Customized Software is taxable under sub Entry (14) of Entry 39 of IV Schedule to

the APVAT Act with effect from 01.09.2005. For the period from 1.4.2005 to 31.8.2005 it
is taxable under entry 2 of IV schedule to APVAT Act. Either under entry 39 or under
entry 2 of IV schedule to the APVAT Act the goods are taxable at 4%.
d)

Clarification on the issue of classification given at (C) here above applies to the

question of the dates of the applicability of the entries under IV schedule to the APVAT
Act.
e)

A dealer who is registered as VAT dealer under the provisions of APVAT Act

including a dealer in supplying customized software is eligible for claiming input tax
credit subject to the conditions and restrictions specified in Sec.13 of the APVAT Act &
Rule 20 of the APVAT Rules.
f)

In case a dealer is registered as a VAT dealer with effective date of registration as

1.4.2005 he is eligible to claim ITC from that date.

g)

The question whether a dealer is providing services or supplying goods taxable

under APVAT Act is a question of fact to be determined by the assessing authority with
reference to the documentary evidence available before him. Once a transaction is held
to be a sale of goods, the dealer is eligible to claim ITC if he is registered as VAT dealer
and subject to the conditions and restrictions mentioned in Sec.13 of the APVAT Act and
Rule 20 of APVAT Rules.
h)

A VAT dealer can claim refund of the excess ITC subject to the conditions

mentioned in Section 38 of the APVAT Act, 2005.

***
13. A.R.Com/ 62 /2008.

Dated 30- 07- 2009

Ref:- CCTs. Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:
I.M/s Ness Technologies (India) Pvt. Ltd.,Banjara Hills Hyderabad, (TIN
28560235239.) have filed an application and sought clarification and
advance ruling on the following items:
a. Whether the applicant who is engaged in development of customized
software in pursuance of contract with its parent company in USA which are

taxable under the service tax law as Information Technology Services U/

the Finance Act, 2008 be considered as goods u/APVAT Act, 2005?
b. Whether the applicant is considered a dealer and is required to disclose
such turnover in the returns that are filed with the CTD every month.
c.

Whether the applicant who is supplying technical qualified professionals

to the customers for development of customized software at the customers

location be regarded as a dealer in Goods specifically when the contract
provides for payment for services and remuneration is on the basis of hours
spent at the customers location and such services are taxable under the service
tax law as Information Technology Services U/Finance Act, 2008.
d.

If the clarification to the above issues are positive, whether the applicant is

eligible to avail input tax credit on the eligible purchases made for
development of software. Further whether the applicant can claim the refund
on the excess input tax credit lying unutilized.

II. The applicant stated that the company is incorporated under the Companies
Act, 1956, and is in the business of software, application development,
proprietary vertical-specific solutions, and IT outsourcing, Google and
Ness have entered into Google Inbound Services Agreement under
which Ness would assist Google in relation to development of
Software. Further Google and Ness have mutually agreed statement
of works for defining the deliverables, payment mechanism. Hence
sought for clarification on the issues mentioned supra.
III. (i)(a): Customized software is goods for the purpose of levy of
tax under APVAT Act as held by the Honble Supreme Court in the
case of Tata Consultancy Services Vs State of Andhra Pradesh (137
STC 620) and subsequently by the Honble STAT in the case of

Computer Vision Labs (India) Ltd. Vs State of Andhra Pradesh ( 46

APSTJ 244).
(i)(b): Any person who carries on the business of supplying software,
whether canned or customized, is a dealer and he is required to obtain
registration and file returns as per the provisions of the APVAT Act.
(ii) : The question whether a person is supplying technically qualified
professionals or the customized software developed by such professionals
is a question of fact which should be answered by the Assessing Authority
concerned of the dealer with reference to the agreements entered into by
the dealer with the customers, the invoices raised on the customers,
vouchers and other documentary evidence produced by the dealer.
(iii) : A dealer who registers himself as a VAT dealer under APVAT Act is
eligible to claim input tax credit subject to the conditions and restrictions
mentioned under Section 13 of the APVAT Act and Rule 20 of the APVAT
Rules.
***

14.A.R.Com/96 /2007.

Dated 30 -07 - 2009

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:
I. M/s Madras Cements Ltd., Jaggaiahpet, Krishna District, (TIN 28960205382.)
have filed an application and sought clarification and advance ruling on the
following:

Whether input VAT Credit is eligible on the following purchases for the
additional Railway siding at our own premises which will be used for transporting of
Raw materials inside the factory and Dispatch of Cement & Clinker:
1) Material supply for the pathway and for Ballast for the additional Railway siding
at our own premises.
2) Procurement of spares for overhead Electrification of our additional private
Railway siding at our own premises and ruling is given as under:
II. The applicants are manufacturers of Cement having factory located at Jayanthipuram,
Jaggaiahpet, Krishna Dist.,. They stated that they have gone for expansion of their linker
& Cement manufacturing capacity , and they have own private Railway siding in their
factory premises. The siding is being used for inflow of materials like Gypsum and for
Fuels. Dispatch of Cement is being done by Road as well as by Rail to various places in
AP and outside the AP. They have additional Railway line the premises. Railway lines
fare forming part of their Plant & Machinery, which will be used for inflow of input
materials for manufacture and dispatch of Clinker and Cement. Hence they sought for
clarification

whether input VAT Credit is eligible on the purchases for the additional

Railway siding at their own premises which will be used for transporting of Raw
materials inside the factory and Dispatch of Cement & Clinker:
III. The ruling is that, u nder the provisions Sec.13 of APVAT Act input tax credit will be
allowed to a VAT dealer on the purchases of taxable goods, if such purchases are for use in
the business of the VAT dealer. The grant of input tax credit however is subject to the
restrictions and conditions specified under Section 13 and under Rule 20 of the APVAT Act
and Rules respectively. Under clause (i) of Rule 20(2) any inputs used in the construction or
maintenance of any building including factory or office building are not eligible for input
tax credit.

In the present case the dealer, M/s Madras Cements Ltd, claims that the

additional Railway siding constructed in their factory premises is plant and machinery. The
question whether the Railway siding is part of the factory building or plant and machinery

is to be determined by the assessing authority after making a field visit to verify whether the
siding along with the Railway line is annexed to the factory building totally or only a part of
it is annexed to the factory building with the remaining part forming a part of the plant and
machinery. The dealer would not be eligible to claim input tax credit to the extent the
siding is a part of the factory building.

***
15.A.R.Com/85 /2007

Dated 30 - 07- 2009

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:
I.M/s Keith Electronics Pvt.Ltd., Kavadiguda, Secunderabad,(TIN28600103253
.) have filed an application and sought clarification and advance ruling on the
following items
Rate of tax on OPTICAL FIBER FUSION SPLICER MACHINE.
and ruling is given as under:
II. Optical Fiber Fusion Splicer Machine (HSN Code No. 8515.80.90 of Central Excise
tariff Code) is not specified in any of the Schedules and hence is liable to tax @12.5%
under the residuary entry of Schedule V.
Therefore, it is clarified that Optical Fiber Fusion Splicer Machine falls
under the residuary entry of Schedule V of the APVAT Act, 2005 and liable to tax
@12.5%.
***
16.A.R.Com/ 78 /2007.

Dated 29 - 07- 2009

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:

I.M/s Zuari Cement Ltd. Krishnanagar, Yerraguntla, (TIN 28030153712 .) have filed
an application and sought clarification and advance ruling on the following items
a. Whether the assessing authority can keep the files without responding to the
request of the applicant to transfer the registration files to the assessing
authority over its office in Hyderabad office.
b. Whether pre-deposit of disputed tax in the case of taxing in deferment
period is to be deposited or to be deferred as in the case of tax payment.
II. Both the issues have been examined with reference to the provisions of the APVAT
Act and Rules and the ruling is given as under:
III.

As per sub-Rule (1) of Rule 13 of the APVAT Rules, dealer registered under

Section 17 shall notify the authority prescribed on Form VAT 112 or on Form VAT 051 as
the case may be, regarding the intention of change of his place of business from the
jurisdiction of one authority to the jurisdiction of authority in the State. As per Section
17 read with Rule 59, the authority, prescribed for VAT registration, is the CTO of the
circle concerned and for TOT registration, the ACTO of the circle authorized by the CTO
of the circle.
As per sub-Rule (3) (b) of Rule 3 , the authority, prescribed to receive an
application on Form VAT 112 or on Form TOT 051, as the case may be, for a change of
place of business shall, on approval of the application, remove such registration and shall
be transferred to the authority, prescribed, in whose jurisdiction the proposed new place
of business is sought to be established. Hence the application for transfer shall be made
to the Registering authority prescribed.
According to the second proviso to the sub-section (1) of Section 31 of the
APVAT Act, an appeal so preferred shall not be admitted by the appellate authority
concerned, unless the dealer produces proof of payment of tax admitted to be due or of
such installments as have been granted, and the proof of payment of twelve and half
percent of the difference of the tax assessed by the authority prescribed, and the admitted

tax by the appellant in the relevant tax period, in respect of which the appeal is
preferred.
Further, according to first proviso to sub section (2) of Section 33, no appeal
passed under Section 31 shall be admitted unless it is accompanied by satisfactory proof
of the payment of fifty percent of the tax ordered by the Appellate Authority under
Section 31.
Further, according to second proviso to sub section (2) of Section 33, no appeal
against the orders passed under sub-section (2) of Section 32 shall be admitted under subsection (1) or (2) unless it is accompanied by satisfactory proof of payment of the tax,
admitted b y the appellant to be due or such installments thereof, and twenty five percent
of the difference of the tax, ordered by the revisional authority under sub-section (2) of
Section 32, and the tax, admitted by the appellant.
Hence, in all the above cases, the appeals shall not be admitted unless the
applications are accompanied by the satisfactory proof of payment of 12.5% or 25%
or 50%, as the case may be, and the admitted tax. The payment of 12.5% or 25% or
50% taxes and the admitted taxes is a precondition for admission of appeals and
such taxes cannot be shown against deferment amount treating them as having
been paid for admission of appeals.
Therefore, it is clarified that, the amount calculated @ 12.5% or 25% or
50% as the case may be, of the disputed tax shall be actually paid for the purpose of
admission of appeal and the notional or deemed payment, adjusted against the
eligible amount of industrial incentive, is not permissible as per the relevant
provisions of the APVAT Act, 2005.
***

17.A.R.Com/ 34/2008.

Dated 29 07- 2009

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:
I. M/s S P P POLY PACK (P) LTD, Kattedan,,(TIN ) have filed an application and
sought clarification and advance ruling on the following
Rate of tax on the following Products:

II.

Product

HSN Code

1) Plain or printed Polythene Bags

39239090

2) Plain or printed Polythene Sheets

39219039

3) Plain or printed Polythene Tubes

39173000

4) Waste and Scrap of Plastic

39159029

The issue has been examined with reference to the provisions of the APVAT Act

and Rules and HSN Codes notified by Government and the ruling is given as under:
Sl.No..

Product

1) Plain or printed Polythene Bags

HSN Code
3923.90.90

Ruling
Falls u/item165of entry
100 of IVSch. and hence
liable to tax @ 4%.

2) Plain or printed Polythene Sheets 3921.90.39 This item is not specified

in any of the Schedules,
and hence liable to tax
@12.5%
3) Plain or printed Polythene Tubes

3917.30.00 This item is not specified

in any of the Schedules,
and hence liable to tax
@12.5%.

4) Waste and Scrap of Plastic

3915.90.29 Falls u/item 205 of entry

100 of IV Sch. and hence
liable to tax @ 4%.

Therefore, it is clarified that the goods, manufactured by the applicant, i.e.

Plain or Printed Polythene Bags, and Waste and Scrap of Plastic falls under
items 165 and 205 respectively of entry 100 of the Schedule IV and are liable to tax

@ 4%, and Plain or Printed Polythene Sheets, and Plain or Printed Polythene
Tubes are not notified in any of the Schedules of the APVAT Act, and hence fall
under residuary entry of V Schedule, taxable @ 12.5%.
***
18.A.R.Com/88/2008.

Dated 29- 07- 2009

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:
I. M/s Pan Electro Technic Enterprises (P) Ltd., Chintal, HMT Road, Hyderabad,
(TIN28030185722.) have filed an application and sought clarification and advance
ruling on the following items Rate of Tax on Electrical Transformers (Dry Type)
and ruling is given as under:
II The applicant stated that they are manufacturers of Oil Cooled Tranformers and
Electrical Transformers (Dry Type) and sought for clarification for rate of tax on
ELECTRICAL TRANSFORMERS (Dry Type).
The issue is examined with reference to the provisions of the APVAT Act and
Rules and the ruling is given as under:
Since HSN Code is notified under entry 39 of the IV Schedule, Electrical
Transformers with HSN Code 8504 are liable to VAT @ 4% up to 26.8.2005.
Consequent to the issue of orders by the Government in G.O.Ms.No. 1596 Rev.
(CT-II) Dept. dt. 27.8.2005 wherein the Chapter 8504 was deleted from the list of I.T.
products, Electrical Transformers are liable to VAT @ 12.5% w.e.f. 27.8.2005.
By G.O.M.s No. 1264 Revenue (CT-II) Dept. dt. 1.11.2008, Electrical
Transformers (Dry Type) with HSN Code 8504.31.00 are added under entry 121 of the IV
Schedule. Hence the same are liable to tax @ 4% on and from 1.11.2008.
Therefore, it is clarified that the ELECTRICAL TRANSFORMERS ( DRY
TYPE) are taxable @ 4% from 1.4.2005 to 26.8.2005, and @12.5% from 27.8.2005
to 31.10.2008 and @ 4%.from 1.11.2008.
*****

19.A.R.Com/ 76/2008.

Dated 29- 07- 2009

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:
I.

M/s

Ratan

Stationery

Mart,

behind

Osman

Gunj,

Hyderabad.

(TIN 28800176061) have filed an application 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.1,000/II.

They sought clarification of Rate of tax on the following goods:

a. Staplers ( HSN Code No. 8472.90.10)
b. Staple Pins ( HSN Code No. 8305.20.00)
c.Paper Punch (HSN Code No. HSN Code No. 8472.90.90)
d.Alpins (HSN Code No. 7319.30.00)
e.Index Fick Clips ( HSN Code No. 8305.10.00)

and ruling is given as under:

III.

The applicant is dealer in stationery and requested to clarify the rate of tax on the

goods mentioned supra.

Entry 47 of the IV Schedule deals with

Diary, Calendar, Annual Reports,

Application Forms and similar printed material. The enlarged entry No, 47 of the IV
Schedule under G.O.Ms.No. 175 (CT-II) Dept. dt. 18.2.2009 deals with stationery items
like Letterheads, Visiting Cards, Bill Books, Computer Stationery, Posters, Brochures,
CD/DVD Covers, Visual Aids, Danglers, Streamers, Envelopes, Labels, Telephone
Recharge Coupons, Report Card Tickets and so on.
The items, on which clarification is sought, are not mentioned in the said entry.
The goods, enumerated in the entry 47, are only paper based stationery items. Applying
the principle of Ejusdem Generies, all the above items fall outside the purview of the
entry 47 of Schedule IV and hence are taxable @ 12.5% under residuary entry of
Schedule V of the APVAT Act, 2005.
Therefore, it is clarified that the goods dealt by the applicant namely Staplers
( HSN Code No. 8472.90.10), Staple Pins ( HSN Code No. 8305.20.00), Paper Punch

(HSN Code No. 8472.90.90), Alpins (HSN Code No. 7319.30.00), Index Fick Clips
( HSN Code No. 8305.10.00) falls under residuary entry of Schedule V of the
APVAT Act, 2005 and liable to tax @12.5%.
***
20.A.R.Com/ 56/2008.

Dated 29- 07- 2009

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:
I. M/s Acalmar Oils & Fats Limited, Banjara Hills, Hyderabad, (TIN 28190157037.)
have filed an application and sought clarification and advance ruling on the following
items
Rate of tax on Palm Stearin ( both crude & refined) under VAT Act.
II. The applicant submitted the following documents:
Write up on the issue copy of excise Law and copy of Departmental
Clarification of Govt. of Goa and ruling is given as under:
III. The applicant states that they are in business of refining of edible vegetable oils and
manufacture of Vanaspati. The crude vegetable oils are subject to the processing of
refining where by the colour, odour and free fatty acid contents are eliminated. In the case
of Refined Palm oil it is further subjected to fractionation whereby Refined Palmolein
and Pals Stearin ( both crude and refined) products are generated.
Palm Stearin is generated by mode of physical processing and does not undergo
any chemical change/modification. Therefore it is purely a vegetable oil product of Palm
Oil. All these Palm products such as Refined Palm oil, Refined Palmolein, Refined Palm
Stearin etc. are classified under HSN Code under Chapter 1511. As per Schedule IV of
the APVAT Act, Palmolein & Plm oil are falling under entry 67 viz vegetable oils, and
hence sought for rate of tax on PALM STEARIN (BOTH CRUDE & REFINED).
The issue is examined and the ruling is given as under:
The applicant relies on a clarification issued by the Central Excise Department in
support of their claim that palm stearin is classifiable under HSN Code 1511. A perusal

of the clarification reveals that it had come to the notice of the Board that palm stearine
which is a fraction of palm oil is being classified under heading 1511 of the customs
Tariff at some ports and under 3823 at others. After examining the issue the Board stated
that the stearines falling under heading 1511 are basically tryglycerides ( esters) of fatty
acids and the stearines falling under heading 3823 are basically free fatty acids. The
board advised its officials to get the goods chemically examined to verify whether they re
glycerides ( esters) or fatty acids ( 1511 or a mixture of fatty acids (3823) and collect
tariff accordingly.

The applicant is therefore advised to get their product also

chemically tested. If on such testing, it is proved that the stearine sold by them is a
glyceride ( ester) of fatty acids ( 1511) it is liable to tax at 4% under entry 67 of IV
Schedule to the APVAT Act. On the other hand if the product is proved to be a
mixture of fatty acids (3823) it is liable to tax at 12.5% under5 V Schedule to APVAT
Act.
***

21.A.R.Com/ 11/2008.

Dated 29- 07 - 2009

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:
I. M/s Minar Masts, Hyderabad, (TIN 28940135187.) have filed an application and
sought clarification and advance ruling on the following
Rate of tax on Transportable Containers for Missiles and its Spare Parts and
Accessories.( ASTRA MISSILE) ruling is given as under:
II.

The applicant states that the container is designed for shipment and storage of

one ASTRA Missile, and comprises of specially designed aluminium alloy extrusions,
castings and sheet and features a removable cradle ( Vibration structure assembly) and

seeks clarification on the rate of tax for the Transportable Container for Missile and
its spares and accessories.
The issue is examined with reference to the provisions of the APVAT Act and
Rules as well as and the brief technical description, submitted by the applicant, and the
ruling is given as under:
According to Section 6 of the APVAT Act, where the goods sold or purchased are
contained in containers or are packed in any packing material liable to tax under this Act,
the rate of tax, applicable to such containers or packing material, shall be the same as the
rate of tax, applicable to such goods so contained or packed.
The ASTRA MISSILE, i.e. the content is liable to tax @12.5%, under Schedule V.
Hence the container for shipment and storage of the ASTRA MISSILE is also liable to
tax @12.5%.
Therefore it is clarified that the Transportable Containers for Missiles and
its Spare parts and Accessories( ASTRA MISSILE ) falls under residuary entry
under Schedule V of the APVAT Act, 2005 and liable to tax @ 12.5%.
***

22.A.R.Com/ 59/ 2007.

Dated 28 -07 -2009.

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:
I.

M/s. Bambino Agro Industries Ltd., Hyderabad have filed an application and

sought clarification and advance ruling on the following items

Whether the product Macaroni is similar to the product Vermicelli and if so,
taxable @ 4% or not?
II.

The applicant submitted the following documents:

1) A copy of the order of the High Court dt. 12-8-1987 in W.P.No.10832 of 1987.

2) A write up on the product besides samples of the product and the ruling is
given as under:
III

The statement of arguments placed before this authority at the time of personal

hearing is carefully examined and held as hereunder:

Prior to introduction of APVAT Act, entry 60 of the 1st schedule to APGST Act,
1957, dealt with Maida, Atta, Ravva and Wheat Bran. There was a dispute between the
Department and the Trade about classification of Vermicelli. The view of the Department
was Vermicelli would fall under entry 129 A of the APGST Act as against the view of the
applicant as Maida, under entry 60 of the 1st schedule. This dispute was ultimately
resolved by the Honourable High Court of A.P., in Jaya Foods case holding that
Vermicelli is nothing but Maida, under entry 60 of the 1 st Schedule in the absence of
specific entry for Vermicelli.
Subsequent to the Judgement of the Honble High Court, Vermicelli by name
was specifically inserted as entry 129 B of the 1 st schedule to APGST Act by G.O.
Ms.No.114, dt.14.-4.1990.
With effect from 1-4-2005, VAT Act has come into existence replacing the
APGST Act,1957. Entry 28 of the IV Schedule of the VAT Act deals with, Flour, Atta,
Maida, Suji, Besan and Ravva. The HSN Codes appended to this entry also do not
specifically notified Vermicelli by name to say that Vermicelli falls under entry 28 of the
Schedule IV, appended to APVAT Act. Therefore it was clarified that Vermicelli falls
under residuary entry under V schedule to APVAT Act, 2005.

Subsequently an

amendment was made to entry 28 by G.O.Ms.No.1564, Revenue CT-II Department,

dt.17-8-2005, specifically including Vermicelli and Semiya, under entry 28 of Schedule
IV to APVAT Act, w.e.f 1-8-2005. Thus Vermicelli is liable to tax @ 4% prospectively
from the date of amendment.
The contention of the applicant is verified & examined with the Websters
Dictionary wherein the word macaroni means pasta prepared from wheat flour in the
form of dried hollow tubes and the word vermicelli means a kind of pasta in the
form of long, slender, solid threads, resembling spaghetti. The composition of these
products described shows- macaroni as Hard wheat semolina and vermicelli as Hard

wheat semolina and as such both products are made from Hard wheat semolina.
Hence, macaroni is similar to vermicelli exact marketable trade name.
The issue was referred to the C.T.O. Basheerbagh Circle, Abids Division for the
remarks and the clarification sought by the applicant. In compliance, the C.T.O.
Basheerbagh Circle furnished his remarks which read as under.
The applicant manufactures both products Macaroni and Vermicelli and have
mixture of wheat flour and other liquids. There is no difference between the Macaroni
and Vermicelli in the process under chemical nature etc. in the physical nature which is
due to obtaining of different dies used for getting shapes such as springs, shells discs etc.
thus the ingredients used in the manufacturing of all the products Macaroni and also the
procedure is one and the same as to Vermicelli, different being in the physical shape of
the product.,

Vermicelli is in the shape of long cuts and short cuts, whereas

Macaroni is in the shape of springs, shells and discs. etc.

No doubt, the CTO, Basheerbagh circle, is correct in his analysis. But the
purposes, for which Vermicelli and Macaroni are used, are different. They are not
replaceable. The recipes, in which vermicelli is used, are different from the recipes, in
which macaroni is used. Normally macaroni is used in association with some vegetables
or pieces of meat, whereas vermicelli is used exclusively. The cooking time, taken by
both of are different. In essence, one cannot be substituted for the other. Just because they
are made up of the same, one cannot come to the conclusion that they are one and the
same. For example, both the utensils and the iron chairs are made up of iron and steel in
different shapes, but they cannot be treated as one and the same. Therefore in the absence
of specific mention of a product in any of the Schedules, such product shall be treated as
falling in the residuary Schedule V and accordingly considered as liable to be taxed
@12.5%.
Therefore, it is hereby clarified that the product macaroni made out of hard
wheat

is not identical to vermicelli and accordingly fall under Schedule V,

appended to the APVAT Act, 2005 and liable to tax @ 12.5%.

23.A.R.Com/ 74/2008.

Dated 28-07- 2009

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:
I.M/s

Zen Technologies Limited, Sanathnagar, Hyderabad, (TIN 28470200516.)

have filed an application and sought clarification and advance ruling on the following
items
Rate of tax on Simulators and ruling is given as under:
II.

The applicant stated that they are

engaged

in

designing,

developing,

and

manufacturing various types of training simulators for weapons and driving skills. The
simulators consist of hardware, software and mechanical items. The hardware consists of
computers, projects and other peripherals, whereas the software

consists of window

operating system that facilitates the operation of the simulator. The mechanical items
consists of driver cabin, adjustable motion platform etc.
They further stated that the computer is the heart of the training simulators and all
other components like the sensing unit, display unit, printer, UPS, speakers etc., are
peripherals. The computer with Window Operating System installed thereon that will run
the training software. Sub-item (14) of the entry 39 of Schedule IV of the APVAT Act,
relates to IT Software on any media. Computers & computer peripherals are covered by
sub-item (3) of Item 39. The value of mechanical items is infidecimal. Therefore, it is to
be considered as an electronic good. The appellant is this connection relies on the
decision of the Supreme Court in State of Andhra Pradesh Vs. Kone Elevators (India)
Limited (2005) 140 STC 22. The Supreme Court, considering a proportion of the material
component in a lift, held it as sale of goods and not a works contract. Following the same
principle, the appellant submits that since the predominant component of a simulator
consists of electronic items it should be considered as an electronic product. Accordingly
they sought clarification regarding the rate of tax to be adopted on the end product
Simulator.
A simulator is a composite product of several components, involving in a
systemic way several components, as enumerated in the contentions, raised by the

applicant. The contention that the Simulator should be taxed at the rate, applicable to the
constituent parts, predominantly present in their product called Simulator, cannot be
accepted. The end product, namely Simulator, is different from its constituent parts, just
as a readymade garment is different from cloth.
Therefore, it is clarified that Simulators, which are not specified in
any of the Schedules, falls under the residuary entry of the Schedule V of the APVAT
Act and are liable to be taxed @ 12.5%.
***

24.A.R.Com/ 5 /2009.

Dated 23-10- 2009

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:
I. M/s Kovi Plastics Pvt.Ltd., Ranigunj, Secunderabad,(TIN28720110718 ) have
filed an application and sought clarification and advance ruling on the following
items
a. Rate

of

Tax

on

ALUMINIUM

SHEET

PERFORATED

( ALUMINIUM GRILLS) with HSN Code 7606.12.00

b. Rate of Tax on ALUMINIUM SCRAP CASTINGS HSN Code
7601.20.20
c. Rate of Tax on ALUMINIUM EXTRUSION PROFILE with HSN Code
7604.29.90.
and ruling is given as under:
The clarification is sought on the rates of tax, applicable to (i) ALUMINIUM
SHEET PERFORATED

(ALUMINIUM GRILLS), (ii) ALUMINIUM SCRAP

CASTINGS and (iii) ALUMINIUM EXTRUSION PROFILE.

The issue has to be

examined only with reference to Entry 27 of the Schedule IV of the APVAT Act. The
description of the said Entry is Ferrous and Non Ferrous Metals and Alloys and
extrusions thereof.

According to the said Entry, Non Ferrous Metals and their

Extrusions are alone liable to tax @ 4%. Extrusion is the process by which long straight
metal parts like Wires, Sheets, Ingots etc., can be produced. The cross-sections that can
be produced vary from solid round, rectangular to L shapes, T shapes, Tubes and many
other different types. Extrusion is done by squeezing metal in a closed cavity through a
tool, known as a die using either a mechanical or hydraulic press. Hence, only those
goods, which are the direct outputs of the process of extrusion, fall under Entry 27 of the
Schedule IV of the APVAT Act. If any thing is done to such outputs, subsequent to the
process of extrusion, such final products will not fall under the said Entry. Going by the
said ratio, only ALUMINIUM EXTRUSION PROFILES do fall within the ambit of the
said

Entry

and

the

others,

namely,

ALUMINIUM

SHEET

PERFORATED

(ALUMINIUM GRILLS) and ALUMINIUM SCRAP CASTINGS fall outside the ambit
of the Entry 27 of the Schedule IV of the APVAT Act.
Therefore, it is clarified that the ALUMINIUM SHEET PERFORATED
(ALUMINIUM GRILLS) and ALUMINIUM SCRAP CASTINGS are not
enumerated in any of the Schedules appended to the APVAT Act and hence fall
under residuary Entry of Schedule V of the APVAT Act, liable to tax @ 12.5%.
Whereas, the ALUMINIUM EXTRUSION PROFILES fall within the ambit of the
Entry 27 of the Schedule IV of the APVAT Act and liable to tax @ 4%.
***

25.A.R.Com/ 19 /2009.

Dated 23-10- 2009

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:

I. M/s Nahnce Engineering Solutions Private Limited, Hytech City, Madhapur,

Hyderabad, (TIN 28600150686) have filed an application and sought clarification and
advance ruling on the following items under
a. Rate of Tax on sale of Soft ware with in Andhra Pradesh.
b. Rate of tax on sale of Software outside Andhra Pradesh, with C Form
and Without C Formand ruling is given as under:
II.

The applicant stated that, they are doing business in the software development and

marketing of ready made software to the various dealers within the State and outside the
State. They are also engaged in exporting the software to various countries and importing
software from other countries. They sought for clarification on the rate of tax on sale
of Soft ware within Andhra Pradesh and on sale of Software outside Andhra
Pradesh with C Form and without C Form.
The readymade Software, sold to the dealers/customers within the State, fall
under Entry 2(v) of the Schedule IV appended to the APVAT Act and hence is liable for
tax @ 4%.
Therefore, it is clarified that the readymade Software, sold to the
dealers/customers within the State is liable to tax @ 4%.
Since the authority, constituted by the Commissioner of Commercial Taxes under
Section 67 of the APVAT Act, is empowered to clarify any aspect of the implementation
of APVAT Act and has no jurisdiction to clarify on any of the provisions under Central
Sales Tax Act.
Therefore, this Authority is not inclined to give ruling on the issues raised
under Central Sales Tax Act.
***

26.A.R.Com/24 /2009.

Dated 23-10- 2009

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:
I. M/s Bharat Heavy Plate & Vessels Limited, Visakhapatnam, (TIN
28280189432) have filed an application and sought clarification and advance
ruling on the following items
a. Compact Heat Exchangers designed, developed, manufactured and delivered to
AERONAUTICAL DEVELOPMENT AGENCY against projects sanctioned
and funded by AERONAUTICAL DEVELOPMENT AGENCY will amount to
sale or not ?
b.If it amount to sale what will be the rate of sales tax applicable to such supply
and whether can be accepted any concessional Form or not?
and the ruling is given as under:
II.

The applicants are Public Sector Undertaking, working under the Department of
Heavy Industries & Public Enterprises and engaged in the activity of manufacture,
supply and erection of capital equipments. They stated that they have received an
order from Aeronautical Development Agency (Ministry of Defence, Govt. of
India, Bangalore) for supply of 10 Nos. of Pre-coolers and 8 Nos. of FADEC
Coolers i.e. COMPACT HEAT EXCHANGERS for TEJA Air-Craft . The work
order is placed and funds were also sanctioned by AERONAUTICAL
DEVELOPMENT AGENCY. They sought clarification on the issue whether
Compact Heat Exchangers designed, developed, manufactured and delivered to
AERONAUTICAL DEVELOPMENT AGENCY against projects sanctioned
and funded by AERONAUTICAL DEVELOPMENT AGENCY will amount to
sale or not. They further sought clarification with regard to the rate of tax,
applicable to such supply, if it amounts to sale and on the question whether any

Form, enabling the levy of tax at a concessional rate of tax, can be accepted or
not?
The arrangement between the AERONAUTICAL DEVELOPMENT
AGENCY and M/s Bharat Heavy Plate & Vessels Limited, Visakhapatnam, as
explained by the Authorised Representative of the Appellant at the time of hearing
and can be ascertained from the various documents, filed by the Applicant is as
follows:
The AERONAUTICAL DEVELOPMENT AGENCY, hereinafter called
ADA, placed a Purchase Order for manufacturing and supply of Precooler and
FADEC Cooler for LPS and Navy Aircrafts and others and sanctioned different
amounts of expenditure towards different heads like Raw Materials, fabrication,
Acceptance Testing etc. to the Applicant. These amounts are scheduled to be
released, as agreed upon by both the Parties. There is provision for advance
payment towards procurement of raw materials. The sanction of expenditure
towards raw materials is provisional and can be revised on the basis of increase in
the prices of the said raw material. The contention of the applicant is that the
contract between them and ADA is not for sale but for development of the end
product, for which the consideration is paid. It is explained that the raw materials
are purchased by the Applicant and the expenditure thereof would be reimbursed
by ADA. The contract is clearly for designing, developing, manufacturing and
delivering the products, for which the consideration is paid by ADA to the
Applicant. Thus there is an implicit contract for sale, since the consideration,
determined and paid in any manner whatsoever, is for the delivery of ultimate
product, manufactured by the Applicant. It is clear that the property in goods will
be transferred against a price, decided on various parameters like cost of raw
materials, cost of fabrication etc., and paid in a manner, mutually agreed upon.
The manner of determination of price or the manner of payment will not alter the
nature of transaction and if does, such a colourable device can be used by
anybody to avoid payment of tax. The only question that determines the tax
liability under the local VAT Act is whether there is a sale or not. The transaction

in question has all the ingredients of sale such as existence of seller and buyer,
contract of sale and consideration and hence is liable to tax under the APVAT Act.
Further the products, designed, developed, manufactured and delivered against
projects, sanctioned and funded by ADA in the circumstances and facts, explained
above, are taxable under the APVAT Act. The said products, namely, Pre-coolers
and FADEC Coolers, used in the Aircrafts, are liable to tax @4%, as they are
enumerated at Sl. No. 47 of Entry 102 of the Schedule IV, appended to the
APVAT Act. Further there is no prescribed Form, against which concessional rate
of tax can be extended.
Therefore, it is clarified that the products, designed, developed,
manufactured and delivered against projects, sanctioned and funded by ADA
are taxable under the APVAT Act and the Pre-coolers and FADEC Coolers,
used in the Aircrafts, are liable to tax @ 4%. Further, it is clarified that there
are no statutory provisions, prescribing a Form, against which concessional
rate of tax can be extended to the transactions in question.
***
27.A.R.Com/ 33 /2009.

Dated 23-10- 2009

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:
I. M/s CDR Healthcare Limited,. Hyderguda, Hyderabad, (TIN 28394049026) have
filed an application and sought clarification and advance ruling on the following
items:Applicable rate of tax on AIR CLEAN /AIR VENT5ILATION SYSTEMS/
AIR HANDLING SYSTEMS AND SPARES which are used in a hospital
and ruling is given as under:
II.

In view of the amendment made to Schedule IV of the APVAT Act, vide G.O. Ms.

No. 499 Revenue (CT-II) Department, the applicant sought for clarification on
applicable rate of tax for AIR CLEAN /AIR VENTILATION SYSTEMS/ AIR

HANDLING SYSTEMS AND SPARES, which are used in Hospitals. The G.O. Ms.
No. 499 Revenue (CT-II) Department dated 06-05-2009 incorporated Clean Air
Ventilation Systems/Air Handling systems and the parts thereof, used in Pharmaceutical
Industry in the Schedule IV of the APVAT Act at Sl. No. 50 under Entry 102. The plain
reading of the said Entry shows that the said goods are taxable @ 4%, only when they are
used in the Pharmaceutical Industry, but not in Hospitals.

The intention of the

Legislature is to extend the benefit of lower rate of tax only for the said goods, used as
inputs in Pharmaceutical Industry.
Therefore, it is clarified that the AIR CLEAN /AIR VENTILATION
SYSTEMS/ AIR HANDLING SYSTEMS AND SPARES, used in Hospitals, are
liable to tax @ 12.5%.
***

28.A.R.Com/ 38 /2009.

Dated 23-10- 2009

Ref:- CCTs.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:
I. M/s Bake Zone Bakers and Confectioneries, Ashoknagar, Hyderabad,
(TIN28346302661) have filed an application and sought clarification and advance
ruling on the following items
In view of amendment made by Act No. 4 of 2009 , Whether Bakery items
sold by the applicant across the counter i.e. not served with the premises, tax
has to be paid under other provisions in the Act at the applicable rates and
that in respect of such sales corresponding Input Tax Credit can be availed?
and Rules and Ruling is given as under:

II.

The applicants

representative

stated that the applicant is engaged in the

business of trading in baked food, cool drinks, packed chips, biscuits etc. and the annual
total turnover of the applicant is less than 1.5 crores in respect of sales of all such goods.
In view of latest amendment made by Act No. 4 of 2009, the applicant sought
clarification on the question whether the applicant would fall under the category of
clause (d) of sub-section (9) of Section 4 (newly introduced), or under the other
provisions of the Act. He further sought clarification on the issue whether the Bakery
items, sold by the applicant across the counter i.e. not served within the premises, if
taxable at the rates applicable to them under the relevant Entries in the Schedules of the
APVAT Act, are eligible for Input Tax Credit.
Only the specified goods, served in any Restaurant or Eating House or any other
similar establishment, are alone liable to tax under Section 4 (9) (d) of the APVAT Act.
Those goods, which are not served within the premises, but sold across the counter are
liable to tax at the rates applicable to them under the relevant Entries in the Schedules
appended to the APVAT Act in case of a VAT dealer. When any establishment partly sells
goods and partly serves the goods within their premises, the goods, sold across the
counter, are liable to tax at the rates, applicable to them under the relevant Entries in the
Schedules appended to the APVAT Act in case of a VAT dealer, while the goods, served
within the premises, are liable to tax under Sec.4(9)(d) of the APVAT Act.
Therefore, it is clarified as follows:
i.) The goods, to the extent served within the premises of any Hotel, Restaurant,
Eating House or similar Establishment, are liable to tax under Sec. 4 (9) (d) of
the APVAT Act.
ii)The goods, to the extent sold across the counters of any Hotel, Restaurant,
Eating House or similar Establishment and not meant for consumption within
the premises, are liable to tax at the rates, applicable to them under the relevant
Entries in the Schedules appended to the APVAT Act in case of a VAT dealer.
The goods, so sold, are eligible for Input Tax Credit, subject to the restrictions
imposed under the APVAT Act and Rules.

***

***